Lee Mizell and Pearlene Mizell - Page 9

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                  In examining the arrangement with respect to the production                         
            of agricultural products on petitioner's property, therefore, we                          
            look not only to the obligations imposed upon petitioner by the                           
            leases, but to those obligations that existed within the overall                          
            scheme of the farming operations which were to take place on                              
            petitioner's property.  These include petitioner's obligations as                         
            a partner in Mizell Farm pursuant to the partnership agreement,                           
            as well as the general understanding between petitioner and his                           
            sons with respect to the production of agricultural products on                           
            his property.  Viewed in this manner, the arrangement provided,                           
            or contemplated, that petitioner was to materially participate in                         
            the production of agricultural products on the property.                                  
                  Based upon the record as a whole, we find that petitioner                           
            and his sons understood and contemplated that petitioner was to                           
            "engage to a material degree in the physical work related to the                          
            production of * * * [agricultural] commodities" on his property.                          
            Sec. 1.1402(a)-4(b)(3)(ii), Income Tax Regs.  The partnership                             
            agreement required him to do so, as he concedes, and the leases                           
            in turn contemplated that he, as a member of the partnership,                             
            would materially participate in such production.  We further                              
            find, taking into consideration the leases, the partnership                               
            agreement and the general understanding between the petitioner                            

            including any fixed amount to which the purchaser has a right as                          
            a result of contractual arrangements existing at the time of                              

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