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does not pass muster given the strict scrutiny applied
to such related-party transactions, and given that
exceptions from self-employment tax under section
1402(a)(1) are narrowly construed.
Bot I, Hennen I, and McNamara I involved taxpayers who,
pursuant to certain agreements or arrangements, were to, and did,
participate materially in the production of agricultural commodi-
ties involved in those respective cases. In Bot I and Hennen I,
the taxpayer-owners of the farmland in question entered into
(1) employment agreements or arrangements with their respective
taxpayer-spouses and (2) rental agreements or arrangements with
those spouses. In McNamara I, the taxpayer-owners of the farm-
land in question entered into (1) an employment agreement or
arrangement with their wholly owned corporation and (2) a rental
agreement or arrangement with that corporation.
In Bot I and Hennen I, the taxpayer-owners of the farmland
in question contended that the respective rental agreements or
arrangements involved in those cases did not require their
material participation in the production of the agricultural
commodities in question. We found that the respective taxpayer-
owners in Bot I and Hennen I played a material role in the
production of such commodities under an agreement or arrangement
with their taxpayer-spouses. We further found in Bot I and
Hennen I that the income received from the rental of the respec-
tive taxpayer-owners’ farmland in question was derived under an
arrangement between the taxpayer-owners of the farmland and their
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