An individual, R, was born in September 1893 and applied for social security retirement benefits in October 1958. In order to qualify, he needed 15 quarters of covered earnings. He alleged that he had earnings from 1955 through 1958 in the form of real estate loans.

R would lend money to people, secured by real estate. He did not make active efforts to solicit new business but would receive referrals from friends, realtors, and attorney. He would interview the borrowers to inform himself of their employment and inspect the property which would secure the loans.

The question was whether or not R was carrying on a trade or business within the meaningful of the Social Security Act.

While R did indeed make the loans for a profit motive, it appeared from all the facts and circumstances that he made the loans as an investment in order to earn a higher interest rate on his capital, rather than as a business or occupation. There were many months in which he did not make any loans at all, and there were some years he only made one or two loans. As such, it could not be said that R’s activities were regular or continuous enough to constitute an occupation or calling.

Because the loan interest was not considered net earnings from social employment, R did not have enough quarters of coverage to qualify for social security benefits.

See Social Security Ruling (SSR) 64-10.

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.