SSR 61-57. COMPUTATION OF EARNINGS

J, a druggist, became entitled to benefits in the amount of $85 per month

effective October 1958, when he was 65 years old. For some years J owned

and operated a drugstore in Denver, Colorado, to which he devoted full

time. He sold the store and business on June 22, 1960, because it was

unprofitable. His taxable year 1960 was the calendar year. In this year

his net loss from the business was $2,260. (This amount included a loss

sustained on sale of his inventory when the business was sold). Early in

July 1960, he secured employment and earned wages of $3,120 in the rest of

the year. His earnings from employment in each of the months July through

December were well over $100.

The question to be decided is what deductions, if any, must be imposed

against J's benefits for the months of 1960, under section 203 of the

Social Security Act. Under the provisions of that section, a person

entitled to old-age insurance benefits can earn as much as $1,200 in a

taxable year of 12 months and still receive all his benefits for that

year. If such a beneficiary has total earnings from employment and

self-employment which exceed $1,200 for the year, deductions for one or

more months may be required. However, a deduction may not be made for a

month in which the beneficiary is age 72 or over; nor may a deduction be

made for a month in which the beneficiary neither worked as an employee

for wages of more than $100 nor rendered substantial services as a

self-employed person.

J rendered substantial services in self-employment in each of the 6

months January through June 1960 and rendered services for wages of over

$100 for employment in each of the 6 months July through December 1960.

Therefore, the decision as to what deductions, if any, must be imposed for

months in 1960 depends upon the amount of J's earnings for that year.

ices as a

self-employed person.

J rendered substantial services in self-employment in each of the 6

months January through June 1960 and rendered services for wages of over

$100 for employment in each of the 6 months July through December 1960.

Therefore, the decision as to what deductions, if any, must be imposed for

months in 1960 depends upon the amount of J's earnings for that year.

Section 203(e)(4)(A) (redesignated section 203(f)(5)(A) by the Amendments

of 1960) provides that a beneficiary's earnings for purposes of imposing

deductions will be computed as follows:

J's wages for 1960 were $3,120. His self-employment for that year

resulted in a net loss of $2,260. Subtracting the net loss from the total

wages to compute the earnings in accordance with the provisions cited

above, J has earnings of $860 for the calendar year 1960. Since his

earnings are less than $1,200 in this 12-month taxable year, it is held that J's benefits are not subject to deductions for any month

of 1960 under section 203 of the Act.