Calling for Free tax advice for the Poodle'esque tax gurus (solo 401K)

So lets say I start a little biz on the side. I understand I can get a solo 401K, put in up to $17K plus 25% of profit up to a certain threshold. Plus if my wife is an 'employee', I can put $17K for her (or 100% of comp) plus 25% of profits.

My question is, if my business in its startup year loses money, does that limit what my wife can put in (I would not put in any in my name as I max out at work). So for Example:

Business Revenue: $10K
Biz expense (not including salary to wife): $2K
Salary to wife $12K.

My question is, would I be in bounds to have her put $12K in the 401K, or it is limited given that is the total profit of my sole proprietorship, per her salary. Does the IRS take fondly to this? TIA