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SEC. 1402-Continued

(a) (1) Continued

Do.....

(clause added)

(a) (2)-(8)
(deleted,
renumbered)

Aug. 1, 1956, H.R. 7225, P.L. 84-880, § 201(e) (2), 70 Stat. 840: Amended Sec. 1402(a)(1) (as amended by P.L. 83-761, § 201(a)(1)) by adding at the end thereof the following:

"except that the preceding provisions of this paragraph shall not apply to any income derived by the owner or tenant of land if (A) such income is derived under an arrangement, between the owner or tenant and another individual, which provides that such other individual shall produce agricultural or horticultural commodities (including livestock, bees, poultry, and fur-bearing animals and wildlife) on such land, and that there shall be material participation by the owner or tenant in the production or the management of the production of such agricultural or horticultural commodities, and (B) there is material participation by the owner or tenant with respect to any such agricultural or horticultural commodity;". Applicability:

Taxable years ending after 1955.

(Id., § 201 (m) (1), 70 Stat. 843.)

322

Sept. 1, 1954, H.R. 9366, P.L. 83-761, § 201(a) (2), 68 Stat. 1087: Amended Sec. 1402 (a) (relating to definition of "net earnings from self-employment")—

(1) by striking out paragraph (2), which read as follows (68A Stat. 353):

"(2) there shall be excluded income derived from any trade or business in which, if the trade or business were carried on exclusively by employees, the major portion of the services would constitute agricultural labor as defined in section 3121 (g); and

322 Section 201 (m)(1) of P.L. 84-880 provided as follows:

"(m) (1) The amendments made by subsection (a) and paragraph (1) of subsection (h) shall apply with respect to remuneration paid after 1956. The amendment made by subsection (b) shall apply with respect to remuneration paid after October 1956. The amendments made by subsection (c) and paragraph (2) of subsection (h) shall apply with respect to service performed after 1956. The amendments made by paragraphs (1) and (2) of subsection (d) shall apply with respect to service with respect to which the amendments made by paragraphs (1) and (2) of subsection (b) of section 104 of this Act apply. The amendments made by paragraph (1) of subsection (e) shall apply with respect to service performed after 1954. The amendment made by paragraph (3) of such subsection shall apply with respect to taxable years ending after 1954. The amendments made by paragraph (2) of subsection (e) and by subsection (f) shall apply with respect to taxable years ending after 1955. The amendment made by subsection (i) shall apply with respect to taxable years ending on or after December 31, 1956. The amendment made by subsection (1) shall apply with respect to certificates filed after 1956 under section 3121(k) of the Internal Revenue Code of 1954."

The amendments made by section 201 of P.L. 84-880 were as follows:

Subsection (a) added a new section 3113 and amended the table of sections for Subchapter B of Chapter 21.

Subsection (b) amended Sec. 3121 (a) (9).

Subsection (c) amended Sec. 3121(b)(1)(B).

Subsection (d) (1) amended Sec. 3121(b) (6) (B) (ii).

Subsection (d) (2) amended Sec. 3121(b) (6) (C) (vi).

Subsection (e) (1) amended Sec. 3121(b) by adding a new paragraph (16).

Subsection (e) (2) amended Sec. 1402(a)(1).

Subsection (e)(3) amended Sec. 1402(c) (2).

Subsection (f) amended Sec. 1402(c) (5).

Subsection (g) amended Sec. 1402 (a) (8) (B).

Subsection (h) (1) amended Sec. 3121(a) (8) (B).

Subsection (h) (2) amended Sec. 3121 by adding a new subsection (o).

Subsection (h)(3) amended Sec. 3102(a).

Subsection (i) amended the last two sentences of Sec. 1402(a).

Subsection (j) amended Sec. 3121(1) (8) (A).

Subsection (k) amended the third sentence of Sec. 3121(k)(1).

Subsection (1) amended the fifth sentence of Sec. 3121(k)(1).

All of these amendments are set forth herein in their proper context.

SEC. 1402-Continued

(a) (2)-(8)-Continued

(a) (3) (B). (in full)

(a) (8)(added)

there shall be excluded all deductions attributable to such income;"; and

(2) by redesignating paragraphs (3), (4), (5), (6), (7), and (8), and any references thereto contained in the Code, as paragraphs (2), (3), (4), (5), (6), and (7), respectively.323

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Feb. 26, 1964, H.R. 8363, P.L. 88-272, § 227 (b) (6), 78 Stat. 98: Amended subparagraph (B) of Sec. 1402(a) (3) (original paragraph (4) redesignated by P.L. 83-761, § 201(a)(2)) 324 to read as follows:

"(B) from the cutting of timber, or the disposal of timber, coal, or iron ore, if section 631 applies to such gain or loss, or" Applicability:

Amounts received or accrued in taxable years beginning after December 31, 1963, attributable to iron ore mined in such taxable years.

(Id., § 227 (c), 78 Stat. 98.)

Sept. 1, 1954, H.R. 9366, P.L. 83-761, § 201 (c) (4), 68 Stat. 1089:
Amended Sec. 1402(a)-

(A) by striking out the period at the end of paragraph (7) (as renumbered by P.L. 83-761, § 201 (a) (2)) and inserting in lieu thereof a semicolon, and

(B) by inserting after such paragraph (7) the following new paragraph (8):

"(8) an individual who is

"(A) a duly ordained, commissioned, or licensed minister of a church or a member of a religious order; and

"(B) a citizen of the United States performing service described in subsection (c) (4) as an employee of an American employer (as defined in section 3121(h))

shall compute his net earnings from self-employment derived from the performance of service described in subsection (c)(4) without regard to section 911 (relating to earned income from sources without the United States) and section 931 (relating to income from sources within possessions of the United States)." Applicability:

Only taxable years ending after 1954.

(Id., § 201(d), 68 Stat. 1089.)

323 Section 201(a)(2) of P.L. 83-761 also added two new sentences at the end of Sec. 1402(a). See p. 516 below.

324 The original paragraph (4) of section 1402(a) read as follows (68A Stat. 354):

"(4) there shall be excluded any gain or loss—

"(A) which is considered as gain or loss from the sale or exchange of a capital asset,

"(B) from the cutting of timber, or the disposal of timber or coal, if section 631 applies to such gain or loss, or

"(C) from the sale, exchange, involuntary conversion, or other disposition of property if such property is neither

(i) stock in trade or other property of a kind which would properly be includible in inventory if on hand at the close of the taxable year, nor

"(ii) property held primarily for sale to customers in the ordinary course of the trade or business;".

SEC. 1402-Continued

(a) (8) (B). (in full)

Aug. 1, 1956, H.R. 7225, P.L. 84-880, § 201 (g), 70 Stat. 841: Amended Sec. 1402(a) (8) (B) (as added by P.L. 83-761, § 201(c) (4)) to read as follows:

"(B) a citizen of the United States performing service described in subsection (c) (4) as an employee of an American employer (as defined in section 3121 (h)) or as a minister in a foreign country who has a congregation which is composed predominantly of citizens of the United States,".

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325 Section 201(m)(2)–(4) of P.L. 84–880 (70 Stat. 843-845) provided as follows: "(2)(A) Except as provided in subparagraph (B), the amendment made by subsection (g) shall apply only with respect to taxable years ending after 1956. "(B) Any individual who, for a taxable year ending after 1954 and prior to 1957, had income which by reason of the amendment made by subsection (g) would have been included within the meaning of 'net earnings from self-employment' (as such term is defined in section 1402(a) of the Internal Revenue Code of 1954), if such income had been derived in a taxable year ending after 1956 by an individual who had filed a waiver certificate under section 1402(e) of such Code, may elect to have the amendment made by subsection (g) apply to his taxable years ending after 1954 and prior to 1957. No election made by any individual under this subparagraph shall be valid unless such individual has filed a waiver certificate under section 1402(e) of such Code prior to the making of such election or files a waiver certificate at the time he makes such election.

"(C) Any individual described in subparagraph (B) who has filed a waiver certificate under section 1402(e) of such Code prior to the date of enactment of this Act, or who files a waiver certificate under such section on or before the due date of his return (including any extension thereof) for his last taxable year ending prior to 1957, must make such election on or before the due date of his return (including any extension thereof) for his last taxable year ending prior to 1957, or before April 16, 1957, whichever is the later.

“(D) Any individual described in subparagraph (B) who has not filed a waiver certificate under section 1402(e) of such Code on or before the due date of his return (including any extension thereof) for his last taxable year ending prior to 1957 must make such election on or before the due date of his return (including any extension thereof) for his first taxable year ending after 1956. Any individual described in this subparagraph whose period for filing a waiver certificate under section 1402(e) of such Code has expired at the time he makes such election may, notwithstanding the provisions of paragraph (2) of such section, file a waiver certificate at the time he makes such election.

"(E) An election under subparagraph (B) shall be made in such manner as the Secretary of the Treasury or his delegate shall prescribe by regulations. Notwithstanding the provisions of paragraph (3) of section 1402(e) of such Code, the waiver certificate filed by an individual who makes an election under subparagraph (B) (regardless of when filed) shall be effective for such individual's first taxable year ending after 1954 in which he had income which by reason of the amendment made by subsection (g) would have been included within the meaning of 'net earnings from selfemployment' (as such term is defined in section 1402(a) of such Code), if such income had been derived in a taxable year ending after 1956 by an individual who had filed a waiver certificate under section 1402(e) of such Code, or for the taxable year prescribed by such paragraph (3) of section 1402(e), if such taxable year is earlier, and for all succeeding taxable years.

"(F) No interest or penalty shall be assessed or collected for failure to file a return within the time prescribed by law, if such failure arises solely by reason of an election made by an individual under subparagraph (B), or for any underpayment of the tax imposed by section 1401 of such Code arising solely by reason of such election, for the period ending with the date such individual makes an election under subparagraph (B).

“(3) Any tax under chapter 2 of the Internal Revenue Code of 1954 which is due, solely by reason of the enactment of subsection (f), or paragraph (2) of subsection (e), of this section, for any taxable year ending on or before the date of the enactment of this Act shall be considered timely paid if payment is made in full on or before the last day of the sixth calendar month following the month in which this Act is enacted. In no event shall interest be imposed on the amount of any tax due under such chapter solely by reason of the enactment of subsection (f), or paragraph (2) of subsection (e), of this section for any period before the day after the date of enactment of this Act.

"(4) Any tax due under chapter 21 of the Internal Revenue Code of 1954 which is due, solely by reason of the enactment of subsection (d) and an effective date prescribed pursuant to paragraph (2) (B) or (2) (C) of section 104 (i), for any calendar quarter beginning prior to the day on which the Secretary of Health, Education, and Welfare approves the plan which prescribes such effective [Footnote 325 continued on following page]

60-448-67- -34

SEC. 1402-Continued

(a) (8) _ _ (in full)

(a) (9)
(added)

Aug. 30, 1957, H.R. 8892, P.L. 85-239, § 5(b), 71 Stat. 523:
Amended Sec. 1402(a) (8) (as added by P.L. 83-761, § 201(c)(4),
and amended by P.L. 84-880, § 201 (g)) to read as follows:

"(8) an individual who is a duly ordained, commissioned, or licensed minister of a church or a member of a religious order shall compute his net earnings from self-employment derived from the performance of service described in subsection (c) (4) without regard to section 107 (relating to rental value of parsonages) and section 119 (relating to meals and lodging furnished for the convenience of the employer) and, in addition, if he is a citizen of the United States performing such service as an employee of an American employer (as defined in section 3121 (h)) or as a minister in a foreign country who has a congregation which is composed predominantly of citizens of the United States, without regard to section 911 (relating to earned income from sources without the United States) and section 931 (relating to income from sources within possessions of the United States)."

Applicability:

The amendments made by this section 326 shall, except for purposes of section 203 of the Social Security Act, apply only with respect to taxable years ending on or after December 31, 1957. For purposes of section 203 of the Social Security Act (other than subsection (a)), such amendments shall apply only with respect to taxable years beginning after the month [August 1957] in which this Act is enacted. For purposes of subsection (a) of such section 203, such amendments shall apply only with respect to taxable years of the insured individual ending on or after December 31, 1957."

(Id., § 5(c), 71 Stat. 524.)

Sept. 13, 1960, H.R. 12580, P.L. 86-778, § 103 (k) (1), 74 Stat. 938: Amended Sec. 1402(a) (relating to definition of "net earnings from self-employment”)—

(1) by striking out the period at the end of paragraph (8) (as added by P.L. 83-761, § 201 (c) (4), and amended by P.L. 85-239, § 5(b)) and inserting in lieu thereof "; and"; and

Footnote 325-Continued

date shall be considered timely paid if payment is made in full on or before the last day of the sixth calendar month following the month in which such plan is approved. In no event shall interest be imposed on the amount of any such tax due under such chapter for any period before the day on which the Secretary of Health, Education, and Welfare approves such plan.'

The plan referred to in paragraph (4) above was approved by the Secretary of Health, Education, and Welfare December 28, 1956. See n. 388 under amendment to Sec. 3121(b) (6) (B) (ii), p. 598 below; also "ANCILLARY PROVISIONS" and notes relating thereto under Sec. 6601, pp. 11151117 below.

326 Section 5(a) of P.L. 85-239 amended paragraph (7) of section 211(a) of the Social Security Act to read as follows:

"(7) An individual who is a duly ordained, commissioned, or licensed minister of a church or a member of a religious order shall compute his net earnings from self-employment derived from the performance of service described in subsection (c) (4) without regard to section 107 (relating to rental value of parsonages) and section 119 (relating to meals and lodging furnished for the convenience of the employer) of the Internal Revenue Code of 1954 and, in addition, if he is a citizen of the United States performing such service as an employee of an American employer (as defined in section 210 (e)) or as a minister in a foreign country who has a congregation which is composed predominantly of citizens of the United States, without regard to section 911 (relating to earned income from sources without the United States) and section 931 (relating to income from sources within possessions of the United States) of such Code."

SEC. 1402-Continued

(a) (9) (added 1960)-Continued

(2) by inserting after such paragraph (8) the following new paragraph (9):

"(9) the term 'possession of the United States' as used in sections 931 (relating to income from sources within possessions of the United States) and 932 (relating to citizens of possessions of the United States) shall be deemed not to include the Virgin Islands, Guam, or American Samoa."

Applicability:

P.L. 86-778, § 103 (v) (1) provided that

"***The amendments made by subsections (g) [amending § 211(a) of the Social Security Act] and (k) [this amendment and the amendment to clauses (v) and (vi) in the last sentence of Sec. 1402(a)] shall apply only in the case of taxable years beginning after 1960, except that, insofar as they involve the nonapplication of section 932 of the Internal Revenue Code of 1954 to the Virgin Islands for purposes of chapter 2 of such Code and section 211 of the Social Security Act, such amendments shall be effective in the case of all taxable years with respect to which such chapter 2 (and corresponding provisions of prior law) and such section 211 are applicable.

(74 Stat. 941-942.)

**9327

See Sec. 931, ANCILLARY PROVISIONS, P.L. 86-778, § 103(g) (1), p. 417 above.

327 The complete text of section 103 (v) (1) of P.L. 86-778 was as follows: "(v)(1) The amendments made by subsection (a) shall apply only with respect to reinterments after the date of the enactment of this Act. The amendments made by subsections (b), (e), and (f) shall apply only with respect to service performed after 1960; except that insofar as the carrying on of a trade or business (other than performance of service as an employee) is concerned, such amendments shall apply only in the case of taxable years beginning after 1960. The amendments made by subsections (d), (i), (o), and (p) shall apply only with respect to service performed after 1960. The amendments made by subsections (h) and (1) shall apply only in the case of taxable years beginning after 1960. The amendments made by subsections (c), (n), (q), and (r) shall apply only with respect to (1) service in the employ of the Government of Guam or any political subdivision thereof, or any instrumentality of any one or more of the foregoing wholly owned thereby, which is performed after 1960 and after the calendar quarter in which the Secretary of the Treasury receives a certification by the Governor of Guam that legislation has been enacted by the Government of Guam expressing its desire to have the insurance system established by title II of the Social Security Act extended to the officers and employees of such Government and such political subdivisions and instrumentalities, and (2) service in the employ of the Government of American Samoa or any political subdivision thereof or any instrumentality of any one or more of the foregoing wholly owned thereby, which is performed after 1960 and after the calendar quarter in which the Secretary of the Treasury receives a certification by the Governor of American Samoa that the Government of American Samoa desires to have the insurance system established by such title II extended to the officers and employees of such Government and such political subdivisions and instrumentalities. The amendments made by subsections (g) and (k) shall apply only in the case of taxable years beginning after 1960, except that, insofar as they involve the nonapplication of section 932 of the Internal Revenue Code of 1954 to the Virgin Islands for purposes of chapter 2 of such Code and section 211 of the Social Security Act, such amendments shall be effective in the case of all taxable years with respect to which such chapter 2 (and corresponding provisions of prior law) and such section 211 are applicable. The amendments made by subsections (j), (s), and (t) shall take effect on the date of the enactment of this Act; and there are authorized to be appropriated such sums as may be necessary for the performance by any officer or employee of functions delegated to him by the Secretary of the Treasury in accordance with the amendment made by such subsection (t)."

The amendments made by section 103 of P.L. 86-778 were as follows:

Subsection (a) amended section 202(i) of the Social Security Act, section 101 (d) of the
Social Security Act Amendments of 1950 and section 5(e) (2) of the Social Security
Act Amendments of 1952.

Subsection (b) amended section 203 (k) of the Social Security Act.
Subsection (c) amended section 210(a) (7) of the Social Security Act.
Subsection (d) amended section 210(a) of the Social Security Act.
Subsection (e) amended section 210(h) of the Social Security Act.

[Footnote 327 continued on following page]

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