If I own a citrus grove and have outsourced all management and maintenance work. What form should I use to report this ?

[CathiM]

How are you paid?  Does the management company give you a percentage or does the income from the grove come directly to you?

[jose37jr]

The grove care co. bills me monthly for mgmt, OH,chemicals, materials, labor, equip use, supplies, etc. After citrus is harvested by them and it is processed and marketed, they charge their fees and I get whatever is left if any. I have used Sch E  in the past, but I don't want to break down all the different expenses since it's their work and not mine (I have no employees). Other then property taxes, govt fees, etc. where can I enter the TOTAL grove care costs amount? I know where to enter the the net citrus sales income (got a Form 1099-PATR). Starting in 2018, the Operator will will be reimbursed for expenses, and I will get 50% of any net income the grove makes. I continue to own the grove--another passive activity.

[CathiM]

So on Schedule F where you are entering the 1099-PATR for 2017, use the line 32 a for Total grove care costs. You can type in the description there.  Use Grove Care Costs or whatever you think sounds best. I hope this answers your question. If not, let me know.

[jose37jr]

Thank you very much. I had used Sch F but I said Sch E.  On line 32a I had written the name of the grove care company and shown the TOTAL grove care cost, but was worried because that's just a miscellaneous costs space. You eliminated that worry.

[CathiM · Accepted solution]

If you materially participate, you should use Schedule F.  If you still receive the sales income, you can enter your income on Line 8, Other income of Schedule F.  Then you can use Line 32 a-f section Other expenses of Part II Schedule F to enter your expenses for management of the grove.

If you did not materially participate, it is a passive activity, You can report it on Schedule E. If you are actually renting or leasing the grove (they pay you for use of the grove), you will probably want to report the income on Schedule E. 

[jose37jr]

share profit if operations make a profit at end of year. Operator is reimbursed for expenses before profit is computed. 

[jose37jr]

Dont participate in it's operation other than pay property taxes. Not receiving  rent. If grove does not make a profit, I get no revenue from it. Operator is reimbursed for his expenses from grove sales. Then we split profit , if any.