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employees; assisting with computer bookkeeping; driving trucks;
securing the farmland; and making the business profitable. From
the time Ms. Johnson began farming in 1963, she performed the
following farm-related activities in the production of agricul-
tural commodities: Maintaining the books and preparing monthly
reports for the accountant; preparing payroll; paying employees;
depositing employment taxes; banking; preparing food for employ-
ees; picking up supplies; driving trucks and tractors; hauling
employees from field to field; monitoring the radio and respond-
ing to communications; maintaining the farmyard by mowing lawns;
and other farm help as needed.
In October 1989, petitioners formed G.E. Johnson, Inc., and
each of them owned 50 percent of the stock of that corporation.
At all relevant times, G.E. Johnson, Inc., engaged in the farming
business, specifically the production of cash crops. During each
of the years at issue, G.E. Johnson, Inc., farmed 1,813 acres of
land, 617 acres of which petitioners owned. Third parties owned
the remaining 1,196 acres.
After the formation of G.E. Johnson, Inc., that company
hired Mr. Johnson and Ms. Johnson pursuant to an oral arrangement
(oral employment arrangement)3 under which they were to serve as
its chief executive officer (CEO) and chief financial officer
3During the years at issue, petitioners had no written
employment agreement with G.E. Johnson, Inc.
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