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After resolution of other issues as a result of Bot v.
Commissioner, 353 F.3d 595 (8th Cir. 2003), affg. 118 T.C. 138
(2002), the sole issue remaining for decision is whether
petitioners are entitled to defer income.
Some of the facts in this case have been stipulated and are
so found. Petitioners resided in Balaton, Minnesota, at the time
they filed their petition.
Section 7491 does not affect the outcome because
petitioners’ liability for the deficiencies is decided on the
preponderance of the evidence.
During taxable years 1994 and 1995, petitioner Keith
Scherbart (petitioner) was a member of Minnesota Corn Processors
(MCP). MCP is an agricultural cooperative organized under the
laws of the State of Minnesota and owned by corn producers for
the purpose of marketing and processing their corn.
Under the Uniform Marketing Agreement, petitioner designated
MCP as petitioner’s agent. Petitioner was obligated to deliver
bushels of corn equal to the number of “Units of Equity
Participation” he held in MCP. MCP required 3 deliveries of raw
corn per year. Members were permitted to fulfill their delivery
obligations through a variety of means, including the use of
MCP’s “pool” corn. “Pool” corn is corn purchased and maintained
by MCP, and at the request of a member is used to fulfill a
specified portion of the member’s delivery obligation. During
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