- 15 - The parties agree that during 1995 petitioners were to, and did, participate materially within the meaning of section 1402(a)(1) in the production by JJ & P Farms, Inc., of agricul- tural commodities by performing petitioners’ farm-related activi- ties with respect to, inter alia, processing hogs through peti- tioners’ 800-head capacity hog barn. They disagree over whether the 1995 claimed rent for that barn was derived under an arrange- ment within the meaning of section 1402(a)(1)(A) and section 1.1402(a)-4(b)(2), Income Tax Regs., between petitioners and JJ & P Farms, Inc., which provided or contemplated, inter alia, that JJ & P Farms, Inc., was to produce agricultural commodities in that barn and that petitioners were to participate materially in the production of such commodities by processing hogs through that barn. It is petitioners’ position that the 1995 claimed rent for petitioners’ 800-head capacity hog barn was not derived under such an arrangement and that consequently such claimed rent, reduced by the deductions attributable to such rent, is not subject to self-employment tax because it does not constitute includible farm rental income under section 1402(a)(1) and the regulations thereunder. In support of their position, petition- ers rely on the opinion of the Court of Appeals for the Eighth Circuit in McNamara v. Commissioner, 236 F.3d 410 (8th Cir. 2000), revg. and remanding Bot v. Commissioner, T.C. Memo. 1999-Page: Previous 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Next
Last modified: May 25, 2011