1134.1 What fishing activities are considered a trade or business?
Services performed after December 31, 1954, by a person on a boat engaged in catching fish or other forms of aquatic life constitute a trade or business if the following conditions are met:
An arrangement exists between the person and the owner or operator of the boat whereby the person does not receive any remuneration other than a share of the catch or a share of the proceeds of the sale of the catch;
The amount of the share depends on the amount of the catch; and
The operating crew of the boat is normally made up of fewer than 10 persons.
If all of the conditions are met, with one exception, the person is self-employed.
1134.2 What exception applies?
The exception applies if:
You received a share of a boat's catch of fish or other aquatic animal life (or a share of the proceeds therefrom) after December 31, 1954, and before October 4, 1976, for services performed on the boat after December 31, 1954; and
The boat's owner or operator reported such share as wages under the Federal Insurance Contributions Act (FICA).
1134.3 What rules apply after 1994?
Services after 1994 constitute a trade or business if you continue to meet all the requirements above and receive certain cash remuneration that:
Does not exceed $100 per trip;
Is contingent on a minimum catch; and
Is paid solely for additional duties (such as mate, engineer, or cook) for which additional cash remuneration is traditional in the industry.
1134.4 How is the size of the crew calculated?
The operating crew of a boat is treated as made up of fewer than 10 individuals if the average size of the operating crew on trips made during the preceding four calendar quarters consisted of fewer than ten individuals.
1134.5 When is the provision effective?
The new provision provided above is effective for payments after December 31, 1994. In addition, the provision applies to a payment made after December 31, 1984, and all years before January 1, 1995, unless the payer subjected the payment to FICA tax.
1134.6 If the conditions are not met, what rules apply?
If all of the conditions with respect to services performed after 1994 are not met, apply common-law rules.