I 

108TH CONGRESS 

1ST SESSION H. R. 2747

To amend the Internal Revenue Code of 1986 to update the optional methods 

for computing net earnings from self-employment. 

IN THE HOUSE OF REPRESENTATIVES 

JULY 15, 2003

Mr. LEWIS of Kentucky introduced the following bill; which was referred to 

the Committee on Ways and Means 

A BILL

To amend the Internal Revenue Code of 1986 to update 

the optional methods for computing net earnings from 

self-employment.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. MODIFICATION TO OPTIONAL METHOD OF 

4 COMPUTING NET EARNINGS FROM SELF-EM5 PLOYMENT. 

6 (a) AMENDMENTS TO THE INTERNAL REVENUE

7 CODE OF 1986.—

8 (1) IN GENERAL.—The matter following para9 graph (15) of section 1402(a) of the Internal Rev10 enue Code of 1986 is amended—
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1 (A) by striking ‘‘$2,400’’ each place it ap2 pears and inserting ‘‘the upper limit’’, and 

3 (B) by striking ‘‘$1,600’’ each place it ap4 pears and inserting ‘‘the lower limit’’. 

5 (2) DEFINITIONS.—Section 1402 of such Code 

6 is amended by adding at the end the following new 

7 subsection: 

8 ‘‘(l) UPPER AND LOWER LIMITS.—For purposes of 

9 subsection (a)—

10 ‘‘(1) LOWER LIMIT.—The lower limit for any 

11 taxable year is the sum of the amounts required 

12 under section 213(d) of the Social Security Act for 

13 a quarter of coverage in effect with respect to each 

14 calendar quarter ending with or within such taxable 

15 year. 

16 ‘‘(2) UPPER LIMIT.—The upper limit for any 

17 taxable year is the amount equal to 150 percent of 

18 the lower limit for such taxable year.’’. 

19 (b) AMENDMENTS TO THE SOCIAL SECURITY ACT.—

20 (1) IN GENERAL.—The matter following para21 graph (15) of section 211(a) of the Social Security 

22 Act is amended—

23 (A) by striking ‘‘$2,400’’ each place it ap24 pears and inserting ‘‘the upper limit’’, and 
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1 (B) by striking ‘‘$1,600’’ each place it ap2 pears and inserting ‘‘the lower limit’’. 

3 (2) DEFINITIONS.—Section 211 of such Act is 

4 amended by adding at the end the following new 

5 subsection: 

6 ‘‘Upper and Lower Limits 

7 ‘‘(k) For purposes of subsection (a)—

8 ‘‘(1) The lower limit for any taxable year is the 

9 sum of the amounts required under section 213(d) 

10 for a quarter of coverage in effect with respect to 

11 each calendar quarter ending with or within such 

12 taxable year. 

13 ‘‘(2) The upper limit for any taxable year is the 

14 amount equal to 150 percent of the lower limit for 

15 such taxable year.’’. 

16 (3) CONFORMING AMENDMENT.—Section 212 

17 of such Act is amended—

18 (i) in subsection (b), by striking 

19 ‘‘For’’ and inserting ‘‘Except as provided 

20 in subsection (c), for’’; and 

21 (ii) by adding at the end the following 

22 new subsection: 

23 ‘‘(c) For the purpose of determining average indexed 

24 monthly earnings, average monthly wage, and quarters of 

25 coverage in the case of any individual who elects the option 
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1 described in clause (ii) or (iv) in the matter following sec2 tion 211(a)(15) for any taxable year that does not begin 

3 with or during a particular calendar year and end with 

4 or during such year, the self-employment income of such 

5 individual deemed to be derived during such taxable year 

6 shall be allocated to the two calendar years, portions of 

7 which are included within such taxable year, in the same 

8 proportion to the total of such deemed self-employment 

9 income as the sum of the amounts applicable under section 

10 213(d) for the calendar quarters ending with or within 

11 each such calendar year bears to the lower limit for such 

12 taxable year specified in section 211(k)(1).’’. 

13 (c) EFFECTIVE DATE.—The amendments made by 

14 this section shall apply to taxable years beginning after 

15 December 31, 2002.

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