Robert E. and Carloyn S. Holmes - Page 14

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             establish a permanent cover of grass and/or other                        
             vegetation on the land in lieu of cultivating row crops                  
             such as corn.  This is intended to prevent erosion of the                
             soil.  The USDA pays one-half of the expenses incurred in                
             establishing this permanent cover and provides technical                 
             assistance to the owner or operator through the SCS,                     
             conservation districts, U.S. Forest Service, State forestry              
             agencies, and other agencies.                                            
                  On May 5, 1986, petitioner signed a contract placing                
             14.3 acres of the 40-acre parcel in the CRP at an annual                 
             rental rate of $57 per acre.  This agreement was to be                   
             effective until 1996.  A representative of the Commodity                 
             Credit Corp. approved the contract on or about August 5,                 
             1986.                                                                    
                  In 1987, after discussions with Mr. VandenHeede,                    
             Mr. Robinson, and Mr. Douglas Jackson, petitioners'                      
             accountant, regarding the economic feasibility of farming                
             the land, and after obtaining information from the local                 
             Agriculture Stabilization and Conservation Service (ASCS),               
             petitioner hired Mr. Robinson as an independent contractor               
             to till, plant, and harvest row crops on a portion of the                
             120-acre parcel.  Mr. Robinson continued to work for                     








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