Page:United States Statutes at Large Volume 76.djvu/859

 76 STAT.] I

PUBLIC LAW 87-792-OCT. 10, 1962

" (B) a trust forming a part of such plan shall constitute a qualified trust under this section only if the requirements in subsection (d) are also met."j and (3) by redesignating subsection (c) as subsection (h) and inserting after subsection (b) the following new subsections:

811

^o«'. p- 812.

"(c) DEFINITIONS AND RULES RELATING TO SELF-EMPLOYED INDIVIDUALS AND OWNER-EMPLOYEES,—For purposes of this section—

"(1) EMPLOYEE.—The term 'employee' includes, for any taxable year, an individual who has earned income (as defined in paragraph (2)) for the taxable year. To the extent provided in regulations prescribed by the Secretary or his delegate, such term also includes, for any taxable year— " (A) an individual who would be an employee within the meaning of the preceding sentence but for the fact that the if^. trade or business carried on by such individual did not have net profits for the taxable year, and •H)')!' " (B) an individual who has been an employee within the meaning of the preceding sentence for any prior taxable year. ^

, "(2)

E A R N E D INCOME.—

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" (A) IN GENERAL.—The term 'earned income' means the net earnings from self-employment (as defined in section r» 1402(a)) to the extent that such net earnings constitute earned income (as defined in section 911(b) but determined with the application of subparagraph (B)), but such net earnings shall be determined— ~j, " (i) without regard to paragraphs (4) and (5) of •|,' section 1402(c), ^,P.,, J " (ii) in the case of any individual who is treated as an ' "^ ' employee under sections 3 1 2 1 (d)(3)(A), (C), or (D), ^^I's without regard to paragraph (2) of section 1402(c), and ir "(iii) without regard to items which are not included . in gross income for purposes of this chapter, and the deductions properly allocable to or chargeable against such items. For purposes of this subparagraph, sections 911(b) and .,-, 1402, as in effect for a taxable year ending on December 31, 1962, and subparagraph (B), as in effect for a taxable year ^, beginning on January 1, 1963, shall be treated as having been in effect for all taxable years ending before such date. " (B) EARNED INCOME WHEN BOTH PERSONAL SERVICES AND CAPITAL ARE MATERIAL INCOME-PRODUCING FACTORS.—In apply-

,j ^^. ,., ,^ j'^ . r. I t ':

ing section 911(b) for purposes of subparagraph (A), in the case of an individual who is an employee within the meaning of paragraph (1) and who is engaged in a trade or business in which both personal services and capital are material income-producing factors and with respect to which the individual actually renders personal services on a full-time, or substantially full-time, basis, so much of his share of the net profits of such trade or business as does not exceed $2,500 shall be considered as earned income. In the case of any such individual who is engaged in more than one trade or business with respect to which he actually renders substantial personal services, if with respect to all such trades or businesses

26 USC 1402. 26 USC 911.

26 USC 3121.

.,,•. •,26 USC 911.

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