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The sole issue for decision is whether rental payments
received by petitioner Teresa Hennen (Mrs. Hennen) from
petitioner John P. Hennen (Mr. Hennen) are includable in Mrs.
Hennen's net earnings from self-employment under section
1402(a)(1) and thus subject to self-employment taxes.
FINDINGS OF FACT
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. Hennen have farmed for 38 years since they have
been married. During the taxable years at issue, Mr. Hennen
conducted farming operations in Lyon County, Minnesota. He had a
diversified farm and raised cattle, hogs, corn, soybeans,
alfalfa, and wheat. Mr. Hennen operated the farm as a sole
proprietorship, but he actually farmed with his and Mrs. Hennen's
two sons. The farm was 1100 acres in area. Their house and a
house occupied by a son and his wife were on the farm premises.
Mr. Hennen owned about 320 acres, and Mrs. Hennen owned 200
acres. The other acreage is rented from others. Mr. Hennen
rented the 200 acres of farmland from Mrs. Hennen for $16,000 per
year under an oral agreement. Mr. Hennen paid her $80 an acre,
which is comparable to the amount he paid to others. Mr. Hennen
used the land rented from Mrs. Hennen in the farming operations
to produce agricultural commodities such as livestock and crops.
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