SSR 61-43. ADMINISTRATOR OR EXECUTOR -- OPERATION OF BUSINESS AMONG ASSETS OF ESTATE
- Where the administratrix of her deceased husband's estate operated a retail hobby store, which was the principal asset of such estate, until it could be sold; and the administratrix received remuneration of $60 a week for her services in operating the store, which remuneration was separate and apart from her regular fees as administratrix; held, the services of the administratrix in operating the store constitute carrying on a "trade or business" within the meaning of section 211(c) of the Act and her remuneration for such services is includible in computing her net earnings from self-employment.
H died intestate in 1958. He was survived by a daughter and a widow, W, who was appointed administratrix of his estate. Prior to his death H owned and operated a retail hobby store, which was the principle asset of the estate. W, as administratrix, continued to operate the store, and as remuneration for her services she received, with the approval of the court, $60 a week from the store's receipts. These payments were apart from her regular fees approved by the court for her usual activities as administratrix. W made efforts to sell the store and purchased stock to keep the business going so that its sales value as a going business would not be diminished. W operated the store from 1958 through 1960, at which time the store was sold and the estate settled.
The questions to be resolved are whether W's services in operating the store constitute carrying on a "trade or business" within the meaning of section 211(c) of the Social Security Act and, consequently, whether the remuneration received by her for those services may be included in computing her net earnings from self-employment for social security purposes.
Section 211 of the Social Security Act provides in pertinent part:
- (a) the term "net earnings from self-employment" means the gross income, as computed under Subtitle A of the Internal Revenue Code of 1954, derived by an individual from any trade or business carried on by such individual, less the deductions allowed under such subtitle which are attributable to such trade or business,* * *
- (c) the term "trade or business," when used in reference to self-employment income or net earnings from self-employment, shall have the same meaning as when used in section 162 of the Internal Revenue Code of 1954.
Whether or not a person is engaged in a trade or business is dependent upon all the facts and circumstances in the particular case. As a general rule, when a person is regularly engaged in an occupation or profession for profit and, as to such occupation or profession, is not an employee or not otherwise excluded from the self-employment provisions of the Act, such a person is engaged in a trade or business within the meaning of section 211(c).
A professional fiduciary or executor who regularly engages in fiduciary services and handles a number of estates is engaged in a trade or business. A nonprofessional fiduciary (for example, a person who serves as executor or administrator in isolated instances, and then only as personal representative for the estate of a deceased friend or relative) generally is not engaged in a trade or business. A nonprofessional fiduciary who actually carries on a trade or business in connection with the administration of an estate, such as operating a store which is part of the estate, may have income includible as net earnings from self-employment if the trade or business is an asset of the estate and the executor actively participates in the operation of such trade or business. In this event, only the fees approved or allowed as compensation for services in operating the trade or business, as distinguished from the normal compensation payable to an executor, are includible in computing net earnings from self-employment.
In the present case W's activities in operating the store for the years 1958 through 1960 constitute the carrying on of a "trade or business" within the meaning of section 211(c) of the Act under the criteria above. There was a trade or business among the assets of H's estate; W did actively participate in its operation; and her remuneration for this activity was separate and apart from her regular fees as an administratrix.
Accordingly, it is held that W's services in operating the hobby store during the years 1958 through 1960 constitute carrying on a "trade or business" within the meaning of section 211(c) of the Act and her remuneration for such services is includible in computing her net earnings from self- employment for those years.