20 CFR 404.1027(i)
L performed agricultural services on a ranch for a number of years until her employer's death in September 1966. She and her employer had agreed that her wages would be $500 a year. In payment of her wages, the employer at times purchased a United States Savings Bond, Series E, and gave it to her. A statement signed by the president of the local bank listed 18 United States Savings Bonds, Series E, by number, issue date and registration in L's possession.
A question has been raised whether the United States Savings Bonds received by L from the employer, represent cash remuneration for agricultural labor within the meaning of section 209(h) of the Social Security Act and Regulations No. 4 of the Social Security Administration, section 404.1027(i) (20 CFR 404.1027(i)), and thus creditable as wages for social security benefit purposes.
Section 209(h) of the Social Security Act provides, as pertinent here, that the term "wages" means remuneration paid after 1950 for employment but does not include remuneration paid in any medium other than cash for agricultural labor. Section 404.1027(i) of Regulations No. 4 reads in part as follows: ". . . cash remuneration includes checks and other monetary media of exchange."
The facts show that all the listed bonds were purchased for $375 each and had a face value of $500 each, except four bonds issued in 1966 which were purchased for $75 each and had a face value of $100 each. All but three of the bonds were registered in L's name alone; two of the three were registered in both L's name and that of her employer; the other bond was registered in L's name payable on death to a named beneficiary.
Pursuant to applicable regulations of the Treasury Department (31 CFR 315.7) provision is made for three forms of Federal savings bond registration -- single owner, co-ownership, and beneficiary payable on death of owner. Thus, registration of the bonds in L's name alone made her the single owner of such bonds. Registration of the two bonds in the name of L's employer and herself made them co-owners as the bonds could have been redeemed by either without the consent of the other, but since they were in L's sole possession, only she could in fact have redeemed them. In any event, on the death of her employer, L became sole owner. The bond registered to L, payable on death to a named beneficiary, indicates that she was the owner of the bond with the sole right to redeem it, and that payment would have been made to the named beneficiary only after L's death.
Treasury regulations further provide that payment of a Federal savings bond will be made to the person entitled thereto upon the surrender of the bond with an appropriate request for payment. Such payment will be made without regard to any notice of adverse claims to a bond and no stoppage will be entered against payment in accordance with the registration. A Series E bond will be redeemed for 75 percent of its face value with interest at any time on or after the first day of the second month after the month of issue.
Section 404.1027(i) of Regulations No. 4 cited, supra, defines cash remuneration to include checks and other monetary media of exchange. It is reasonable also to include within this concept United States Savings Bonds which are redeemable in cash in full on request, even though after a specified date.
Having determined that the U.S. Savings Bonds constitute cash remuneration in the instant case, two related questions remain for resolution, (1) bearing in mind that they are not instantly redeemable, what is the date they may first be considered cash remuneration, and (2) taking into consideration the difference between the face value of the bond and its conversion value at any point short of redemption, how is the amount of the wage payment to be figured.
L could not have redeemed any bond until the first day of the second month following the month of issue. Therefore a bond given to her constitutes cash remuneration for agricultural labor only on such first day. Further, only 75 percent of the face value of each bond can be deemed cash remuneration (regardless of any interest paid at redemption) since that was the amount of cash L was able to receive when the bond was first redeemable and consequently became cash remuneration to her.
Accordingly, it is held that United States Savings Bonds, Series E, purchased by L's employer, who registered them in L's name either as single owner, co-owner, or owner with a named beneficiary, and gave sole possession of them to L for services rendered on the employer's ranch, constitute cash remuneration for agricultural labor within the meaning of section 209(h) of the Social Security Act and regulations promulgated thereunder, and are thus creditable as her wages for employment.
 See in this regard 31 C.F.R. 315.35(a) and (b); also, 31 C.F.R. 315.55, 316.60, and 316.65; 316.10(a) and (b) and Appendix Tables.
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