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FINDINGS OF FACT
Some facts are stipulated and are so found. The stipulation
of facts, with accompanying exhibits, is incorporated herein by
this reference. At the time they filed the petition, petitioners
resided in Onslow, Iowa.
For many years prior to the years at issue, petitioners
engaged in farming operations in Jones County, Iowa. In 1993,
petitioners incorporated their farming operations by transferring
their farming equipment, grain, and livestock to two subchapter C
corporations: Welter Seed & Honey Co. and Land of Milk & Honey
Farms, Inc. (the corporations). Petitioners retained ownership
of their farmland and leased it to the corporations for use in
the corporations’ farming operations. Petitioners also received
a modest salary from the corporations.
During the years at issue, each of the corporations
maintained its own books and records, had its own bank account,
and filed Federal income tax returns. One of the corporations,
Land of Milk & Honey Farms, Inc., is listed as the “producer”
and the “operator” on Government forms relating to Federal
agricultural subsidy programs for each of those years.
Prior to the incorporation of petitioners’ farming
operations, petitioner Herman Welter (Mr. Welter) engaged in
commodities trading activities through several brokerage
accounts. Mr. Welter continued to engage in such activities
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Last modified: May 25, 2011