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agricultural land from third parties. Petitioner was the owner
or lessee of 731 acres of cultivated acreage in Lincoln County
(the property) during the years in issue. Prior to the years in
issue, petitioner farmed the property as a sole proprietor
producing cotton, rice, and soybeans, and included the income
from his farming activities in the computation of his net
earnings from self-employment.
In 1986, petitioner formed a partnership (Mizell Farm) with
his three sons. The purpose of Mizell Farm was to conduct
farming operations. Petitioner held a 25-percent ownership
interest in the partnership. The partnership agreement provided
that each of the partners would have an equal voice in the
management and conduct of the partnership business, and required
that each partner devote his full time and attention to the
business. In accordance with the partnership agreement,
petitioner made management decisions, acquired operating capital,
and contributed physical labor to the farming operation during
the years 1988, 1989, and 1990. Petitioner included his
distributive share of the partnership's income in his income on
his Federal income tax returns for each of the years in issue and
treated such income as net earnings from self-employment.
On January 1, 1988, petitioner entered into a series of
agricultural leases (leases) wherein petitioner leased the 731
acres of property to Mizell Farm in return for a one-quarter crop
share. During the years in issue, petitioner and his three sons
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