- 7 - 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. * * *Page: Previous 1 2 3 4 5 6 7 8 9 10 Next
Last modified: May 25, 2011