[Code of Federal Regulations]
[Title 26, Volume 12]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.1402(a)-1]

[Page 10]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.1402(a)-1  Definition of net earnings from self-employment.

    (a) Subject to the special rules set forth in Sec. Sec. 1.1402(a)-3 
to 1.1402(a)-17, inclusive, and to the exclusions set forth in 
Sec. Sec. 1.1402(c)-2 to 1.1402(c)-7, inclusive, the term ``net 
earnings from self-employment'' means:
    (1) The gross income derived by an individual from any trade or 
business carried on by such individual, less the deductions allowed by 
chapter 1 of the Code which are attributable to such trade or business, 
plus
    (2) His distributive share (whether or not distributed), as 
determined under section 704, of the income (or minus the loss), 
described in section 702(a)(9) and as computed under section 703, from 
any trade or business carried on by any partnership of which he is a 
member.
    (b) Gross income derived by an individual from a trade or business 
includes payments received by him from a partnership of which he is a 
member for services rendered to the partnership or for the use of 
capital by the partnership, to the extent the payments are determined 
without regard to the income of the partnership. However, such payments 
received from a partnership not engaged in a trade or business within 
the meaning of section 1402(c) and Sec. 1.1402(c)-1 do not constitute 
gross income derived by an individual from a trade or business. See 
section 707(c) and the regulations thereunder, relating to guaranteed 
payments to a member of a partnership for services or the use of 
capital. See also section 706(a) and the regulations thereunder, 
relating to the taxable year of the partner in which such guaranteed 
payments are to be included in computing taxable income.
    (c) Gross income derived by an individual from a trade or business 
includes gross income received (in the case of an individual reporting 
income on the cash receipts and disbursements method) or accrued (in the 
case of an individual reporting income on the accrual method) in the 
taxable year from a trade or business even though such income may be 
attributable in whole or in part to services rendered or other acts 
performed in a prior taxable year as to which the individual was not 
subject to the tax on self-employment income.

[T.D. 6691, 28 FR 12796, Dec. 3, 1963, as amended by T.D. 7333, 39 FR 
44445, Dec. 24, 1974]