'(1) There shall be excluded rentals from real estate and from personal property leased with the real estate * * *
'(2) There shall be excluded dividends on any share of stock, and interest on any bond, debenture, note, or certificate, or other evidence of indebtedness, issued with interest coupons or in registered form by any corporation * * *
'(3) There shall be excluded any gain or loss which is considered * * * as gain or loss from the sale or exchange of a capital asset, * * *
'(b) The term 'self-employment income' means the net earnings from self-employment derived by an individual (other than a non-resident alien individual) during any taxable year beginning after 1950; * * *.'
Appendix C (Excerpts from 20 -- Code of Federal Regulations, 1949 ed., as supplemented).
The following rules and regulations, quoted in pertinent parts, and authorized by § 205 of the Act, Tit. 42 U.S.C.A. § 405, were quoted in large part in the opinion below, TR. 16-19 inclusive. Section numbers are those of the Social Security Administrative Regulations.
' § 404.415 * * * A person shall be deemed to have engaged in self-employment in any month if in such month he renders substantial services, as defined in Section 404.416, in operating a trade or business as owner or partner, even though there may be no earnings from self-employment attributable to his services for such month. For purposes of paragraph (b)(5) of this section, an individual will be presumed with respect to any month to have rendered services for wages, as defined in Section 404.417, of more than $ 80 until it is shown to the satisfaction of the Administration that such individual did not render services in such month for more than such amount.
' § 404.416 (defining substantial services): -- For the purposes of section 404.415 an individual is presumed to have rendered substantial services in each month in his taxable year. However, he may submit evidence to establish that in any month in such taxable year he did not render substantial services with respect to any trade or business the net in or loss of which is includible in computing his net earnings from self-employment for any taxable year if such taxable year ends prior to his first taxable year beginning after 1954, or in computing his earnings (but without regard to section 404.417(b)) for any taxable year if such taxable year begins after 1954. In determining whether an individual has rendered such substantial services in a month, the particular facts in each case will be examined. The following factors, among others, will be considered in making the determination:
(a) The amount of time devoted to the trade or business,
(b) The amount of capital invested in the trade or business,
(c) The nature of the services rendered by the beneficiary,
(d) The seasonal nature of the trade or business,
(e) The presence or absence of a paid manager, a partner, or a family member who manages the business,
(f) The type of business establishment that is involved, and
(g) The relationship of the activity performed prior to the period of retirement with that performed subsequent to retirement.
' § 404.417 (defining 'earnings') When the term 'earnings' is used in this subpart and not as a part of the phrase 'net earnings from self-employment', it shall mean an individual's earnings with respect to a taxable year beginning after 1954 and includes the sum of his wages, as defined in paragraph (b) of this section, for services rendered in such year and his net earnings from self-employment, as defined in paragraph (a) of this section, for such year, minus any net loss from self-employment, as defined in paragraph (a) of this section, for such year.
'(a) Net earnings from self-employment and net loss from self-employment. An individual's net earnings from self-employment and his net loss from self-employment for the purpose of this section and § 404.416, shall be determined under the provisions of section 211, but without regard to the provisions in paragraphs (1), (4), and (5) of subsection (c); any excess of income over deductions so resulting from such computation shall be his net earnings from self-employment and any excess of deductions over income so resulting shall be his net loss from self-employment. * * *
' § 404.1051 (Income included in net earnings from self-employment)
'(c) Where an individual is engaged in more than one trade or business within the meaning of section 211(c) of the act and section 404.1057, his net earnings from self-employment consists of the aggregate of the net income and losses (computed subject to the special rules provided in this section) of all such trades or businesses carried on by him. Thus, a loss sustained in one trade or business carried on by an individual will operate to offset the income derived by him from another trade or business.
'(d) The net earnings from self-employment of an individual include, in addition to the earnings from a trade or business carried on by him, his distributive share of the ordinary net income or ordinary net loss from any trade or business carried on by each partnership of which he is a member. An individual's distributive share of the ordinary net income or ordinary net loss of a partnership shall be computed under section 183 of the Internal Revenue Code subject to the special rules set forth in section 211(a) of the act and in this section and to the exclusions provided in section 211(c) of the act and in section 404.1057.
'(g) The net earnings from self-employment of a partner include his distributive share of the ordinary net income or ordinary net loss of the partnership of which he is a member, irrespective of the nature of his membership. Thus, in determining his net earnings from self-employment, a limited or inactive partner includes his distributive share of the ordinary net income or ordinary net loss of the partnership.'
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