TN 9 (02-98)

RS 01803.002 How to Compute NESE


1. Gross Income

Add the gross earnings from all trades or businesses carried on by the self-employed person, to compute net earnings.

2. Partnership Income

Include his/her distributive share of income from a partnership of which he /she is a general partner.

3. Exclusion

Exclude any types of income so specified by the Act or the Internal Revenue Code (IRC).

4. Business Expenses

Subtract any ordinary and necessary expenses incurred in carrying on the business.

5. Tax Deduction

Multiply the result by .9235 (i.e., 100% - 7.65% = 92.35% or 0.9235) to derive the NESE, beginning with taxable years after 12/31/89.

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RS 01803.002 - How to Compute NESE - 03/17/1998
Batch run: 07/03/2014