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The parties stipulated that Mr. Hennen used the land rented
from Mrs. Hennen in the farming operations to produce
agricultural commodities such as livestock and crops. With
respect to whether under the arrangement Mrs. Hennen was to
materially participate in the farming operations, we look not
only to the obligations imposed upon Mrs. Hennen by the oral
lease, "but to those obligations that existed within the overall
scheme of the farming operations which were to take place" on
Mrs. Hennen's property. Mizell v. Commissioner, T.C. Memo. 1995-
571. (Emphasis supplied.) These include Mrs. Hennen's
obligations as a longstanding participant in the farming business
as well as the "general understanding between * * * [Mr. Hennen
and Mrs. Hennen] with respect to the production of agricultural
products". Id. Viewed in this light, the arrangement between
Mr. and Mrs. Hennen provided, or contemplated, that Mrs. Hennen
materially participate in the production of agricultural
commodities on the farmland.
Mr. Hennen claimed he made all the management decisions. He
acknowledged that he had farmed with his wife for 38 years. Mr.
Hennen candidly stated in the answer to the following question:
Respondent: Q And in fact, she does materially
participate and help out and pull her share.
Mr. Hennen: A If you are familiar with the farm, sir,
that's what makes a farm successful. Everybody carries
their weight.
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