- 6 -
position that the arrangement with respect to the production of
agricultural products did not provide for material participation
by petitioner, and therefore, the rental income cannot be
considered self-employment income. Respondent disagrees and
argues that the arrangement did provide for petitioner's material
participation.
There apparently is no dispute between the parties that
petitioner's conduct in connection with the production of
agricultural products on his property constituted material
participation within the meaning of the statute and regulations.
There is also apparently no dispute that as a result of the
partnership agreement and the general understanding with his
sons, petitioner was obligated and expected to "materially
participate" in the production of agricultural products on his
property. It seems that the dispute between the parties focuses
upon the construction of the word "arrangement" as used in
section 1402(a)(1) and the corresponding regulations, and further
upon the extent of the obligations imposed upon petitioner
pursuant to the leases.
Petitioners argue that the leases provide the exclusive
basis for determining the terms of the arrangement regarding the
production of agricultural products on petitioner's property.
Petitioners further argue that the leases impose no obligation on
petitioner to materially participate in the production of
agricultural products on the property. Although not expressly
Page: Previous 1 2 3 4 5 6 7 8 9 10 Next
Last modified: May 25, 2011