Federal Farm Rental Income and Expenses
Extracted from PDF file 2018-federal-form-4835.pdf, last modified October 2018
Farm Rental Income and ExpensesForm 4835 Department of the Treasury Internal Revenue Service (99) Farm Rental Income and Expenses OMB No. 1545-0074 2018 (Crop and Livestock Shares (Not Cash) Received by Landowner (or Sub-Lessor)) (Income not subject to self-employment tax) ▶ Attach to Form 1040 or Form 1040NR. ▶ Go to www.irs.gov/Form4835 for the latest information. Attachment Sequence No. 37 Your social security number Name(s) shown on tax return Employer ID number (EIN), if any A Did you actively participate in the operation of this farm during 2018? See instructions Part I 1 2a 3a 4 a b 5 a c 6 7 9 10 11 12 . . Yes No 1 2b 3b 4a 4c 5b 5d 6 7 10 11 Depreciation and section 179 expense deduction not claimed elsewhere . . . . 12 8 9 13 14 15 16 17 18 19a 19b Pension and profit-sharing plans . . . . . . 22 Rent or lease: a Vehicles, machinery, and equipment (see instructions) . . . . b Other (land, animals, etc.) 23 Repairs and maintenance 24 Seeds and plants . . 25 Storage and warehousing 26 Supplies . . . . . 27 Taxes . . . . . . 28 Utilities . . . . . 29 Veterinary, breeding, and medicine . . . 30 Other expenses (specify): a b c d e f g . . . . . . . . . . . ▶ Net farm rental income or (loss). Subtract line 31 from line 7. If the result is income, enter it here and on Schedule E (Form 1040), line 40. If the result is a loss, you must go to line 34. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . Reserved for future use . . . . . . . . . . . . . . . . . . . . . . . If line 32 is a loss, check the box that describes your investment in this activity. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . c . 21 Car and truck expenses (see Schedule F (Form 1040) instructions). Also attach Form 4562 . . Chemicals . . . . . . . Conservation expenses (see instructions) . . . . . . Custom hire (machine work) . 20 Total expenses. Add lines 8 through 30g. See instructions 33 34 . Expenses—Farm Rental Property. Do not include personal or living expenses. Employee benefit programs other than on line 21 (see Schedule F (Form 1040) instructions). . . 14 Feed . . . . . . . . 15 Fertilizers and lime . . . . 16 Freight and trucking . . . 17 Gasoline, fuel, and oil . . . 18 Insurance (other than health) 19 Interest (see instructions): a Mortgage (paid to banks, etc.) b Other . . . . . . . . 20 Labor hired (less employment credits) (see Schedule F (Form 1040) instructions) . . . . 32 . Gross Farm Rental Income—Based on Production. Include amounts converted to cash or the equivalent. 13 31 . Income from production of livestock, produce, grains, and other crops . . . . . . . . Cooperative distributions (Form(s) 1099-PATR) 2a 2b Taxable amount Agricultural program payments (see instructions) 3a 3b Taxable amount Commodity Credit Corporation (CCC) loans (see instructions): CCC loans reported under election . . . . . . . . . . . . . . . . . . . CCC loans forfeited . . . . . . . . 4b 4c Taxable amount Crop insurance proceeds and federal crop disaster payments (see instructions): Amount received in 2018 . . . . . . . 5a 5b Taxable amount If election to defer to 2019 is attached, check here ▶ 5d Amount deferred from 2017 Other income, including federal and state gasoline or fuel tax credit or refund (see instructions) Gross farm rental income. Add amounts in the right column for lines 1 through 6. Enter the total here and on Schedule E (Form 1040), line 42. . . . . . . . . . . . . . . ▶ Part II 8 . You may have to complete Form 8582 to determine your deductible loss, regardless of which box you checked. If you checked box 34b, you must complete Form 6198 before going to Form 8582. In either case, enter the deductible loss here and on Schedule E (Form 1040), line 40. See instructions . . . . . . . . . . . . . . . . . . . . . . . . For Paperwork Reduction Act Notice, see your tax return instructions. Cat. No. 13117W 21 22a 22b 23 24 25 26 27 28 29 30a 30b 30c 30d 30e 30f 30g 31 } 32 33 34a 34b All investment is at risk. Some investment is not at risk. 34c Form 4835 (2018) Page 2 Form 4835 (2018) General Instructions Section references are to the Internal Revenue Code unless otherwise noted. Future developments. For the latest information about developments related to Form 4835 and its instructions, such as legislation enacted after they were published, go to www.irs.gov/Form4835. What’s New Excess farm losses limitation. The excess farm loss rules do not apply in 2018. However, if you had an excess farm loss in 2017, you may be able to deduct it in 2018. See the instructions for line 34 for more information. Business interest expense limitation. For tax years beginning after 2017, your business interest expense deduction may be limited. See Form 8990, Limitation on Business Interest Expense IRC 163(j), and its instructions for more information. Excess business loss limitation. If you have a loss on line 32, you may be subject to a new business loss limitation. See Form 461, Limitation on Business Losses, and its instructions for details on the excess business loss limitation. Purpose of Form If you were the landowner (or sub-lessor) and did not materially participate (for self-employment tax purposes) in the operation or management of the farm, use Form 4835 to report farm rental income based on crops or livestock produced by the tenant. See chapter 12 in Pub. 225, Farmer’s Tax Guide, for the definition of material participation for landlords. Use this form only if the activity was a rental activity for purposes of the passive activity loss limitations. See the Instructions for Form 8582, Passive Activity Loss Limitations, for the definition of “rental activity.” If you have net income on line 32, your tax may be less if you figure it using Schedule J (Form 1040). Do not use Form 4835 if you were a/an: • Tenant—instead use Schedule F (Form 1040) to report farm income and expenses; • Landowner (or sub-lessor) and materially participated in the operation or management of the farm—instead use Schedule F (Form 1040) to report farm income and expenses; • Landowner (or sub-lessor) and received cash rent for pasture or farmland based on a flat charge—instead report as income on Schedule E (Form 1040), Part I; • Estate or trust with rental income and expenses from crop and livestock shares—instead report on Schedule E (Form 1040), Part I; or • Partnership or S corporation with rental income and expenses from crop and livestock shares—instead report on Form 8825. Qualified joint ventures. If you and your spouse each materially participated as the only members of a jointly owned and operated farm rental business, and you filed a joint return for the tax year, you can make an election to be taxed as a qualified joint venture instead of a partnership. This election in most cases will not increase the total tax owed on the joint return, but it does give each of you credit for social security earnings on which retirement benefits are based and for Medicare coverage without filing a partnership return. If you and your spouse make the election and you didn’t materially participate (for self-employment tax purposes) in the operation or management of the farm, but maintained the farm as a rental business, you each can file a separate Form 4835 to report your share of farm rental income based on crops or livestock produced by the tenant. If you and your spouse did materially participate (for self-employment tax purposes) in the operation or management of the farm, you each must file a separate Schedule F (Form 1040). For an explanation of “material participation,” see the instructions for Schedule C (Form 1040), Profit or Loss From Business (Sole Proprietorship), line G. For more information on qualified joint ventures, go to IRS.gov and enter “qualified joint venture” in the search box. Additional information. See the Instructions for Schedule F (Form 1040), Profit or Loss From Farming, and Pub. 225 for more information. Specific Instructions Employer ID number (EIN). You need an EIN only if you had a qualified retirement plan or were required to file an employment, excise, estate, trust, partnership, or alcohol, tobacco, and firearms tax return. If you need an EIN, see the Instructions for Form SS-4. Line A. Generally, you are considered to actively participate if you participated in making management decisions or arranging for others to provide services (such as repairs) in a significant and bona fide sense. Management decisions that are relevant in this context include approving new tenants, deciding on rental terms, approving capital or repair expenditures, and other similar decisions. You do not, however, actively participate if at any time during the year your interest (including your spouse’s interest) in the activity was less than 10% (by value) of all interests in the activity. Part I. Gross Farm Rental Income—Based on Production Line 1. Report income you received from livestock, produce, grains, and other crops based on production. Under both the cash and the accrual methods of accounting, you must report livestock or crop share rentals received in the year you convert them into money or its equivalent. Lines 2a and 2b. Enter on line 2a your total distributions from cooperatives as shown on Form 1099-PATR, Taxable Distributions Received From Cooperatives. On line 2b, report the taxable amount. See the instructions for Schedule F (Form 1040), lines 3a and 3b. Form 4835 (2018) Lines 3a and 3b. Enter on line 3a the total agricultural program payments you received. On line 3b, report the taxable amount. See the instructions for Schedule F (Form 1040), lines 4a and 4b. Lines 4a through 4c. Report the full amount of Commodity Credit Corporation (CCC) loans forfeited, even if you reported the loan proceeds as income. See the instructions for Schedule F (Form 1040), lines 5a through 5c. Lines 5a through 5d. In general, you must report crop insurance proceeds in the year you receive them. Federal crop disaster payments are treated as crop insurance proceeds. However, if you use the cash method of accounting and 2018 was the year of damage, you can elect to include certain proceeds in income for 2019. To do this, check the box on line 5c and attach a statement to your return. See chapter 3 of Pub. 225. Generally, if you elect to defer any eligible crop insurance proceeds, you must defer all such crop insurance proceeds (including federal crop disaster payments). For details on how to complete lines 5a through 5d, see the instructions for Schedule F (Form 1040), lines 6a through 6d. Line 6. Use this line to report income not shown on lines 1 through 5d. See the instructions for Schedule F (Form 1040), line 8. Part II. Expenses—Farm Rental Property Capitalizing costs of producing property and acquiring property for resale. If you produced real or tangible personal property or acquired property for resale, certain expenses may have to be included in inventory costs or capitalized. These expenses include the direct costs of the property and the share of any indirect costs allocable to that property. For details and exceptions, see Capitalizing costs of producing property and acquiring property for resale in the Instructions for Schedule F (Form 1040). How to report. Do not reduce your expenses on lines 8 through 30f by the expenses you must capitalize. Instead, enter the total amount capitalized in parentheses on line 30g. On the line to the left of the line 30g entry space, enter “263A.” Line 10. Expenses you paid or incurred for soil and water conservation, prevention of erosion, or endangered species recovery can be deducted only if they are consistent with a conservation plan approved by the Natural Resources Conservation Service of the Department of Agriculture or a recovery plan approved pursuant to the Endangered Species Act of 1973 for the area in which your land is located. If no plan exists, your expenses must be consistent with a plan of a comparable state agency. Your deduction, however, cannot exceed 25% of your gross income from farming. See the instructions for Schedule F (Form 1040), line 12. Line 12. Enter your depreciation and section 179 expense deduction. For details, including whether you must file Form 4562, Depreciation and Amortization, see chapter 7 of Pub. 225 and the Instructions for Form 4562. Page 3 Lines 19a and 19b. Your interest expense could be limited. See the Instructions for Form 8990 for more information. The tax treatment of interest expense differs depending on its type. For example, home mortgage interest and investment interest are treated differently. You must allocate (classify) your interest expense so it is deducted (or capitalized) on the correct line of your tax return and it gets the right tax treatment. These rules could affect how much interest you are allowed to deduct on Form 4835. See the instructions for Schedule F (Form 1040), lines 21a and 21b. Line 22a. If you rented or leased vehicles, machinery, or equipment, enter on line 22a the business portion of your rental cost. But if you leased a vehicle for a term of 30 days or more, you may have to reduce your deduction by an inclusion amount. See Leasing a Car in Pub. 463, Travel, Entertainment, Gift, and Car Expenses. Lines 30a through 30g. Enter expenses not listed on another line. See the instructions for Schedule F (Form 1040), lines 32a through 32f. If you are required to capitalize expenses, see How to report under Capitalizing costs of producing property and acquiring property for resale on this page. Line 31. If you entered capitalized expenses on line 30g, your total expenses on line 31 will equal the total of lines 8 through 30f reduced by the amount on line 30g. Line 32. If line 31 is more than line 7, don’t enter your loss on line 32. If you have a loss, you must apply the excess business loss rules, the at-risk rules, and the passive activity loss rules. To apply these rules, follow the instructions for line 34, the Instructions for Form 8582, and the Instructions for Form 461. After applying these rules, the amount of your allowable loss may be smaller than the amount figured by subtracting line 31 from line 7. • If line 7 is more than line 31 and you don’t have prior year unallowed passive activity losses from this activity, subtract line 31 from line 7. The result is your net farm rental income. • If line 7 is more than line 31 and you have prior year unallowed passive activity losses from this activity, don’t enter your net farm rental income on line 32 until you have figured the amount of prior year unallowed passive activity losses you may claim this year. Use Form 8582 to figure the amount of prior year unallowed passive activity losses you may include on line 32. If there is a net loss after applying the prior year unallowed loss against the net farm rental income, enter zero on line 32 and enter the net loss on line 34c. Indicate that you are including prior year passive activity losses by entering “PAL” on the dotted line to the left of the entry space for line 32. Note: You may need to include information from Form 4835 on Form 8582 even if you have a net profit. For more information, see the Instructions for Form 8582. Line 34. To determine your deductible loss, you may need to complete Form 8582 and Form 461 regardless of whether you checked box 34a or 34b. However, if you checked box 34b, you must complete Form 6198, At-Risk Limitations, before you complete Form 8582. See the instructions for Schedule F (Form 1040), line 36. Form 4835 (2018) Do not complete Form 8582 if either of the following applies. • You meet all of the conditions listed under Exception for Certain Rental Real Estate Activities in the Instructions for Schedule E (Form 1040). Instead, enter your deductible loss on line 34c and on Schedule E (Form 1040), line 40. Page 4 • You were a real estate professional (as defined in the Instructions for Schedule E (Form 1040)) and you materially participated in the operation of this activity (under the passive loss rules). See the Instructions for Form 8582 for the definition of material participation. Your loss is not subject to the passive activity loss limitations. Instead, enter your deductible loss on line 34c and on Schedule E (Form 1040), line 40. Also, include the loss in the total for Schedule E (Form 1040), line 43.
2018 Form 4835
More about the Federal Form 4835 Other TY 2018
We last updated the Farm Rental Income and Expenses in December 2018, so this is the latest version of Form 4835, fully updated for tax year 2018. You can download or print current or past-year PDFs of Form 4835 directly from TaxFormFinder. You can print other Federal tax forms here.
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