Richard J. and Phyllis Bot - Page 1

                                           118 T.C. No. 8                                              

                                     UNITED STATES TAX COURT                                           

                       RICHARD J. BOT AND PHYLLIS BOT, Petitioners v.                                  
                        COMMISSIONER OF INTERNAL REVENUE, Respondent                                   

                  Docket No. 14155-98.              Filed February 15, 2002.                           

                  Ps maintained active memberships in an                                               
                  agricultural cooperative, which processed and sold corn                              
                  produced by its members.  As active members, Ps were                                 
                  obligated to produce and deliver corn to the                                         
                  cooperative regularly, and, during 1994 and 1995, they                               
                  met that obligation with corn they acquired from a                                   
                  “pool” maintained by the cooperative.  The cooperative                               
                  processed and sold the corn for Ps’ benefit and paid to                              
                  Ps value-added payments for the corn.  For Federal tax                               
                  purposes, Ps reported the value-added payments they                                  
                  received during 1994 and 1995 as proceeds from the sale                              
                  of capital assets and did not treat the amounts                                      
                  received as self-employment income.                                                  
                        Held: During 1994 and 1995, Ps were engaged in                                 
                  the business of acquiring and selling corn and corn                                  
                  products for a profit.  The value-added payments were                                
                  derived from Ps’ business and must be included in the                                
                  calculation of Ps’ net earnings from self-employment                                 
                  for purposes of determining Ps’ liability for self-                                  
                  employment tax.                                                                      

Page:   1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  Next

Last modified: May 25, 2011