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b. Petitioners’ Member Activity With MCP
In 1993, petitioners jointly received value-added payments
from MCP of $73,813.10; for 1994 petitioners received total
value-added payments of $50,302.50; for 1995 Mr. Fultz received
value-added payments of $23,652. The record for Mrs. Fultz for
1995 is incomplete, but the amount she received is not disputed
by the parties. The amounts of the value-added payments had no
impact on the amounts petitioners were to receive under the
leases.
c. Petitioners’ Income Tax Returns and Respondent’s
Determinations
Petitioners timely filed their 1993, 1994, and 1995 Federal
income tax returns. With respect to self-employment tax,
petitioners completed and attached to their 1993, 1994, and 1995
Federal income tax returns Section B-Long Schedules SE,
Computation of Self-Employment Tax. Petitioners reported self-
employment tax of $423, $220, and zero for 1993, 1994, and 1995,
respectively.
In the notice of deficiency, respondent determined that
petitioners’ self-employment income from MCP was $49,500,
$53,225, and $72,325 for 1993, 1994, and 1995, respectively.
These amounts do not match the actual value-added payments to
petitioners because respondent made adjustments based on the
amount and timing of the net payments from Fultz Farms to
petitioners per the lease related to the value-added payments
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