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estate and from personal property leased with the
real estate * * * together with the deductions
attributable thereto * * * except that the preced-
ing provisions of this paragraph shall not apply
to any income derived by the owner or tenant of
land if (A) such income is derived under an ar-
rangement, between the owner or tenant and another
individual, which provides that such other indi-
vidual shall produce agricultural * * * commodi-
ties * * * on such land, and that there shall be
material participation by the owner or tenant
* * * in the production or the management of the
production of such agricultural * * * commodities,
and (B) there is material participation by the
owner or tenant * * * with respect to any such
agricultural * * * commodity;
(The regulations under section 1402(a)(1), and we, refer to the
farm rental income that is included under that section in the
definition of net earnings from self-employment as includible
farm rental income.)
The regulations under section 1402(a)(1) elaborate on the
meaning of includible farm rental income, as follows:
(b) Special rule for “includible farm rental
income”--(1) In general. * * * there shall be included
in determining net earnings from self-employment for
taxable years ending after 1955 any income derived by
an owner or tenant of land, if the following require-
ments are met with respect to such income:
(i) The income is derived under an arrangement
between the owner or tenant of land and another person
which provides that such other person shall produce
agricultural * * * commodities on such land, and that
there shall be material participation by the owner or
tenant in the production or the management of the
production of such agricultural * * * commodities; and
(ii) There is material participation by the owner
or tenant with respect to any such agricultural * * *
commodity.
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