Page:United States Statutes at Large Volume 76.djvu/860

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PUBLIC LAW 87-792-OCT. 10, 1962

[76 STAT.

he actually renders personal services on a full-time, or substantially full-time, basis, there shall be considered as earned income with respect to the trades or businesses in which both personal services and capital are material income-producing factors— " (i) so much of his share of the net profits of such trades or businesses as does not exceed $2,500, reduced by "(ii) his share of the net profits of any trade or business in which only personal services is a material incomeproducing factor. The preceding sentences shall not be construed to reduce the share of net profits of any trade or business which under the second sentence of section 911(b) would be considered as earned income of any such individual. "(3) OWNER-EMPLOYEE.—The term 'owner-employee' means an employee who— " (A) owns the entire interest in an unincorporated trade or business, or " (B) in the case of a partnership, is a partner who owns more than 10 percent of either the capital interest or the profits interest in such partnership. To the extent provided in regulations prescribed by the Secretary or his delegate, such term also means an individual who has been an owner-employee within the meaning of the preceding sentence. " (4) EMPLOYER.—An individual who owns the entire interest in an unincorporated trade or business shall be treated as his own employer. A partnership shall be treated as the employer of each partner who is an employee within the meaning of paragraph (1). "(5)

CONTRIBUTIONS ON BEHALF OF OWNER-EMPLOYEES.—The

term 'contribution on behalf of an owner-employee' includes, except as the context otherwise requires, a contribution under a plan— " (A) by the employer for an owner-employee, and " (B) by an owner-employee as an employee. " (d) ADDITIONAL REQUIREMENTS FOR QUALIFICATION OF TRUSTS AND PLANS BENEFITING OWNER-EMPLOYEES.—A trust forming part of a

26 USC 401.

26 USC 501.

pension or profit-sharing plan which provides contributions or benefits for employees some or all of whom are owner-employees shall constitute a qualified trust under this section only if, in addition to meeting the requirements of subsection (a), the following requirements of this subsection are met by the trust and by the plan of which such trust is a part: "(1) In the case of a trust which is created on or after the date of the enactment of this subsection, or which was created before such date but is not exempt from tax under section 501(a) as an organization described in subsection (a) on the day before such date, the trustee is a bank, but a person (including the employer) other than a bank may be granted, under the trust instrument, the power to control the investment of the trust funds either by directing investments (including reinvestments, disposals, and exchanges) or by disapproving proposed investments (including

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