Date: 06/04/99 Primary Author: D. Scott Beane, CPA

Question:
Are Self Employment Taxes (Social Security Taxes) Assessable on Executors, Trustees, or Directors Fees?

Answer:

1. With regard to Executor or Trustee fees, the determination as to whether or not they are subject to employment taxes rests with whether or not the level of activity rises to that of a "trade or business." In general, non-professional executors and trustees are not subject to self employment taxes. Recurring fees might be considered to be earned income and thus subject to social security taxes. We recommend that non-professional, but recurring, fees be spaced out over time so as not to become a trade or business.

Also refer to Rev. Rul. 58-5 and Rev. Rul 72-86.

2. Directors fees are generally subject to self employment taxes. Refer to Rev Rul 72-86.

For additional research materials refer to IRC Section 1402 and Reg. 1.1402(a)-1.

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