SSR 61-44. PERSONAL SERVICES PERFORMED FOR FAMILY MEMBER OF CLOSE FRIEND

A applied for old-age insurance benefits in July 1960 on attainment of

age 62, and she became entitled to benefits beginning with that month.

However, a question was raised as to the amount of her net earnings from

self-employment for 1958. A determination of the amount of her earnings

for that year was necessary since it would affect the amount of her

monthly old-age insurance benefit. A alleged earnings of $1,850 for the

year 1958. Of this amount $850 had been derived from the operation of her

farm; the remaining $1,000 reported by her for care she had given her

invalid brother-in-law from 1952 to December 1957. The question is whether

this latter amount was properly included by A in computing her net

earnings from self-employment for 1958. This, in turn, depends on whether

or not A was carrying on a trade or business in caring for her

brother-in-law under the following circumstances.

When A's brother-in-law, B, became ill in 1952, A took him into her home

where she could more easily care for him and for her husband who was also

ill. A cared for her husband and B until hr husband died and, thereafter,

maintained the home and nursed B until he died in December 1957.

There was no agreement that A was to receive any reimbursement for the

care and services rendered by her, either when B went to live in A's home

or afterwards. A supplied room and board to B, provided nursing services

when needed, purchased medicines and other supplies for him on various

occasions, and from time to time received money from B toward payment of

groceries and other items purchased. The services performed for B were

similar to those she performed for her husband during his illness, but A

had never performed such services for anyone else. A's regular occupation

was that of housewife. After her husband's death she earned her livelihood

by operating the farm that she inherited from him.

o time received money from B toward payment of

groceries and other items purchased. The services performed for B were

similar to those she performed for her husband during his illness, but A

had never performed such services for anyone else. A's regular occupation

was that of housewife. After her husband's death she earned her livelihood

by operating the farm that she inherited from him.

After B died, it was found that he left an estate of several thousand

dollars, and A then decided to claim $1,500 as reimbursement for the care

and maintenance she had furnished him. B's children paid her this amount

in 1958, and she reported the $1,500, less $500 estimated expenses, as

income derived in 1958 from the business of caring for and nursing her

brother-in-law.

Section 211(a) of the Social Security Act provides that the term "net

earnings from self-employment" means the gross income, as computed under

subtitle A of the Internal Revenue Code of 1954, derived by an individual

from any trade or business carried on by such individual, less the

deductions allowed under such subtitle which are attributable to such

trade or business.

Section 211(c) of the Act provides that the term "trade or business,"

when used with reference to self-employment income or net earnings from

self-employment, shall have the same meaning as when used in section 162

of the Internal Revenue Code of 1954, with certain exceptions not relevant

here.

In determining the existence or nonexistence of a trade or business,

factors taken into consideration include: (1) whether the activity was

initiated and performed with a profit motive; (2) whether it was regular

and continuous; (3) whether it was engaged in as a regular occupation or

calling; and (4) whether the individual held himself out to others as

being engaged in the selling of goods or services. No single factor is

controlling, and each individual case must be resolved on its own merits

with due consideration of the entire factual situation.

ith a profit motive; (2) whether it was regular

and continuous; (3) whether it was engaged in as a regular occupation or

calling; and (4) whether the individual held himself out to others as

being engaged in the selling of goods or services. No single factor is

controlling, and each individual case must be resolved on its own merits

with due consideration of the entire factual situation.

The services A performed and the providing of a home for B were not

activities initiated for the production of income. A did not hold herself

out to others as being engaged in a profit-making enterprise. The

performance of the activities arose from the natural love and affection

existing between relatives and A did not have any reasonable expectation

that she would profit from such services.

Accordingly, it is held that A was not engaged in a "trade or

business" within the meaning of section 211(c) of the Act in performing

services for R, and the payment she received for such services is not

includible in computing her "net earnings from self-employment."

Therefore, A's net earnings for 1958 for the purpose of computing the

amount of her old-age insurance benefit are $850, the amount she derived

from the operation of her farm.