- 31 -
inquiry in that case was not whether the taxpayer had entered in
the trade or business of farming, but whether the CRP payments
had a direct nexus to the taxpayer’s existing trade or business
of farming and/or cattle grazing. On this issue, we found that:
Since the CRP acreage was added to his existing
farmland, and since petitioner Connie Ray was already
in the business of farming and ranching, this was a
payment to him in connection with his ongoing trade or
business. [Ray v. Commissioner, supra.8]
The issue in dispute in Ray was obviously different from the
issue originally in dispute in this case. Given the different
issues, and the factual distinctions between the two cases, we
consider Ray to be of limited application here, notwithstanding
respondent's concessions of the deficiencies in reliance upon
that case. Furthermore, we do not consider the position
originally taken by respondent here to be in conflict with the
position taken by the Commissioner in Ray.
On the basis of the facts available to respondent at the
relevant time,9 we find that respondent's position had a
reasonable basis in fact and law. It follows, and we hold, that
8 We went on to hold that the CRP payments in question were
subject to the self-employment tax. Ray v. Commissioner, T.C.
Memo. 1996-436. But see Wuebker v. Commissioner, 110 T.C. ___
(1998).
9 Petitioners' attack on the reasonableness of respondent's
position is undermined by their failure to take full advantage of
the opportunities to meet with IRS officials in order to discuss
respondent’s adjustments and present additional information in
support of the disallowed deductions.
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