A social security claimant attained age 65 in December 1957 and applied for benefits in January 1968. The question was whether or not he had enough quarters of coverage to qualify for benefits.

During the years 1955 through 1957, claimant was engaged in commodities trading as an odd-lot trader on the Chicago Board of Trade.

An odd-lot trader in commodities is one who trades in less than the standard “round” number of units of a commodity, such as 5,000 bushels of corn. As an odd-lot trader, claimant would buy commodities at 1/8 of a cent per bushel less than, and sell at 1/8 of a cent per bushel higher than, the current market price.

The sale or exchange of capital assets is not considered covered wages or earnings from self employment for social security purposes.

However, claimant had set up a family corporation through which he funneled his profits and losses from commodities trading. This corporation’s sole asset was the claimant’s ability to trade on the commodities exchange. It’s address was listed as claimant’s personal address and it had no phone number listed.

Claimant claimed that he had received creditable wages from the company for the years 1955-1957. However, social security held that the corporation was a mere shell, or a sham, that was formed solely for the purpose of attempting to qualify otherwise excluded profits as social security wages or earnings.

The Seventh Circuit Court of Appeals upheld this decision. Unlike a manufacturing company, such as a producer of corn-based products that buys and sells commodities as an integral part of its business in order to hedge against price increases of its primary raw material, claimant bought and sold commodities purely for investment and/or speculative purposes. The formation of a corporate shell did not transform the non-creditable profits from this enterprise into creditable social security wages.

See Brunenkant v. Ribicoff, 310 F.2d 355 (7th Cir. 1962). See also Social Security Ruling SSR 63-36c.

This material should not be construed as legal advice for any particular fact situation, but is intended for general informational purposes only. For advice specific to any individual situation, an experienced attorney should be contacted.