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farm or acquired on the open market, by hiring an outside grower,
or from pool corn.
Pool corn was corn maintained by MCP and made available for
members to use in order to meet their production and delivery
obligations under the UMAs. A member using pool corn completed a
“pool corn certificate” which required that member to check a box
on the certificate requesting that the obligation be fulfilled
through the pool and to charge the member’s account with an
acquisition fee of 5 cents per bushel or the going charge at that
time for this service. Any check that was sent to Mr. Fultz in
payment for delivered corn would have been offset by whatever
charge he had incurred for the pool corn. The pool corn
certificates were sent directly to Mr. Fultz, not Fultz Farms.
If Fultz Farms fell short of corn to satisfy Mr. Fultz’s
obligation to MCP, on some occasions corn was purchased by Fultz
Farms from a local elevator in lieu of using pool corn.
3. Petitioners’ 1994 and 1995 Tax Years
a. Leases Between Petitioners and the Corporation
In 1991, Mr. Fultz executed a lease agreement with Fultz
Farms. This lease remained effective in 1994 and 1995 and
reflected petitioners as lessors and Fultz Farms as lessee.
The lease 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
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Last modified: May 25, 2011