II 

109TH CONGRESS 

1ST SESSION S. 896 

To modify the optional method of computing net earnings from selfemployment. 

IN THE SENATE OF THE UNITED STATES 

APRIL 25, 2005 

Mr. FEINGOLD introduced the following bill; which was read twice and 

referred to the Committee on Finance 

A BILL

To modify the optional method of 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. SHORT TITLE. 

4 This Act may be cited as the ‘‘Farmer Tax Fairness 

5 Act of 2005’’. 

6 SEC. 2. MODIFICATION TO OPTIONAL METHOD OF COM7 PUTING NET EARNINGS FROM SELF-EMPLOY8 MENT. 

9 (a) AMENDMENTS TO THE INTERNAL REVENUE

10 CODE OF 1986.— 
2

•S 896 IS

1 (1) IN GENERAL.—The matter following para2 graph (15) of section 1402(a) of the Internal Rev3 enue Code of 1986 is amended— 

4 (A) by striking ‘‘$2,400’’ each place it ap5 pears and inserting ‘‘the upper limit’’, and 

6 (B) by striking ‘‘$1,600’’ each place it ap7 pears and inserting ‘‘the lower limit’’. 

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

9 is amended by adding at the end the following new 

10 subsection: 

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

12 subsection (a)— 

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

14 taxable year is the sum of the amounts required 

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

16 a quarter of coverage in effect with respect to each 

17 calendar quarter ending with or within such taxable 

18 year. 

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

20 taxable year is the amount equal to 150 percent of 

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

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

23 (1) IN GENERAL.—The matter following para24 graph (15) of section 211(a) of the Social Security 

25 Act is amended— 
3

•S 896 IS

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 211 of such Act is 

6 amended by adding at the end the following new 

7 subsection: 

8 ‘‘Upper and Lower Limits 

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

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

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

12 for a quarter of coverage in effect with respect to 

13 each calendar quarter ending with or within such 

14 taxable year. 

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

16 amount equal to 150 percent of the lower limit for 

17 such taxable year.’’. 

18 (3) CONFORMING AMENDMENT.—Section 212 

19 of such Act is amended— 

20 (A) in subsection (b), by striking ‘‘For’’ 

21 and inserting ‘‘Except as provided in subsection 

22 (c), for’’; and 

23 (B) by adding at the end the following new 

24 subsection: 
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•S 896 IS

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

2 monthly earnings, average monthly wage, and quarters of 

3 coverage in the case of any individual who elects the option 

4 described in clause (ii) or (iv) in the matter following sec5 tion 211(a)(15) for any taxable year that does not begin 

6 with or during a particular calendar year and end with 

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

8 individual deemed to be derived during such taxable year 

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

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

11 proportion to the total of such deemed self-employment 

12 income as the sum of the amounts applicable under section 

13 213(d) for the calendar quarters ending with or within 

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

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

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

17 this section shall apply to taxable years beginning after 

18 the date of the enactment of this Act.

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