John P. & Teresa Hennen - Page 7

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               Petitioners contend that the oral lease agreement does not              
          require material participation by Mrs. Hennen in the farming                 
          operations.  Petitioners further contend that the rental income              
          that Mrs. Hennen received from Mr. Hennen was rental from real               
          estate, and therefore should be excluded in determining whether              
          Mrs. Hennen had any net earnings from self-employment as that                
          term is used in section 1402(a)(1).                                          
               In light of all the facts and circumstances, we must decide             
          whether Mrs. Hennen received rental income from Mr. Hennen                   
          pursuant to an "arrangement" between the parties to produce                  
          agricultural commodities on the farm within the meaning of                   
          section 1402(a)(1)(A).                                                       
               In Mizell v. Commissioner, T.C. Memo. 1995-571, this Court              
          explained that:                                                              
               The word "arrangement" is defined as an agreement.                      
               Webster's Third New International Dictionary 120 (1993).                
               While the concept of an agreement certainly includes a                  
               contractual agreement, it is a broader concept that would               
               also include other forms of agreements not necessarily                  
               arising from strict contractual relationships.  Consistent              
               with its dictionary definition, in most of the instances                
               where it is used in the Internal Revenue Code, the word                 
               "arrangement" refers to some general relationship or overall            
               understanding between or among parties in connection with a             
               specific activity or situation.  Generally, it is not                   
               limited only to contractual relationships, or used in a way             
               that suggests that its terms and conditions must be included            
               in a single agreement, contractual or otherwise.  Congress              
               obviously recognized a distinction between a contract and               
               the broader concept of an "arrangement", as is evident from             
               those sections of the Internal Revenue Code that make                   
               reference to both.  * * *                                               

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