Lee Mizell and Pearlene Mizell - Page 2

                                                - 2 -                                                 
                  Respondent determined deficiencies in petitioners' 1988,                            
            1989, and 1990 Federal income taxes in the amounts of $160,                               
            $3,624, and $3,343, respectively.  After concessions,2 the issue                          
            for decision is whether rental income derived from certain                                
            agricultural leases constitutes net earnings from self-                                   
                                         FINDINGS OF FACT                                             
                  Some of the facts have been stipulated and are so found.                            
            The stipulation of facts and the exhibits attached thereto are                            
            incorporated herein by this reference.  During the years in                               
            issue, petitioners were husband and wife and filed joint Federal                          
            income tax returns.  At the time the petition was filed,                                  
            petitioners resided in Gould, Arkansas.  References to petitioner                         
            are to Lee Mizell.                                                                        
                  Petitioner listed his occupation as "farmer" on his 1988,                           
            1989, and 1990 Federal income tax returns.  He has been engaged                           
            in the production of agricultural commodities as a farmer most of                         
            his adult life.                                                                           
                  Over a period of years, petitioner purchased agricultural                           
            land in Lincoln County, Arkansas.  Specifically, petitioner                               
            purchased 55 acres in 1978, 50 acres in 1979, 500 acres in 1986,                          
            and 35 acres in 1988.  Additionally, petitioner leased                                    

            2Petitioners conceded the correctness of adjustments for                                  
            auto depreciation in the amounts of $10,310, $496, and $298 for                           
            the years 1988, 1989, and 1990, respectively.                                             

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