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FINDINGS OF FACT
Respondent determined deficiencies in petitioners' 1993,
1994, and 1995 Federal income taxes in the amounts of $2,106,
$2,204, and $2,223, respectively.
The sole issue for decision is whether rental payments
received by petitioner Judy Bot (Mrs. Bot) from petitioner
Vincent E. Bot (Mr. Bot) are includable in Mrs. Bot's net
earnings from self-employment under section 1402(a)(1) and thus
subject to self-employment taxes.
Some of the facts have been stipulated and are so found.
Petitioners resided in Minnesota at the time the petition was
filed.
Mr. and Mrs. Bot have farmed for approximately 38 years.
During the taxable years at issue, Mr. Bot operated a 460-acre
crop and livestock farm as a sole proprietorship in Minneota,
Minnesota. Mr. Bot owned 160 acres of the farm. Mr. Bot rented
the remaining 300 acres of the farm, under cash rental agreements
at approximately $90 per acre, from Mrs. Bot and Bruce B. Bot.
During the taxable years at issue, Mr. Bot rented 240 acres of
farmland from Mrs. Bot for $90 per acre for a total of $21,600
per year.
Mrs. Bot owned the farmland in her own name. She inherited
one-eighth of the farmland from her parents, and purchased the
remaining seven-eighth from her siblings sometime about 1974.
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Last modified: May 25, 2011