2017 Form 4835 F4835
User Manual: 4835
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Form 4835
Department of the Treasury
Internal Revenue Service (99)
Farm Rental Income and Expenses
(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.
OMB No. 1545-0074
2017
Attachment
Sequence No. 37
Name(s) shown on tax return Your social security number
Employer ID number (EIN), if any
A Did you actively participate in the operation of this farm during 2017? See instructions . . . . . . . Yes No
Part I Gross Farm Rental Income—Based on Production. Include amounts converted to cash or the equivalent.
1 Income from production of livestock, produce, grains, and other crops . . . . . . . . 1
2 a
Cooperative distributions (Form(s) 1099-PATR)
2a 2b
Taxable amount
2b
3 a
Agricultural program payments (see instructions)
3a 3b
Taxable amount
3b
4 Commodity Credit Corporation (CCC) loans (see instructions):
a CCC loans reported under election . . . . . . . . . . . . . . . . . . . 4a
b CCC loans forfeited . . . . . . . . 4b 4c
Taxable amount
4c
5 Crop insurance proceeds and federal crop disaster payments (see instructions):
a Amount received in 2017 . . . . . . . 5a 5b
Taxable amount
5b
cIf election to defer to 2018 is attached, check here ▶5d Amount deferred from 2016 5d
6 Other income, including federal and state gasoline or fuel tax credit or refund (see instructions) 6
7 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. . . . . . . . . . . . . . . ▶7
Part II Expenses—Farm Rental Property. Do not include personal or living expenses.
8
Car and truck expenses (see
Schedule F (Form 1040)
instructions). Also attach Form 4562
8
9 Chemicals. . . . . . . 9
10 Conservation expenses (see
instructions) . . . . . . 10
11 Custom hire (machine work) . 11
12
Depreciation and section 179
expense deduction not
claimed elsewhere . . . . 12
13
Employee benefit programs other
than on line 21 (see Schedule F
(Form 1040) instructions). . .
13
14 Feed ........ 14
15 Fertilizers and lime . . . . 15
16 Freight and trucking . . . 16
17 Gasoline, fuel, and oil . . . 17
18 Insurance (other than health). 18
19 Interest:
a Mortgage (paid to banks, etc.) 19a
b Other........ 19b
20
Labor hired (less employment
credits) (see Schedule F (Form
1040) instructions) . . . . 20
21 Pension and profit-
sharing plans . . . 21
22 Rent or lease:
a
Vehicles, machinery, and
equipment (see
instructions) . . . . 22a
b
Other (land, animals, etc.)
22b
23
Repairs and maintenance
23
24 Seeds and plants . . 24
25
Storage and warehousing
25
26 Supplies . . . . . 26
27 Taxes . . . . . . 27
28 Utilities . . . . . 28
29 Veterinary, breeding,
and medicine . . . 29
30 Other expenses
(specify):
a 30a
b 30b
c 30c
d 30d
e 30e
f 30f
g 30g
31 Total expenses. Add lines 8 through 30g. See instructions . . . . . . . . . . . ▶31
32
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 lines 33 and 34.
See instructions..........................
32
33 Did you receive an applicable subsidy in 2017? See instructions . . . . . . . . . . 33 Yes No
34 If line 32 is a loss, check the box that describes your investment in this activity. See
instructions...........................
}
34a
All investment is at risk.
34b
Some investment is not at risk.
c
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 ........................ 34c
For Paperwork Reduction Act Notice, see your tax return instructions. Cat. No. 13117W Form 4835 (2017)
Form 4835 (2017) Page 2
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.
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 (2017) Page 3
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 2017 was the year of damage, you can
elect to include certain proceeds in income for 2018. 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.
Lines 19a and 19b. 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 farm loss rules, the at-risk rules, and the passive
activity loss rules. To apply these rules, follow the
instructions for lines 33 and 34, and the Instructions for
Form 8582. 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 33. If you received an applicable subsidy and
checked “Yes” on line 33, your farm rental losses may be
reduced or eliminated if your Form 4835 activity is a trade
or business. An applicable subsidy is any CCC loan. See
the instructions for Schedule F (Form 1040), line 35. If the
excess farm loss rules apply, use one of the worksheets
in the Instructions for Schedule F (Form 1040) to
determine if you have an excess farm loss. See the
Instructions for Schedule F (Form 1040) for more details
on how to complete the worksheets.
Form 4835 (2017) Page 4
Line 34. To determine your deductible loss, you may
need to complete Form 8582 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.
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.
• 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.
