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decisions regarding these farming procedures on his own without
consulting Dean Foods.
Petitioner owned and maintained almost all of the equipment
that he needed in order to produce the beet crops.
Petitioner paid for the beet seeds, fertilizer, and
herbicide. Dean Foods did not reimburse petitioner for these
expenses.
3. Petitioners' Federal Income Tax Returns
Petitioner received a document from Dean Foods styled
"Notice to Growers" which stated:
All payment under Dean Foods raw product contracts are
for leased land. * * * Payments are considered rental
income and as such are reportable to the Internal
Revenue Service on Form 1099 in year of payment.
In 1991, 1992, and 1993, Dean Foods mailed to petitioner
Forms 1099-MISC reporting "rental income" thereon in the amounts
of $12,423.67, $11,208.78, and $13,609.66, respectively. On
their Federal income tax returns for those years, petitioners
reported such income from the company as rental income not
subject to self-employment tax.
Initially, we note that there is no dispute between the
parties regarding the taxability of the "rental" receipts from
Dean Foods to petitioners in 1991, 1992, or 1993 as ordinary
income. Petitioners so reported the amounts on their 1991, 1992,
and 1993 returns. Rather, the dispute is whether such income is
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