John P. & Teresa Hennen - Page 5

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          taxes, Federal Insurance Contribution Act taxes, and Medicare tax            
          for all 3 years.                                                             
               In the notice of deficiency, respondent, inter alia,                    
          determined that the real estate rental payments Mrs. Hennen                  
          received from Mr. Hennen during the taxable years at issue are               
          includable in Mrs. Hennen's net earnings from self-employment                
          under section 1402(a)(1), and thus subject to self-employment                
          tax.  Respondent also allowed petitioners a deduction for one-               
          half of the self-employment taxes imposed for the taxable years              
          at issue.                                                                    
               On the Forms 4797, Sales of Business Property, attached to              
          their returns, Mr. and Mrs. Hennen reported gains of $24,046 from            
          a sale of 78 acres in 1994, and "0" gains from the sale of a                 
          sprayer in 1995.                                                             
               Section 1401 provides that a tax shall be imposed on the                
          self-employment income of every individual.  Generally, rentals              
          from real estate are excluded from the computation of net                    
          earnings from self-employment.  Sec. 1402(a)(1).  However,                   
          section 1402(a)(1) also provides that rentals derived by the                 
          owner or tenant of land are not excluded from the computation of             
          net earnings from self-employment if:                                        
               (A) such income is derived under an arrangement, between the            
               owner or tenant and another individual, which provides that             
               such other individual shall produce agricultural * * *                  

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