Entire farm is in the Agricultural Reserve Program. We receive an annual CRP Rental of $2945. For this year only, there is an added line Auto CRP-Cost Shares $720. Also we were required to do brush removal which cost $1800 this year. The total on line 14 is $3665. Can I subtract the $720 from that? Can I subtract the $1800 conservation cost (brush removal)? If so where do I subtract it. The farm is not a business or a rental.
Individuals must report all CRP payments on Schedule F, Profit or Loss From Farming, line 4a, Agricultural Program Payments. The amount of “annual rental payments” must be reported on line 4b, Taxable Amount, except to the extent it is for the permanent retirement of cropland base and allotment history (generally reportable on Form 4797, Sales of Business Property). The “annual rental payments” are not rentals from real estate and should not be reported on Form 4835, Farm Rental Income and Expenses, or Schedule E, Supplemental Income and Loss. The cost-sharing payments must be reported on Schedule F line 4b, Taxable Amount, unless they qualify for the cost-sharing exclusion. For more information about this exclusion, see the section titled Cost-Sharing Exclusion (Improvements) in IRS Publication 225, Farmer’s Tax Guide.