SSR 67-52: SECTION 203(f)(5)(D). -- ROYALTIES FROM WORKS COPYRIGHTED IN OR AFTER YEAR AUTHOR ATTAINED AGE 65 -- EXCLUSION FROM NET EARNINGS FROM SELF-EMPLOYMENT FOR WORK DEDUCTION PURPOSES
THIS RULING MODIFIES SSR 60-25, C.B. 1960-61, P.75.
- Royalties received from a book, the revision of which was copyrighted in or after the taxable year the author attained age 65; held, not excluded for deduction purposes from net earnings from self-employment by section 203(f)(5)(D) of the Social Security Act, notwithstanding the original version of the book was copyrighted before the taxable year the author attained 65.
J, who was born October 15, 1901, wrote a textbook which was originally published and copyrighted in 1950. He revised his textbook periodically. The most recent revision was published and copyrighted in 1966, the year in which he attained age 65.
Under the rule set out in SSR 60-25, C.B. 1960-61, p. 75, royalties are included in a writer's gross income for the taxable year in which they are received, for purposes of computing net earnings from self-employment under section 211(a), and for purposes of making deducting under section 203 of the Social Security Act. This is true even though the self-employment activity resulting in the copyright which produced the income was performed in a prior year. However, subsection 203(f)(5)(D) of the Social Security Act, which was added by the 1965 amendments, excludes certain royalties received in or after the taxable year the beneficiary reaches age 65 from the computation of net earnings from self-employment for deduction purposes. This subsection provides as follows:
- In the case of an individual --
- (i) who has attained the age of 65 on or before the last day of the taxable year, and
- (ii) who shows to the satisfaction of the Secretary that he is receiving royalties attributable to a copyright or patent obtained before the taxable year in which he attained the age of 65 and that the property to which the copyright or patent relates was created by his own personal efforts, there shall be excluded from gross income any such royalties.
Thus, for deduction purposes, where an author receives royalties in or after a taxable year in which he attained age 65, only those royalties which stem from a copyright obtained before such year may be excluded form the computation of his gross income.
This has raised the question whether the royalties J received from sales of the 1966 revision of his textbook must be included in his earnings from self-employment for work deduction purposes. Based on the facts in this case, the royalties received by J are not attributable to a copyright obtained before the year in which he attained age 65. Section 7 of Title 17 of the United States Code which deals with copyrights, provides that revised books shall be treated as new books subject to independent copyright. As J has indicated, each new revision has a new copyright date. Held, accordingly, that royalties received by J from the 1966 revision of this book are attributable to a copyright obtained in or after the year he reached age 65 and, as such, are not excluded by section 203(f)(5)(D) from his net earnings from self-employment for deduction purposes.