If you merely rent out your land to farmers and do not materially participate in
the labor or management of the farming process yourself, you are considered a
landowner, not a farmer, according to the IRS. Form 4835 is the way for
non-participating farmland owners to report their farm income and expenses.
Most landowners contract with farmers under a
crop-share arrangement, in which "rent" is paid in crops or livestock
produced by the farmer. Form 4835 only recognizes income to a landowner in the
year that these crop or livestock shares are converted to cash.
Line 1 of Form 4835 is where you'd report any
such income you receive from the production of grains, livestock, produce or
other crops.
As with most businesses, any expenses
that can be reasonably attributed to your farm rental business are allowable
expenses. You'll deduct your total expenses from your total farm rental income
to determine your net taxable income, or loss, from the business.This amount appears on line 40 of your
Schedule E.
Ultimately, reporting your net farm rental income is
essentially the same as reporting any type of rental real estate income
on
Schedule
E
, "Supplemental Income and Loss.
To input Form 4835:
- Go
to Business Income and Expenses
- Scroll down to the topic Farm Income and Expenses and
- Choose
Farm Rental Income and Expenses.
- Then
step through the Farm Rental (Form
4835) interview.
