Gain on the sale of a business asset and early retirement

[RitaB]

Does gain on the sale of a business asset count toward the earnings limit for someone retiring prior to full retirement age?  I've got a guy about to start drawing SS benefits at age 62.  His net income on Sch C will be under the annual earnings limit, but he will most likely sell depreciated equipment.  I was pretty certain only the Sch C earnings will count.  But, I started thinking that gain from depreciation recapture is Qualified Business Income, so now I'm not so sure.

[Gail in Virginia]

Good question.  If i am not mistaken, SSA will look at the amount reported on the Schedule SE for earnings from self-employment and therefore the recaptured gain/capital gain will not count against what he can earn for social security purposes.  But I am not sure.

[RitaB]

2 hours ago, Gail in Virginia said:

Good question.  If i am not mistaken, SSA will look at the amount reported on the Schedule SE for earnings from self-employment and therefore the recaptured gain/capital gain will not count against what he can earn for social security purposes.  But I am not sure.

Yes, that was my first thought, too, and Sch E income can be Qualified Business Income, and that's not earnings for this purpose, so my second thought may just be a rabbit hole.  I'm so tired.  There was a knock on my door 45 seconds after I got home last night, and it was my butt.

[ILLMAS]

16 hours ago, RitaB said:

Yes, that was my first thought, too, and Sch E income can be Qualified Business Income, and that's not earnings for this purpose, so my second thought may just be a rabbit hole.  I'm so tired.  There was a knock on my door 45 seconds after I got home last night, and it was my butt.

This remind me of a song that came out when I was in high school lol  

[jklcpa]

The asset sales aren't included.

Here is what I found for the SSA's Code of Federal Regulations to determine what is earned income.  Also, keep in mind that in the year of retirement, I believe that only the earned income through the end of the month preceding retirement is counted.  Here's that first link:  https://www.ssa.gov/OP_Home/cfr20/416/416-1110.htm

And here is the link to that same Code of Fed Regs for 404.1080 that is referenced in the first page: https://www.ssa.gov/OP_Home/cfr20/404/404-1080.htm