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payments received by husband-wife farmers from a corporation were
earnings from self-employment subject to the self-employment tax.
In light of all the facts and circumstances, we must decide
whether petitioners received rental income from McNamara Farms
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. * * *
McNamara Farms used the farmland to produce agricultural
commodities such as corn, soybeans, seed corn, sweet corn, and
sugar beets. With respect to whether under the arrangement
petitioners were to materially participate in the farming
operations, we look not only to the obligations imposed upon them
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