- 3 -
years at issue, petitioners owned approximately 470 acres of farm
land which they leased to Fultz Farms. Fultz Farms was involved
in growing crops, such as corn and soybeans, and hog farming.
The corn and grain grown on the farm also provided feed for
livestock. During the years in issue, Mr. Fultz was president of
Fultz Farms, and Eric Fultz, Mr. Fultz’s brother, was vice
president, secretary, and treasurer of Fultz Farms.3 Mr. Fultz
and Eric Fultz were also directors. During 1993, 1994, and 1995,
Mr. Fultz owned 33 percent of Fultz Farms.
2. Minnesota Corn Processors
In approximately 1982, Minnesota Corn Processors (MCP), an
agricultural cooperative, was formed under the laws of the State
of Minnesota, by a group of Minnesota farmers.
MCP’s goal was to collectively provide a corn processing
capability to its members and to realize profits for the members
based upon the increased values of that processed corn. Had MCP
not been created, petitioners and other farmers would have been
limited to selling their corn as raw corn, and the processing
profits would have been realized by others.
MCP’s articles of incorporation authorized it to issue
30,000 shares of common stock at $50 per share and 100,000 shares
of nonvoting preferred stock at $50 per share. The shares of
3Bernard Fultz resigned as vice president of Fultz Farms in
January 1992 and as a director of Fultz Farms sometime between
January 1993 and January 1994.
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