- NEXTRECORD - income from self-employment and therefore subject to the tax thereon. OPINION Section 1401 provides that, in addition to other taxes, a tax shall be imposed on the self-employment income of every individual. Generally, rentals from real estate are excluded from the computation of net earnings from self-employment. Sec. 1402(a)(1). There is an exception to the exclusion, however, with respect 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 * * * commodities * * * 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 * * * commodities, and (B) there is material participation by the owner or tenant * * * with respect to any such * * * commodity. [Sec. 1402(a)(1).] In other words, if the income is derived under an arrangement which provides for the production of agricultural products on the land of the owner or tenant (the owner), and if the arrangement obligates the owner to materially participate in the production or the management of the production of agricultural commodities, and if the owner actually materially participates in the production or the management of the production of agricultural commodities, then the income received by the owner pursuant to the arrangement is considered earnings from self-employment. See sec. 1.1402(a)-4(b)(3)(i), Income Tax Regs. "The term 'production' * * * refers to the physical workPage: Previous 1 2 3 4 5 6 7 8 Next
Last modified: May 25, 2011