After reading my post I realize that my answer was just as unclear as the law is unclear. Damn!

Well... I will stick my neck out and say that if you follow factor #1 and pay yourself a S-corp salary comparatively to others in your industry you can probably get by without a problem and save on SE tax. There.. I said what you wanted to hear. This is assuming that you are not so aggressive with other tax items that would cause your S-corp or 1040 tax return to be subject to audit anyway. Bye the way, the IRS always audits both S-corp and individual 1040 when the have reason to look at either one by itself. Lets face it, your tax return is "scored" at process time and the IRS has too many other returns to look at if yours shows a fairly good salary thereby not adding up much score.

my 2? ??