SSR 61-45. RENTAL OF CONSTRUCTION EQUIPMENT

Held , such individual was engaged in a trade or business, within

the meaning of section 211(c) of the Act, in 1959 and 1960, and the income

he derived therefrom in those years is includible in computing his net

earnings from self-employment for social security purposes.

M filed application for old-age insurance benefits in March 1961. Since M

was born in 1889, he needed six quarters of coverage to become entitled to

benefits. He stated he had acquired the necessary quarters of coverage

from self-employment during 1959 and 1960 by engaging in the business of

renting construction equipment.

In 1959 M purchased a bulldozer for $16,000 on a conditional sales

contract. M rented the bulldozer to the X Construction Company for $600

per month under a contract whereby M was to pay for necessary repairs and

insurance on the bulldozer, and the X Company was to pay the ordinary

running expenses. M paid the monthly installments on the bulldozer under

the conditional sales contract as well as the insurance, and in 1960 he

also paid for general repairs to it. In January 1961 M purchased two more

bulldozers which he rented to the X Company under terms similar to those

of the first contract. At no time did M try to rent his equipment to any

firm or person other than the X Company. M derived a net profit of $1,900

from the operation if 1959 and a net profit of $3,800 in 1960.

The question is whether these amounts derived in 1959 and 1960 may be

included as net earnings from self-employment to old- age insurance

benefits. This, in turn, depends on whether M was carrying on a trade or

business in 1959 and 1960, since under section 211(a) net earnings from

self-employment must be derived from a trade or business.

Section 211(c) of the Act provides in pertinent part:

In determining the existence 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;

ss in 1959 and 1960, since under section 211(a) net earnings from

self-employment must be derived from a trade or business.

Section 211(c) of the Act provides in pertinent part:

In determining the existence 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; (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

case must be resolved on its own merits with due consideration of the

entire factual situation.

In the present case, M initiated and carried on his activity for the

purpose of making a profit. M's dealings with the X Company required a

continuity and repetition of transactions and negotiations on the

purchase, financing, leasing and repair of the equipment. Further, these

dealings were carried on over a period of several years and involved

equipment which, with the purchase of the two bulldozers in 1961 was

valued at approximately $50,000. M's purchase and rental of only one piece

of equipment in 1959 and 1960 might of itself be regarded as an isolated

transaction which would lack the continuity and regularity of transactions

necessary for the existence of a trade or business under section 211(c).

However, his acquisition of additional equipment and his continuing

rentals in 1961, though occurring after the period in question, support

his allegation that his original intention was to engage in a trade or

business, and clearly evidence the necessary continuity and regularity.

ity and regularity of transactions

necessary for the existence of a trade or business under section 211(c).

However, his acquisition of additional equipment and his continuing

rentals in 1961, though occurring after the period in question, support

his allegation that his original intention was to engage in a trade or

business, and clearly evidence the necessary continuity and regularity.

Accordingly, it is held that M was engaged in a trade or business

within the meaning of section 211(c) of the Act in 1959 and 1960. The

income he derived from the business in those years in thus includible in

computing his net earnings from self-employment. Therefore, M is entitled

to the old-age insurance benefits for which he filed application.