Conservation Reserve Program CRP with farm

[dn1984gt]

We had farm that we rented fields out to farmer, thus claimed farm rental. 

2024 we got in the CRP program and had planted in pines.  Maybe should have switched it to farm owner but did not.  Reconsidering if that was mistake as I do not know what differences carry over from year to year or tax implications.  As rental I documented all the costs to plant trees and there is a loss carried forward.

I worried I did it wrong and started to amend the return and in doing so it reports cost sharing differently; but in the end (if I did it correctly) it shows no difference in amount I owe state or fed.  

Any insight to what level it matters and clean way to change it?  Is it worth changing 2024 and will it change what imports to 2025?  Or just update in 2025?

[PatriciaV]

Your CRP activity is a new "business" that should be reported as Farming (Schedule F) and not Farm Rental (Form 4835 / Schedule E). Your best option is to amend your 2024 return and report your CRP activity separately. If it makes no difference in your tax liability, you don't necessarily need to file the amended return. But you should transfer that return to 2025 so the different activities are already set up.

If you have already started your 2025 return, use the information from the amended 2024 return to set up the two separate activities. Be sure to keep good records of both income and expenses for each activity.

See these articles for information on how the two activities differ: 

• What is Form 4835: Farm Rental Income and Expenses
• What is Schedule F: Profit or Loss from Farming

[dn1984gt]

Thank you.

In TT when I got to "other tax  situation/business taxes" there is a menu that references reforestation.  Not sure if that is duplicate of what goes on schedule F costs.  Also hard to see where the part of income listed as cost sharing goes.

[PatriciaV]

Where you report your CRP income depends on the purpose of the planting activity. Reforestation refers to the replanting of trees in areas where forests have been cut down or degraded. This is separate from planting trees on land that has not been previously forested.

Since you already report farm rental income, it's logical to include the CRP income with that activity, especially if the CRP covered most of the costs of planting the trees.

You may wish to consult a forestry expert in your area for more specific guidance.