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.
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.