An individual purchased a bulldozer in 1959 which he rented to a construction company for two years, under terms whereby he paid for the insurance and repairs while the company paid the ordinary running expenses. In 1961 he purchased two additional bulldozers which he also rented to the same company on the same terms.

Held, such individual was engaged in a trade or business, within the meaning of section 211(c) of the Act, in 1959 and 1960, and the income he derived therefrom in those years is includible in computing his net earnings from self-employment for social security purposes.

M filed application for old-age insurance benefits in March 1961. Since M was born in 1889, he needed six quarters of coverage to become entitled to benefits. He stated he had acquired the necessary quarters of coverage from self-employment during 1959 and 1960 by engaging in the business of renting construction equipment.

In 1959 M purchased a bulldozer for $16,000 on a conditional sales contract. M rented the bulldozer to the X Construction Company for $600 per month under a contract whereby M was to pay for necessary repairs and insurance on the bulldozer, and the X Company was to pay the ordinary running expenses. M paid the monthly installments on the bulldozer under the conditional sales contract as well as the insurance, and in 1960 he also paid for general repairs to it. In January 1961 M purchased two more bulldozers which he rented to the X Company under terms similar to those of the first contract. At no time did M try to rent his equipment to any firm or person other than the X Company. M derived a net profit of $1,900 from the operation if 1959 and a net profit of $3,800 in 1960.

The question is whether these amounts derived in 1959 and 1960 may be included as net earnings from self-employment to old- age insurance benefits. This, in turn, depends on whether M was carrying on a trade or business in 1959 and 1960, since under section 211(a) net earnings from self-employment must be derived from a trade or business.

Section 211(c) of the Act provides in pertinent part:

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, * * *.

In determining the existence of a trade or business, factors taken into consideration include: (1) whether the activity was initiated and performed with a profit motive; (2) whether it was regular and continuous; (3) whether it was engaged in as a regular occupation or calling; (4) whether the individual held himself out to others as being engaged in the selling of goods or services. No single factor is controlling, and each case must be resolved on its own merits with due consideration of the entire factual situation.

In the present case, M initiated and carried on his activity for the purpose of making a profit. M's dealings with the X Company required a continuity and repetition of transactions and negotiations on the purchase, financing, leasing and repair of the equipment. Further, these dealings were carried on over a period of several years and involved equipment which, with the purchase of the two bulldozers in 1961 was valued at approximately $50,000. M's purchase and rental of only one piece of equipment in 1959 and 1960 might of itself be regarded as an isolated transaction which would lack the continuity and regularity of transactions necessary for the existence of a trade or business under section 211(c). However, his acquisition of additional equipment and his continuing rentals in 1961, though occurring after the period in question, support his allegation that his original intention was to engage in a trade or business, and clearly evidence the necessary continuity and regularity.

Accordingly, it is held that M was engaged in a trade or business within the meaning of section 211(c) of the Act in 1959 and 1960. The income he derived from the business in those years in thus includible in computing his net earnings from self-employment. Therefore, M is entitled to the old-age insurance benefits for which he filed application.

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