- 23 -
delivering, and selling corn. The facts support a conclusion
that petitioners continued to acquire, market, and sell corn and
corn products either directly to MCP or through MCP as their
agent. Consequently, our decision in Felber simply is not
applicable with respect to whether petitioners carried on a trade
or business during 1994 and 1995 involving MCP. We hold that
petitioners were engaged, during 1994 and 1995, in continuing and
regular efforts to reap a profit from the acquisition, marketing,
and sale of corn and corn products and that those efforts
constituted a trade or business.
II. Income Derived From a Trade or Business
When faced with whether a taxpayer must treat a particular
item of income as net earnings from self-employment, we have
consistently stated that the taxpayer must derive the income in
question from a trade or business carried on by the taxpayer.
Newberry v. Commissioner, 76 T.C. 441, 444 (1981); Ray v.
Commissioner, T.C. Memo. 1996-436. In other words, there must be
a nexus between the trade or business and the income that the
taxpayer has received. Newberry v. Commissioner, supra at 444.
We are satisfied that the value-added payments were derived
from petitioners’ trade or business. Petitioners, either
directly or through the sons as their agents, regularly acquired
and delivered option pool corn to MCP which MCP processed and
then marketed and sold for petitioners. Under the UMAs, MCP was
Page: Previous 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 NextLast modified: May 25, 2011