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RS 01802: Self-Employment - Trade or Business

Effective Dates: 09/27/1994 - Present

TN 12 (09-90)

A. BACKGROUND

Self-employed individuals report NESE and SEI on their Federal income tax returns. In most instances there is no need to question the existence of the trade or business. The following guidelines are provided to assist in development when required. (See RS 01804.044.)

B. PROCEDURE

The following list of questions provide general guidance in gathering information to determine the existence of a trade or business. Adapt the questions to fit the situation.

  • Has IRS issued a ruling to the individual regarding the existence of a trade or business?

  • What documents has the individual executed? (e.g., SS-4, tax reports or returns, . . . etc.)

  • Why does the individual feel the activities constitute a trade or business?

  • Associating with other individuals? In what capacity? (i.e. partner, helper etc.)

  • What business firms or other organizations did the individual deal with?

  • How was income reported on tax return?

  • Business licenses, permits, registrations?

  • Place of business?

  • Indications of availability to others for transacting business?

  • Member of business or trade association?

  • Other pertinent information?

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RS 01801: Coverage of Self - Employment - General
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RS 018: Coverage of Self-Employment
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RS 01803: Net Earnings from Self-Employment
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