Lee Mizell and Pearlene Mizell - Page 7

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            stated as such, the thrust of petitioners' position is that the                           
            word "arrangement" connotes some form of contractual                                      
            relationship, the terms and conditions of which must be set forth                         
            in a single contract.  Respondent takes the position that the                             
            word "arrangement" should be construed to take into account the                           
            entire understanding between petitioner and his sons (operating                           
            through Mizell Farm) with respect to the farming operations                               
            conducted on the property.  According to respondent, the                                  
            partnership agreement, which petitioner agrees obligates him to                           
            materially participate in the production of agricultural products                         
            on the property, must be considered along with the leases in                              
            establishing the terms of the arrangement.  Respondent further                            
            argues that even if the arrangement is limited to the leases, the                         
            leases provide for the material participation of petitioner as a                          
            partner in Mizell Farm.                                                                   
                  Although nowhere defined in the Internal Revenue Code, the                          
            word "arrangement" appears in more than 90 sections.  Where a                             
            word used in a statute is not specifically defined, we apply the                          
            language's plain, obvious, and rational meaning.  American                                
            Tobacco Co. v. Patterson, 456 U.S. 63, 68 (1982); United States                           
            v. Merriam, 263 U.S. 179, 187-188 (1923).  The word "arrangement"                         
            is defined as an agreement.  Webster's Third New International                            
            Dictionary 120 (1993).  While the concept of an agreement                                 
            certainly includes a contractual agreement, it is a broader                               
            concept that would also include other forms of agreements not                             

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