share of such gross income (after such gross in-
come has been so reduced), or
‘‘(B) if the member’s distributive share of
the gross income of the partnership derived
from such trade or business (after such gross
income has been reduced by the sum of all pay-
ments to which section 707(c) applies) is more
than the upper limit for the taxable year and
the member’s distributive share (whether or not
distributed) of income described in section
702(a)(8) derived from such trade or business
(computed under this subsection without regard
to this sentence) is less than the lower limit for
the taxable year, the member’s distributive
share of income described in section 702(a)(8)
derived from such trade or business may, at the
member’s option, be deemed to be the lower
limit for the taxable year.
‘‘(3) UPPER
AND
LOWER
LIMITS.—For pur-
poses of this subsection—
‘‘(A) LOWER LIMIT.—The lower limit for
any taxable year is the sum of the amounts re-
quired under section 213(d) of the Social Secu-
rity Act for a quarter of coverage in effect with
respect to each calendar quarter ending with or
within such taxable year.
‘‘(B) UPPER LIMIT.—The upper limit for
any taxable year is the amount equal to 150
percent of the lower limit for such taxable year.
‘‘(4) DETERMINATION OF GROSS INCOME.—For
purposes of this subsection, the term ‘gross income’
means—
‘‘(A) in the case of any trade or business
in which the income is computed under a cash
receipts and disbursements method, the gross
receipts from such trade or business reduced by
the cost or other basis of property which was
purchased and sold in carrying on such trade or
business, adjusted (after such reduction) in ac-
cordance with the provisions of paragraphs (1)
through (7) and paragraph (9) of subsection
(a), and
‘‘(B) in the case of any trade or business
in which the income is computed under an ac-
crual method, the gross income from such trade
or business, adjusted in accordance with the
provisions of paragraphs (1) through (7) and
paragraph (9) of subsection (a).
‘‘(5) INCOME DERIVED FROM MORE THAN ONE
TRADE OR BUSINESS.—For purposes of this sub-
section, if an individual (including a member of a
partnership) derives gross income from more than
one such trade or business, such gross income (in-
cluding his distributive share of the gross income of
any partnership derived from any such trade or
business) shall be deemed to have been derived from
one trade or business.
‘‘(6) ELECTION.—The option under this sub-
section shall be allowed for any taxable year only if
elected on the first return filed for such taxable
year’’.
(2) 
CONFORMING
AMENDMENT.—Section
1402(a) of such Code is amended by striking all that
follows the first sentence following paragraph (15)
and inserting ‘‘For optional method of determining
net earnings from self-employment, see subsection
(h).’’.
(b) AMENDMENTS TO THE SOCIAL SECURITY ACT.—
(1) IN GENERAL.—Section 211(g) of the Social
Security Act (42 U.S.C. 411(g)) is amended to read
as follows:
‘‘Optional Method for Computing Net Earnings From
Self-Employment
‘‘(g)(1) In the case of any trade or business which
is carried on by an individual—
‘‘(A) if the gross income derived by the indi-
vidual from such trade or business is not more than
the upper limit for the taxable year and the net
earnings from self-employment derived by the indi-
vidual from such trade or business (computed under
subsection (a) without regard to this sentence) are
less than 662⁄3 percent of such gross income, the net
earnings from self-employment derived by the indi-
vidual from such trade or business may, at the indi-
vidual’s option, be deemed to be 662⁄3 percent of
such gross income, or
‘‘(B) if the gross income derived by the indi-
vidual from such trade or business is more than the
upper limit for the taxable year and the net earnings
from self-employment derived by the individual from
such trade or business (computed under subsection
(a) without regard to this sentence) are less than the
lower limit for the taxable year, the net earnings
from self-employment derived by the individual from
such trade or business may, at the individual’s op-