Ralph E. Frahm & Erika C. Frahm - Page 2




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          162(a)1 certain amounts in excess of those conceded by respondent           
          for “Employee benefit programs” that petitioners claimed in                 
          Schedule F, Profit or Loss From Farming (Schedule F), included as           
          part of petitioners’ tax return for each of those years.  We hold           
          that they are.                                                              
                                  FINDINGS OF FACT                                    
               All of the facts in this case, which the parties submitted             
          under Rule 122, have been stipulated by the parties and are so              
          found except as stated below.                                               
               Petitioners resided in Newton, Iowa, at the time they filed            
          the petition in this case.                                                  
               At all relevant times, petitioner Ralph E. Frahm (Mr. Frahm)           
          owned and operated a grain and livestock farm (farming business)            
          in Newton, Iowa.                                                            
               During 2000, 2001, and 2002, the years at issue, Mr. Frahm             
          had one employee in his farming business, viz., his spouse                  
          petitioner Erika Frahm (Ms. Frahm).  During those years, Ms.                
          Frahm performed field jobs, cared for livestock, assisted with              
          machinery repairs, maintained bookkeeping records, and performed            
          certain other tasks that were usual and customary to Mr. Frahm’s            
          farming business.  During each of the years 2000, 2001, and 2002,           
          Mr. Frahm paid Ms. Frahm annual wages of $3,000 for those ser-              


               1All section references are to the Internal Revenue Code in            
          effect for the years at issue.  All Rule references are to the              
          Tax Court Rules of Practice and Procedure.                                  





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