A social security claimant and her brother pooled their funds together and purchased a 500 acre farm, which they leased pursuant their an agreement in which their partnership would materially participate in the production and management of the agricultural commodities produced on the farm

The brother had significant farming experience and made almost all the major decisions on producing and marketing the crops and livestock.

Pursuant to the agreement, which the parties followed faithfully, the partnership would receive 70% of the profits from the grain sales and the tenant would receive 30%. The parties split the proceeds from the sale of the hay, 50/50.

The brother would hire special workers to assist in baling the hay and combining the crops.

There was no question that the brother materially participated in the management and operations of the production of agricultural commodities.

Although the sister did not actively participate in the agricultural activities, under the principle of mutual agency, which is a characteristic of partnerships, the income derived from the partnership was creditable as net earnings from self-employment for social security purposes.

Because of this, her social security benefits were higher than they would have been in the absence of the partnership.

See Social Security Ruling (SSR) 65-8.

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.