Dennis O. Fultz and Linda G. Fultz - Page 8

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          3.   Petitioners’ 1993, 1994 and 1995 Tax Years                             
               a.  Leases Between Petitioners and Fultz Farms                         
               For 1993, 1994, and 1995, petitioners both executed separate           
          lease agreements with Fultz Farms.  These leases reflected Mr.              
          Fultz and Mrs. Fultz in their individual capacities as lessors              
          and Fultz Farms as lessee.                                                  
               The leases collectively provided that petitioners would                
          receive rent from Fultz Farms for a house, farm land, and MCP               
          shares.  Because of the parties’ partial settlement, only the MCP           
          shares are relevant to this opinion.  The lease rate on MCP                 
          shares “rented” from petitioners was 50 cents per bushel of corn            
          delivered to MCP.  MCP was not a party to the lease arrangement,            
          and Fultz Farms was neither a shareholder nor a member of MCP.              
          Fultz Farms had no contractual relationship with MCP with respect           
          to the value-added payments.                                                
               In 1993, 1994, and 1995, petitioners received value-added              
          payments from MCP by check.  MCP issued the checks to petitioners           
          either jointly or individually.   When petitioners received the             
          checks for value-added payments from MCP in one or both of their            
          names, they deposited the checks within a day or two, and Mr.               
          Fultz then wrote out personal checks to Fultz Farms for the same            
          amounts.                                                                    









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