Amendments to Definitions of Self-Employment Income and Related Definitions

Amendments to Definitions of Self-Employment Income and Related Definitions Sec. 201. (a) (1) Paragraph (1) of section 1402 (a) of the Internal Revenue Code of 1954 is amended to read as follows: “(1) there shall be excluded rentals from real estate and from personal property leased with the real estate (including such rentals paid in crop shares) together with the deductions attributable thereto, unless such rentals are received in the course of a trade or business as a real estate dealer;”. (2) Subsection (a) of section 1402 of the Internal Revenue Code of 1954 is amended by striking out paragraph (2) and redesignating paragraphs (3), (4), (5), (6), (7), and (8), and any references thereto contained in such code, as paragraphs (2), (3), (4), (5), (6), and (7), respectively, and by adding at the end of such subsection the following new sentence: “In the case of any trade or business which is carried on by an individual who reports his income on a cash receipts and disbursements basis, and in which, if it were carried on exclusively by employees, the major portion of the services would constitute agricultural labor as defined in section 3121 (g), (i) if the gross income derived from such trade or business by such individual is not more than $1,800, the net earnings from self-employment derived by him therefrom may, at his option, be deemed to be 50 percent of such gross income in lieu of his net earnings from self-employment from such trade or business computed as provided under the preceding provisions of this subsection, or (ii) if the gross income derived from such trade or business by such individual is more than $1,800 and the net earnings from self-employment derived by him therefrom, as computed under the preceding provisions of this subsection, are less than $900, such net earnings may instead, at the option of such individual, be deemed to be $900. For the purpose of the preceding sentence, gross income derived from such trade or business shall mean the gross receipts from such trade or business reduced by the cost or other basis of property which was purchased and sold in carrying on such trade or business, adjusted (after such reduction) in accordance with the preceding provisions of this subsection.” 68 Stat. 1088 (b) (1) Paragraph (1) of section 1402 (b) of the Internal Revenue Code of 1954 is amended to read as follows: “(1) that part of the net earnings from self-employment which is in excess of— “(A) for any taxable year ending prior to 1955, (i) $3,600, minus (ii) the amount of the wages paid to such individual during the taxable year; and “(B) for any taxable year ending after 1954, (i) $4,200, minus (ii) the amount of the wages paid to such individual during the taxable year; or”. (2) Section 1402 (b) of the Internal Revenue Code of 1954 is amended by inserting after “employees)” the following: “, or under an agreement entered into pursuant to the provisions of section 3121 (1) (relating to coverage or citizens of the United States who are employees of foreign subsidiaries of domestic corporations),”. (c) (1) Section 1402 (c) (2) of the Internal Revenue Code of 1954 is amended by inserting after “18” the following: “and other than service described in paragraph (4) of this subsection”. (2) Section 1402 (c) of the Internal Revenue Code of 1954 is amended by adding at the end thereof the following new sentences: “The provisions of paragraph (4) shall not apply to service (other than service performed by a member of a religious order who has taken a vow of poverty as a member of such order) performed by an individual during the period for which a certificate filed by such individual under subsection (e) is in effect. The provisions of paragraph (5) shall not apply to service performed by an individual in the exercise of his profession as a Christian Science practitioner during the period for which a certificate filed by him under subsection (e) is in effect.” (3) Section 1402 of the Internal Revenue Code of 1954 is amended by adding at the end thereof the following new subsection: “(e) Ministers, Members of Religious Orders, and Christian Science Practitioners.— “(1) Waiver certificate.—Any individual who is (A) a duly ordained, commissioned, or licensed minister of a church or a member of a religious order (other than a member of a religious order who has taken a vow of poverty as a member of such order) or (B) a Christian Science practitioner may file a certificate (in such form and manner, and with such official, as may be prescribed by regulations made under this chapter) certifying that he elects to have the insurance system established by title II of the Social Security Act extended to service described in subsection (c) (4), or service described in subsection (c) (5) insofar as it relates to the performance of service by an individual in the exercise of his profession as a Christian Science practitioner, as the case may be, performed by him. “(2) Time for filing certificate.—Any individual who desires to file a certificate pursuant to paragraph (1) must file such certificate on or before the due date of the return (including any extension thereof) for his second taxable year ending after 1954 for which he has net earnings from self-employment (computed, in the case of an individual referred to in paragraph (1) (A), without regard to subsection (c) (4), and, in the case of an individual referred to in paragraph (1) (B), without regard to subsection (c) (5) insofar as it relates to the performance of service by an individual in the exercise of his profession as a Christian Science practitioner) of $400 or more, any part of which was derived from the performance of service described in subsection (c) (4), or from the performance of service described in subsection (c) (5) insofar as it relates to the performance of service 68 Stat. 1089by an individual in the exercise of his profession as a Christian Science practitioner, as the case may be. “(3) Effective date of certificate.—A certificate filed pursuant to this subsection shall be effective for the first taxable year with respect to which it is filed (but in no case shall the certificate be effective for a taxable year with respect to which the period for filing a return has expired, or for a taxable year ending prior to 1955) and all succeeding taxable years. An election made pursuant to this subsection shall be irrevocable.” (4) Section 1402 (a) of the Internal Revenue Code of 1954 is amended— (A) by striking out the period at the end of paragraph (7) (as renumbered by subsection (a) (2) of this section) and inserting in lieu thereof a semicolon, and (B) by inserting after such paragraph (7) thereof a new paragraph as follows: “(8) an individual who is— “(A) a duly ordained, commissioned, or licensed minister of a church or a member of a religious order; and “(B) a citizen of the United States performing service described in subsection (c) (4) as an employee of an American employer (as defined in section 3121 (h)) shall compute his net earnings from self-employment derived from the performance of service described in subsection (c) (4) without regard to section 911 (relating to earned income from sources without the United States) and section 931 (relating to income from sources within possessions of the United States).” (5) Section 1402 (c) (5) of the Internal Revenue Code of 1954 is amended to read as follows: “(5) the performance of service by an individual in the exercise of his profession as a physician, lawyer, dentist, osteopath, veterinarian, chiropractor, naturopath, optometrist, or Christian Science practitioner; or the performance of such service by a partnership.” (d) The amendments made by subsections (a), (b), and (c) of this section shall be applicable only with respect to taxable years ending after 1954.