W started a grocery store with her own funds and operated it by herself for about 6 or 7 months. After that, her husband, H, joined her in operating the store. He made no capital contribution. They each shared responsibilities for store operations and management equally. Each freely made use of funds in the business’s bank account for both business and personal purposes. The store was known to the general public as a partnership. Each spouse shared in its profits and losses. They conducted the business in this way for over 25 years. There were never any articles of partnership or a formal written agreement setting forth each of this duties and responsibilities.

H applied for old age social security insurance benefits, alleging the business was a 50/50 partnership for which he should be credited Social Security wages in the amount of one-half of the net earnings from the store.

In determining whether a partnership existed, Social Security looked at the totality of the circumstances, including: the intent of the parties, their conduct, their statements, the testimony of disinterested third parties, their abilities, their capital contributions, the control of the business income and the purposes for which it is used, and any other fact and circumstances tending to throw light on the situation.

Under the circumstances, it was clear that, despite the wife’s initial capital contribution and the lack of a written partnership agreement, it was clear from the course of conduct of the parties over 25 years, that the store was a 50/50 partnership.

Therefore, one-half of the net earnings from the business was creditable to H as Social Security wages.

See Social Security Ruling (SSR) 62-17.

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.