Jon W. and Kristi Nelson, et al. - Page 5




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          the partnerships’ income relating thereto and for 2002 a total of           
          35 percent of the partnerships’ income relating thereto.                    
               The parties have stipulated that the above method and                  
          percentages used by WJS-LLP and by WJS-Partnership for allocating           
          and reporting income relating to a particular year’s sugar beet             
          crop between the year of the harvest (65 percent) and the year              
          following the harvest (35 percent) (regardless of the year in               
          which the crops are sold and the proceeds and income are                    
          received) are consistent with the partnerships’ above cash method           
          of accounting and with accounting and tax reporting practices               
          within the sugar beet industry and are recognized and accepted              
          generally by respondent.  See generally sec. 451(d); sec. 1.451-            
          6(a)(1), Income Tax Regs.; Rev. Rul. 74-145, 1974-1 C.B. 113.               
               Each year for Federal income tax purposes WJS-Partnership              
          (and its individual partners) reports income from the harvest and           
          sale of its other farm crops not on the basis of when crops are             
          sold and the proceeds are received, but rather on the basis of              
          similar formulas that defer a percentage of the sales proceeds              
          and income until the following year.                                        
               Under the various formulas used by WJS-Partnership for                 
          reporting in the current year and deferring until the following             
          year a portion of crop proceeds and income, WJS-Partnership                 
          typically defers until the following year over 50 percent of                
          total income relating to all crops grown in the current year.               







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