TN 21 (06-11)

A. Introduction to self-employment QCs before 1978

Credit a QC based upon self-employment income (SEI) for any quarter after 1950 through the last quarter of a taxable year (TY) that began before 1978, or the quarter of death, if earlier, that an number holder had been credited with $100 or more SEI.

B. Policy for self-employment QCs before 1978

1. Crediting SE QCs

For a self-employed person to have SEI, his or her net earnings from SE for a TY must have been at least $400. If a self-employed person has $400 or more of SEI for a TY, credit them with four QCs for that year unless a short TY is involved. For possibility of five QCs, see RS 00301.345B. Do not credit SEI to any part of a TY beginning before 1951.

2. Allocation of SE QCs

Although SEI reports are annual, we credit SEI to calendar quarters to determine the QCs. Allocate SEI as follows.

a. Calendar year

We credit SEI equally to each quarter of the calendar year.

b. Fiscal year (FY) or short TY

Where the TY begins on a date other than January 1, or is less than a calendar year, credit SEI equally to the calendar quarter in which the TY ends and to each of the next three or fewer preceding quarters, any part of which is in the TY.

C. Example of crediting SE QCs

1. FY

John Doe, an architect, reports SEI of $10,800 for the FY ending 03/31/1974. Allocate the SEI as follows: 03/1974 - $2,700; 12/1973 - $2,700; 09/1973 - $2,700; 06/1973 - $2,700.

2. Short TY

Jane Doe’s TY began 09/01/1973, and ended at her death 01/03/1974. During that TY, Ms. Doe received $10,900 in SEI. Allocate $3,600 to each of the calendar quarters 03/1974, 12/1973 and 09/1973.