T applied for old-age insurance benefits and in computing such benefits it became necessary to determine the amount of remuneration he received for services performed within the United States in 1961.
T was a citizen of the United States and was an employee of the International Bank for Reconstruction and Development from March 1, 1961, to June 12, 1961. This organization qualified as an international organization entitled to enjoy privileges, exemptions, and immunities as an international organization under the International Organizations Immunities Act. T served as a consulting engineer for the Bank's Mission to Kuwait which necessitated that a portion of his services be performed outside the United States. T left the United States on March 14, 1961, and returned to the United States on April 29, 1961. His compensation for the services he performed for the Bank both within and without the United States was $6,120, no part of which was specifically identifiable as being for services performed either within or without the United States. All expenses in connection with T's services for the Bank were incurred and paid by the Bank.
Section 210(a)(15) of the Social Security Act excludes from employment covered by the Act:
Section 211(a) of the Act provides that the term "net earnings from self-employment" means the gross income, as computed under subtitle A of the Internal Revenue Code of 1954, derived by an individual from any trade or business carried on by such individual, less the deductions allowed under the subtitle which are attributable to such trade or business. Implicit within this meaning is that an expense incurred in carrying on the trade or business is deductible from gross income by the individual who incurs the liability for payment of the expense.
Section 211(c) of the Act provides, in effect and as pertinent to this case, that the term "trade or business" shall not include the performance of service by an individual as an employee other than service described in section 210(a)(15) performed in the United States by a citizen of the United States. This exception to the exclusion operates to afford social security coverage to service performed in the United States by a citizen of the United States as an employee of an international organization. Such service, though performed in an employment relationship, is treated as if it were performed in the conduct of a trade or business, and the remuneration therefor is considered as being earnings from self-employment.
The remuneration which T received for the services he performed in the United States for the Bank is creditable under the law cited above as earnings from self-employment. The remuneration he received for the services he performed outside the United States is not creditable for social security benefit purposes. It is necessary, therefore, to determine what part of the $6,120 which T received from the Bank is allocable to the services he performed in the United States.
Since it cannot be determined what part of T's remuneration was specifically for services performed in the United States, his remuneration will be allocated on a time basis, i.e., his total pay of $6,120 will be multiplied by a fraction, the denominator of which is the total number of days T was in payment status as an employee of the Bank during the year, and the numerator of which is the number of days T was in the United States while he was in payment status as an employee of the Bank during the year. Time spent by T in travelling from and to the United States is considered as not being time spent in employment within the United States. The day of departure from and the day of arrival in the United States is considered as time spent in employment within the United States.
T was employed by the Bank from March 1, 1961, to June 12, 1961, a total of 104 days. He left the United States on March 14, 1961, and returned on April 29, 1961. He was thus within the United States 14 days in March, 2 in April, 31 in May, and 12 in June, a total of 59 days. Multiplying T's total pay from the Bank, $6,120, by the fraction of 59 over 104 results in $3,471.92. The expenses in connection with T's services for the Bank were incurred and paid by the Bank. Thus, no deduction is allowable for such expenses in computing T's earnings from self-employment. Accordingly, it is held that $3,471.92 is includible in computing T's net earnings from self-employment for 1961.
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