Lee Mizell and Pearlene Mizell - Page 4

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           farmed the property and produced cotton, rice, and soybeans as                             
           partners in Mizell Farm pursuant to the leases that Mizell Farm                            
           had entered into with petitioner.  Mizell Farm was responsible                             
           for all of the expenses related to raising and harvesting the                              
           crops.  Petitioner derived rental income for each of the years in                          
           issue pursuant to the leases.  The actual amount of the rental                             
           income received was based upon the level of sales of the                                   
           agricultural products by the partnership.  Although petitioner                             
           included in his income the rents received pursuant to the leases,                          
           he did not treat such income as earnings from self-employment.                             
                 As of the date of trial, petitioner had not leased the                               
           property to a non-related entity or person.                                                
                 Section 1401 provides that, in addition to other taxes, a                            
           tax shall be imposed on the self-employment income of every                                
           individual.  Generally, rentals from real estate are excluded                              
           from the computation of net earnings from self-employment.  Sec.                           
           1402(a)(1).  There is an exception to the exclusion, however,                              
           with respect to:                                                                           
                 any income derived by the owner or tenant of land if                                 
                 (A) such income is derived under an arrangement,                                     
                 between the owner or tenant and another individual,                                  
                 which provides that such other individual shall                                      
                 produce agricultural * * * commodities (including                                    
                 livestock * * *) on such land, and that there shall be                               
                 material participation by the owner or tenant * * * in the                           
                 production or the management of the production of such                               
                 agricultural * * * commodities, and (B) there is material                            
                 participation by the owner or tenant * * * with respect to                           

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