Court Opinion

ID: 2969348
Source: CourtListenerOpinion
Date Created: 2015-09-22 15:47:06.03685+00
Date Added: 2024-06-11T13:14:50.771374
License: Public Domain

RECOMMENDED FOR FULL-TEXT PUBLICATION
            Pursuant to Sixth Circuit Rule 206
    ELECTRONIC CITATION: 2000 FED App. 0078P (6th Cir.)
                File Name: 00a0078p.06

UNITED STATES COURT OF APPEALS
              FOR THE SIXTH CIRCUIT
                _________________

                              ;
                               
 FREDERICK WUEBKER and
                               
 RUTH WUEBKER,
                               
        Petitioners-Appellees,
                               
                                   No. 98-2287

                               
          v.                    >
                               
                               
                               
 COMMISSIONER OF INTERNAL

      Respondent-Appellant. 
 REVENUE,
                               
                               
                              1
     On Appeal from the United States Tax Court.
                   No. 11472-96
              Argued: December 10, 1999
           Decided and Filed: March 3, 2000
 Before: JONES, COLE, and GILMAN, Circuit Judges.
                  _________________
                       COUNSEL
ARGUED: Robert W. Metzler, U.S. DEPARTMENT OF
JUSTICE, APPELLATE SECTION TAX DIVISION,
Washington, D.C., for Appellant. John Anthony Logan,
Russell N. Cunningham, WRIGHT & LOGAN, Dublin, Ohio,
for Appellees. ON BRIEF: Robert W. Metzler, Teresa E.

                            1
2    Wuebker, et al. v. Commissioner            No. 98-2287     No. 98-2287           Wuebker, et al. v. Commissioner     15

McLaughlin, U.S. DEPARTMENT OF JUSTICE,                         Wuebkers inter alia to seed and fertilize the acreage in
APPELLATE SECTION TAX DIVISION, Washington, D.C.,               accordance with USDA dictates, further constricted the land’s
for Appellant. John Anthony Logan, Russell N. Cunningham,       utility. In my view, the USDA therefore exercised sufficient
Paul L. Wright, WRIGHT & LOGAN, Dublin, Ohio, for               control of the CRP land that it can properly be viewed as
Appellees. Nan M. Still, Larry R. Gearhardt, OHIO FARM          “us[ing]” the land. For this reason, characterization of the
BUREAU FEDERATION, INC., Columbus, Ohio, for                    CRP payment as a “rental[]” payment is entirely consistent
Amicus Curiae.                                                  with ordinary definitions of the term. Accordingly, I
                                                                respectfully DISSENT from Part II.C. of the majority
  GILMAN, J., delivered the opinion of the court, in which      opinion, but join the opinion in all other respects.
COLE, J., joined. JONES, J. (pp. 14-15), delivered a separate
opinion dissenting from Part II.C. of the majority opinion.
                   _________________
                       OPINION
                   _________________
   RONALD LEE GILMAN, Circuit Judge. This dispute
involves the proper tax treatment of payments received by
Frederick and Ruth Wuebker under the United States
Department of Agriculture’s Conservation Reserve Program
(“CRP”), 16 U.S.C. §§ 3801, 3831-36. The Commissioner of
Internal Revenue determined that the amounts received by the
Wuebkers under their CRP contract, less the deductions
attributable thereto, constituted income from the trade or
business of farming that was subject to the self-employment
tax pursuant to § 1401 of the Internal Revenue Code. To the
contrary, the Tax Court agreed with the Wuebkers’ position
that the payments constituted “rentals from real estate” that
are specifically excludible from self-employment income
pursuant to § 1402(a)(1) of the Internal Revenue Code. For
the reasons set forth below, we REVERSE the Tax Court’s
decision.
                   I. BACKGROUND
A. Factual background
  At all times relevant to this case, the Wuebkers resided in
Fort Recovery, Ohio and jointly owned 258.67 acres of land,
much of which was considered highly erodible. After farming
14    Wuebker, et al. v. Commissioner              No. 98-2287      No. 98-2287             Wuebker, et al. v. Commissioner         3

                     ________________                               most of the property for approximately twenty years, they
                                                                    decided to enroll a substantial portion of the land into the
                         DISSENT                                    CRP. The CRP was established pursuant to the Food Security
                     ________________                               Act of 1985, Pub. L. No. 99-198, 99 Stat. 1354 (codified in
                                                                    scattered sections). It authorizes the Department of
  NATHANIEL R. JONES, Circuit Judge, dissenting.                    Agriculture to make payments to those owners and operators
Because I believe that the substantial and wide-ranging             of land who agree to refrain from farming their property in
limitations imposed on the Wuebkers’ use of their land by the       order “to conserve and improve the soil and water resources
CRP signals that the USDA did “use” the land as                     of such lands.” 16 U.S.C. § 3831(a). The Wuebkers agreed
contemplated by ordinary definitions of “rent,” I respectfully      to enroll 214.9 of their acreage into the program because they
DISSENT from Part II.C. of the majority opinion.                    felt that doing so would provide them with a more stable flow
                                                                    of income, benefit their land, and allow them to focus their
   The Internal Revenue Code does not define “rentals from          efforts on their poultry operation.
real estate” for the purposes of § 1402(a)(1), and we therefore
look to ordinary definitions of “rent” to ascertain the statute’s     The Wuebkers executed their CRP contract in November of
meaning. See Smith v. United States, 508 U.S. 223, 228              1991. Frederick Wuebker was listed as the operator of the
(1993) (“When a word is not defined by statute, we normally         land and Ruth Wuebker was listed as the owner. Pursuant to
construe it in accord with its ordinary or natural meaning.”).      the contract, the Department of Agriculture—through the
As the majority notes, “[r]ent normally connotes                    Commodities Credit Corporation (“CCC”) and the
‘[c]onsideration paid for use or occupation of property.” Ante      Agricultural Stabilization and Conservation Service
at 11; see Aujero v. CDA Todco, Inc., 756 F.2d 1374, 1376           (“ASCS”)—promised to pay the Wuebkers a “rental rate per
(9th Cir. 1985) (quoting Black’s Law Dictionary 1166 (5th           acre” of $85 for a period of ten years. Pursuant to the
ed. 1979)); see also Black’s Law Dictionary (Westlaw 1999).         contract, the “annual rental payment” is “based on an
While the USDA did not possess or occupy the Wuebkers’              accepted bid multiplied by the number of determined acres
property in the traditional sense that gives rise to a tenant-      which, subject to the availability of funds, may be paid to a
landlord relationship, see Restatement (Second) of Property         participant to compensate such participant for placing eligible
§ 1.2 (1977) (“A landlord-tenant relationship exists only if the    land in the Conservation Reserve Program.”
landlord transfers the right to possession of the leased
property.”), the CRP certainly placed a number of restrictions        In exchange for that payment, the Wuebkers agreed to,
on the way in which the Wuebkers could use their land.              among other things, (1) implement a conservation plan, (2)
                                                                    establish vegetative cover, (3) “[n]ot engage in or allow
   As the Tax Court found, the Wuebkers were prohibited             grazing, harvesting, or other commercial use of the crop from
from allowing any “grazing, harvesting, or other commercial         the cropland,” (4) “[n]ot harvest or sell, nor otherwise make
use of the crop from the cropland,” see J.A. at 35, and were        commercial use of trees on the CRP land,” (5) “[n]ot produce
required to implement the numerous requirements of the              any agricultural commodity on highly erodible land,”(6)
conservation plan. The USDA also retained a limited right to        “[c]ontrol on [the] land . . . all weeds, insects, pests and other
access the land to ascertain CRP compliance. By prohibiting         undesirable species,” and (7) file annual CRP reports. The
all commercial farming, the USDA greatly reduced the range          contract sets forth certain cost-sharing provisions, pursuant to
of uses to which the Wuebkers could put their property. The         which the CCC reimburses the Wuebkers for specific
sundry dictates of the conservation plan, requiring the             maintenance expenses. Furthermore, in order for an operator
4      Wuebker, et al. v. Commissioner             No. 98-2287    No. 98-2287           Wuebker, et al. v. Commissioner       13

of land to be eligible, the participant is required to “provide   (6th Cir. 1980) (“[C]ourts must look to the substance, rather
satisfactory evidence that such person will be in control of      than the form, of transactions to determine whether payments
such cropland for the full term of the CRP contract period        to a taxpayer constitute capital gain or ordinary income.”);
. . . .” The contract also grants the CCC access to inspect the   Mitchell v. Commissioner, 428 F.2d 259, 263 (6th Cir. 1970)
CRP land:                                                         (“It is a fundamental rule of taxation that form and labels
                                                                  must yield to reality.”). In fact, in setting forth the CRP
    Representatives of CCC shall have the right of access to      payment rules, Congress expressly qualified its use of the
    [the] land subject to this contract and to examine any        term “rental” by providing that “[t]he amounts payable . . . in
    other lands or records under the participant’s control for    the form of rental payments under contracts entered into . . .
    the purpose of determining land classification and            may be determined through . . . the submission of bids . . . or
    erosion rates and for the purpose of determining whether      . . . [through] other means . . . .” 16 U.S.C. § 3834(c)(2)
    there is compliance with the terms and conditions of this     (emphasis added).
    contract.
                                                                    The Tax Court also chose not to follow Ray and Revenue
  With respect to 181.9 of the 214.9 acres, the conservation      Ruling 60-32, asserting that neither decision addressed
plan established by the parties required the Wuebkers to (1)      whether the payments fell within the rental exclusion. A
maintain vegetation throughout the life of the CRP contract,      close reading of those decisions, however, reveals that the
(2) spot mow or chemically treat noxious weeds “at any            both the Tax Court and the IRS were aware of the rentals-
time,” (3) periodically seed and cultivate the land using the     from-real-estate exclusion. In Ray, the Tax Court explicitly
“disc” and “harrow” methods, and (4) lime and fertilize the       noted that the taxpayers had asserted that the exclusion should
land as needed pursuant to ASCS tests. The plan declared          apply: “As to the year 1990, petitioners have conceded all
that the remaining 33.0 acres had adequate existing cover,        respondent’s adjustments to income except respondent’s
requiring only spot mowing and vegetation maintenance. A          determination that petitioners’ receipt of $43,469 of income
revision of the plan in March of 1992, however, required the      in that year constituted income subject to self-employment
Wuebkers to seed the entire 214.9 acres. The Wuebkers             tax, rather than rental income as claimed by petitioners.”
accomplished these tasks by using their existing farming          Ray, 1996 Tax Ct. Memo LEXIS 453, at *1 (emphasis
equipment, and a portion of their costs were reimbursed.          added). Similarly, the IRS in Revenue Ruling 60-32
Most of the work was completed during the first year of the       specifically cites 26 U.S.C. § 1402(a)(1)—the rentals-from-
contract.                                                         real-estate exclusion provision—making it highly unlikely
                                                                  that the exclusion was not considered when the decision was
  In 1992 and 1993, the Wuebkers received $18,190 and             rendered. In sum, we find the Tax Court’s attempt to
$18,267, respectively, under the CRP. On their joint tax          distinguish these prior rulings unpersuasive.
returns for those years, the Wuebkers reported the amounts as
rents on Schedule E, the Supplemental Income Schedule.                               III. CONCLUSION
They did not, however, include the payments in their
computation of self-employment income. As a result of an            For all of the reasons set forth above, we REVERSE the
audit by the IRS, the Commissioner issued a notice of             Tax Court’s decision.
deficiency on March 4, 1996, claiming that the CRP payments
constituted farm income rather than excludible rentals from
real estate, and were therefore subject to the self-employment
12   Wuebker, et al. v. Commissioner              No. 98-2287      No. 98-2287            Wuebker, et al. v. Commissioner         5
347 F.2d at 165. Although it is true that the Department of        tax. The notice assessed additional taxes of $1,685 and
Agriculture is seeking, and receiving, a public benefit by         $1,640 for 1992 and 1993, respectively.
conserving lands enrolled in the CRP, the Wuebkers continue
to maintain control over and free access to their premises.        B. Procedural background
The dissent reasons that, because the government “greatly
reduced the range of uses to which the Wuebkers could put            On June 6, 1996, the Wuebkers filed a timely petition with
their property,” it exercised a level of control akin to “use.”    the Tax Court pursuant to 26 U.S.C. § 6213(a), challenging
We remain unpersuaded, however, that the restrictions              the additional assessments and contending that the CRP
imposed by the Department of Agriculture on a farmer’s use         payments constituted rental income that should be excluded
of his own land somehow translate into “use” by the                from net earnings subject to the self-employment tax.
Department itself.                                                 Although they stipulated to many of the facts involved in the
                                                                   case, the parties presented additional evidence on May 19,
  The essence of the program is to prevent participants from       1997.
farming the property and to require them to perform various
activities in connection with the land, both at the start of the     In an opinion entered on August 27, 1998, the Tax Court
program and continuously throughout the life of the contract,      agreed with the Wuebkers, concluding that because the plain
with the government’s access limited to compliance                 language of the CRP statute, regulations, and contract all
inspections. Given this arrangement, we disagree with the          describe the payments as “rent,” it should be considered as
Tax Court’s determination that the Wuebkers’ maintenance           rental income for tax purposes. The Tax Court also noted that
obligations were legally insignificant.                            the Wuebkers’ service obligations under the CRP contract
                                                                   “were not substantial and were incidental to the primary
  We also note the Wuebkers’ contention that their                 purpose of the contract.” It characterized the payments as
involvement with the CRP land was insufficient to constitute       “compensation for the use restrictions on the land, rather than
“material participation” within the meaning of § 1402(a)(1).       remuneration for the [Wuebkers’] labor.” Finally, the Tax
This contention, however, has no bearing on whether the CRP        Court distinguished the Wuebkers’ case from a prior Tax
payments constituted rentals from real estate. The issue of        Court decision and an earlier revenue ruling holding that
material participation arises only when there is an                payments to farmers under similar conservation plans are, in
arrangement between an owner or tenant and another                 fact, taxable as self-employment income.
individual whereby the other individual is to produce
agricultural or horticultural commodities on the land. No            In this appeal, the Commissioner contends that (1) the
such arrangement is present in this case.                          description of the payments as “rent” in the various CRP
                                                                   provisions does not compel the conclusion that they are, in
  The Tax Court placed great emphasis on the fact that the         substance, rentals from real estate for the purposes of the self-
CRP statute, regulations, and contract refer to the amounts        employment tax, (2) the CRP payments are in fact not “rent”
received by participants in the program as “rental” payments.      because they are not made in exchange for the use or
Although such references favor a conclusion that the               occupancy of land, and (3) the CRP payments are more
payments should be treated as rent for the purposes of             properly characterized as self-employment income because
determining whether they should fall within the rentals-from-      they are made in lieu of farming income.
real-estate exclusion, they certainly do not compel such a
conclusion. See Cline v. Commissioner, 617 F.2d 192, 195
6     Wuebker, et al. v. Commissioner              No. 98-2287      No. 98-2287            Wuebker, et al. v. Commissioner       11

                       II. ANALYSIS                                    “The term ‘net earnings from self-employment’ means the
                                                                    gross income derived by an individual from any trade or
A. Standard of review                                               business carried on by such individual, . . . except that in
                                                                    computing such gross income . . . there shall be excluded
   An order of the Tax Court is “subject to the same review         rentals from real estate . . . together with the deductions
. . . as a similar order of a district court.” 26 U.S.C.            attributable thereto . . . .” 26 U.S.C. § 1402(a) (emphasis
§ 7482(a)(3). Thus, we will sustain the Tax Court’s findings        added). “Rentals from real estate” is not defined by the
of fact unless they are clearly erroneous and we review its         statute and, therefore, the phrase must be interpreted “in
legal conclusions de novo. See Kluener v. Commissioner, 154         accordance with its ordinary or natural meaning.” FDIC v.
F.3d 630, 637 (6th Cir. 1998).                                      Meyer, 510 U.S. 471, 476 (1994). The rentals-from-real-
                                                                    estate exclusion, however, is to be “narrowly construed.”
B. The CRP payments constitute self-employment                      Johnson v. Commissioner, 60 T.C. 829, 833 (1973); see also
   income                                                           Delno v. Celebrezze, 347 F.2d 159, 165 (9th Cir. 1965)
                                                                    (noting with respect to the Social Security Act’s identical
  The decision in this case hinges on whether the CRP               provision that “there is specific evidence that Congress
payments are determined to be farm income or rental income.         intended the rental exclusion to be narrowly restricted to
Although the Wuebkers’ additional tax liability in the range        payments for occupancy only”).
of $1,600 to $1,700 for each tax year might appear to be
relatively small, the implications of this decision loom large.        Rent is defined as “[c]onsideration paid . . . for the use or
The Commissioner in his brief asserts that the Department of        occupancy of property . . . .” BLACK’S LAW DICTIONARY
Agriculture pays approximately $1.8 billion per year to             1299 (7th ed. 1999); see also Aujero v. CDA Todco, Inc., 756
farmers under the CRP. With the self-employment tax                 F.2d 1374, 1376 (9th Cir. 1985) (“Rent normally connotes
currently set at the rate of 15.3%, see 26 U.S.C. § 1401(a),        ‘[c]onsideration paid for use or occupation of property.’”
(b), the cumulative amount of tax dollars at stake—even after       (citation omitted)). Here, the Wuebkers do not—and
giving effect to the relevant caps and deductions—is                cannot—contend that the Department of Agriculture obtained
obviously substantial.                                              the right to “occupy” the land enrolled in the CRP. The
                                                                    government’s access is limited to inspecting the property and
  In order to finance Social Security and Medicare benefits         determining whether the Wuebkers are in compliance with the
for the self-employed and their dependents, the government          contract.
taxes the self-employment income of every individual. See 26
U.S.C. § 1401; Patterson v. Commissioner, 740 F.2d 927, 929            Whether the CRP payments constitute consideration for the
(11th Cir. 1984). “‘[S]elf-employment income’ means the net         “use” of the Wuebkers’ land is a closer question. Citing the
earnings from self-employment derived by an individual              many objectives of the CRP, such as the reduction of soil
. . . .” 26 U.S.C. § 1402(b). “‘[N]et earnings from                 erosion and the protection of the nation’s long-term food
self-employment’ means the gross income derived by an               production capabilities, the Wuebkers assert, and the dissent
individual from any trade or business carried on by such            agrees, that the government is “using” the land in question.
individual, less the deductions allowed by this subtitle . . . .”   We believe, however, that such an argument impermissibly
Id. § 1402(a). Thus, “[t]o be taxable as self-employment            stretches the plain meaning of the term “use,” especially in
income, an individual’s income must be (1) derived, (2) from        light of the narrow construction required of the rentals-from-
a trade or business, (3) carried on by that individual.”            real-estate exclusion. See Johnson, 60 T.C. 833; Delno,
10    Wuebker, et al. v. Commissioner               No. 98-2287       No. 98-2287            Wuebker, et al. v. Commissioner         7

set forth in Part II.C. below, we find that the Tax Court’s           Milligan v. Commissioner, 38 F.3d 1094, 1097 (9th Cir.
disregard of these prior decisions is unwarranted.                    1994).
  In support of their argument, the Wuebkers rely primarily              Despite setting forth the definition of self-employment
on Milligan v. Commissioner, 38 F.3d 1094 (9th Cir. 1994),            income and the general rules for determining whether monies
and Gump v. United States, 86 F.3d 1126 (Fed. Cir. 1996).             received by a taxpayer should be included as such, the Tax
The Milligan court held that termination payments received            Court did not expressly conclude in its opinion whether the
by an insurance agent under a noncompetition agreement did            CRP payments in this case constitute—in the first
not derive from the taxpayer’s business activity of insurance         instance—self-employment income. Although we would
sales because they were not “tied to the quantity or quality of       normally remand for such a preliminary conclusion, a remand
the taxpayer’s prior labor . . . .” Milligan, 38 F.3d at 1098. In     is not necessary where the lower court has implicitly made
Gump, the court followed Milligan and ruled that monthly              such a finding. See Brown v. Baltimore & Ohio R.R. Co., 805
payments received by the taxpayer from his former employer            F.2d 1133, 1141 (4th Cir. 1986) (“The ordinarily preferred
did not derive from his insurance trade because they arose            course . . . is to remand for first instance determination of the
from the cessation of said business. Gump, 86 F.3d at 1128-           issue by the district court. . . . Nevertheless, where . . . the
29.                                                                   issue is narrow and specific, and the implicit determination
                                                                      clear beyond any doubt, we may yet review to avoid the
   Both decisions, however, are factually distinguishable from        expensive alternative of a remand for a practically assured pro
the instant action. First, neither case involves the unique           forma express determination conforming to that one
aspects of the CRP and the maintenance obligations attendant          necessarily implicit in the judgment.”). In proceeding directly
to the program. Second, unlike the situations in Milligan and         to an analysis of whether the CRP payments fell within the
Gump, the Wuebkers continued to engage in their business              rentals-from-real-estate exclusion, the Tax Court implicitly
while they were receiving their CRP payments. Furthermore,            found that, should the exclusion not apply, the payments
although the Wuebkers argue that “the CRP payments were               would be taxable as self-employment income. Based on this
not conditioned upon any farming activity,” their position is         conclusion, and in light of the fact the parties have briefed the
weakened by the fact that they were required to perform tasks         question on appeal, the issue is ripe for review.
that are intrinsic to the farming trade or business (e.g., tilling,
seeding, fertilizing, and weed control) that required the use of        In response to the Commissioner’s appeal, the Wuebkers do
their farming equipment.                                              not assert that the “trade or business” or “carried on”
                                                                      requirements are lacking in this case. Rather, they argue that
C. The CRP payments are not excludible as rentals from                the CRP payments do not constitute self-employment income
   real estate                                                        because they do not “derive” from their farming business.
                                                                      The Commissioner contends, in reply, that a sufficient nexus
  The Tax Court, relying primarily on the language of the             exists between the CRP payments and the Wuebkers’ farming
CRP statute, regulations, and contract, concluded that the            operations. As explained below, we believe that the
CRP payments are not properly considered self-employment              Commissioner’s contention represents the stronger argument.
income because they fall within the rentals-from-real-estate
exclusion. In his appeal, the Commissioner essentially argues           “The term ‘derive’ requires ‘a nexus between the income
that the nature, not the label, of the payments compel an             received and a trade or business that is, or was, actually
opposite conclusion. We agree.                                        carried on.’” Milligan, 38 F.3d at 1098 (quoting Newberry v.
8      Wuebker, et al. v. Commissioner             No. 98-2287   No. 98-2287            Wuebker, et al. v. Commissioner        9

Commissioner, 76 T.C. 441, 444 (1981)). Similarly, the           Id. at *5. In conclusion, the Tax Court stated that “Ray was
income “must arise from some actual (whether present, past,      an active farmer/rancher with respect to additional acreage
or future) income-producing activity of the taxpayer . . . .”    [enrolled in the CRP], and the payments . . . had a direct
Newberry, 76 T.C. 446.                                        nexus to his trade or business.” Id. at *7.
  In Ray v. Commissioner, 72 T.C.M. 780, 1996 Tax            The facts of Ray are almost identical to those in the case
Ct. Memo LEXIS 453 (1996), the Tax Court considered the          before us, and the decision’s reasoning is sound. Like Ray,
nature of CRP payments such as those involved in this case.      the Wuebkers were engaged in the business of farming prior
Connie Ray, the taxpayer, was engaged in the business of         to and during the term of their CRP contract. Their
farming and cattle grazing. He eventually purchased              agreement with the CCC required them to perform several
additional property that had previously been enrolled in the     ongoing tasks with respect to the land enrolled in the CRP,
CRP by the seller. Ray became a party to a new contract with     the very land they already owned and had previously farmed.
the CCC, requiring him to assume obligations similar to those    As the Tax Court concluded in Ray, the CRP payments to the
undertaken by the Wuebkers in this case. During the years in     Wuebkers were “in connection with” and had a “direct nexus
question, Ray and his wife did not report the CRP payments       to” their ongoing trade or business.
as self-employment income. After the IRS assessed a
deficiency, Ray filed a petition challenging the                   Revenue Ruling 60-32, 1960-1 C.B. 23, further supports the
Commissioner’s characterization of the payments. The Tax         above conclusion. Issued in connection with the CRP’s
Court, in holding that the payments constituted self-            predecessor agricultural plan, the Soil Bank Program, 7
employment income, focused on the relationship between the       U.S.C. §§ 1801-37 (repealed 1965), the ruling expressed the
CRP payments and Ray’s farming and ranching business:            IRS’s opinion that “[p]ayments and benefits attributable to the
                                                                 acreage reserve program are includible in determining the
    Petitioner Connie Ray was a farmer and rancher and had       recipient’s net earnings from self-employment if he operates
    apparently been so for some years. He owned and              his farm personally or through agents or employees.”
    operated farmlands in Texas. As an addition to his           Although not binding on this court, a revenue ruling
    holdings, he acquired the CRP tract and, by agreement        constitutes the studied view of the IRS and is “entitled to
    with the CCC, he continued in effect the existing            some deference unless ‘it conflicts with the statute it
    contractual relationship under the CRP program. Under        supposedly interprets or with that statute’s legislative history
    this program, he was required to tend and nourish the        or if it is otherwise unreasonable.’” CenTra, Inc. v. United
    land, fight diseases, and control soil erosion. What he      States, 953 F.2d 1051, 1056 (6th Cir. 1992) (quoting
    could not do is to farm or graze the land. In other words,   Threlkeld v. Commissioner, 848 F.2d 81, 84 (6th Cir. 1988)).
    in return for nurturing and conserving the CRP acreage,      Because the Soil Bank Program was substantially the same as
    but not farming or grazing it, he would and did receive a    the CRP, see Peterson v. Chater, 72 F.3d 675, 677 (8th Cir.
    fee from CCC. Since the CRP acreage was added to his         1995) (“CRP has been called ‘Son of Soil Bank.’”), and
    existing farmland, and since petitioner Connie Ray was       because the judgment expressed in Revenue Ruling 60-32 is
    already in the business of farming and ranching, this was    not an unreasonable interpretation, we find it persuasive.
    a payment to him in connection with his ongoing trade or
    business.                                                      The Tax Court’s decision under review expressly
                                                                 distinguishes Ray and Revenue Ruling 60-32. For the reasons