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:
If you receive a cash payment from a farmer as rental income, the IRS says to enter the income and expenses associated with this income on schedule E. Farm Rental Income (form 4835) will result in the same taxation but is specifically for share crop income and expenses only.
Here's a copy of form 4835 to view, note the heading;
<a rel="nofollow" target="_blank" href="https://www.irs.gov/pub/irs-pdf/f4835.pdf">https://www.irs.gov/pub/irs-pdf/f4835.pdf</a>
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: