Jere J. and Paulette M. Solvie - Page 13

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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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