Form 4835 Farm Rental Income and Expenses

Form

4835

Department of the Treasury
Internal Revenue Service (99)

Farm Rental Income and Expenses

OMB No. 1545-0074

2009

(Crop and Livestock Shares (Not Cash) Received by Landowner (or Sub-Lessor))
(Income not subject to self-employment tax)

© Attach

© See

to Form 1040 or Form 1040NR.

Name(s) shown on tax return

Attachment
instructions on back.
Sequence No. 37
Your social security number
Employer ID number (EIN), if any

A

Did you actively participate in the operation of this farm during 2009 (see instructions)? .

Part I
1
2a
3a
4
a
b
5
a
c
6
7

Chemicals . . . . . . .
Conservation expenses (see
instructions) . . . . . .

11
12

Custom hire (machine work) .
Depreciation and section 179
expense deduction not
claimed elsewhere . . . .

13

Employee benefit programs
other than on line 21 (see
Schedule F instructions) . .

Feed . . . . . . . .
Fertilizers and lime . . . .
Freight and trucking . . .
Gasoline, fuel, and oil . . .
Insurance (other than health).
Interest:
a Mortgage (paid to banks, etc.)
b Other . . . . . . . .
20
Labor hired (less employment
credits) (see Schedule F
instructions) . . . . . .

8
9
10
11

12

13
14
15
16
17
18
19a
19b

20

21

Pension and profitsharing plans . .

22
a

Rent or lease:
Vehicles, machinery, and
equipment (see
instructions) . . . .

b
23
24
25
26
27
28
29

Other (land, animals, etc.)
Repairs and maintenance
Seeds and plants . .
Storage and warehousing
Supplies . . . . .
Taxes . . . . . .
Utilities . . . . .
Veterinary, breeding,
and medicine . . .
Other expenses
(specify):

30

c

.

.

Yes

No

1
2b
3b
4a
4c
5b
5d
6
7

.

22a
22b
23
24
25
26
27
28
29

30a
30b
30c
30d
30e
30f
30g
31

. . . . . ©
income, enter it
. . . . .
.

.

.

.

.

You may have to complete Form 8582 to determine your deductible loss, regardless of which
box you checked (see instructions). If you checked box 33b, you must complete Form 6198
before going to Form 8582. In either case, enter the deductible loss here and on Schedule E,
line 40 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

For Paperwork Reduction Act Notice, see instructions on back.

21

a
b
c
d
e
f
g

Total expenses. Add lines 8 through 30g (see instructions) . . . . . .
Net farm rental income or (loss). Subtract line 31 from line 7. If the result is
here and on Schedule E, line 40. If the result is a loss, you must go to line 33
If line 32 is a loss, check the box that describes your investment in this activity
(see instructions) . . . . . . . . . . . . . . . . . . . .

33

.

Expenses—Farm Rental Property. Do not include personal or living expenses.

9
10

31
32

.

Gross Farm Rental Income—Based on Production. Include amounts converted to cash or the equivalent.

Car and truck expenses (see
Schedule F instructions). Also
attach Form 4562 . . . .

14
15
16
17
18
19

.

Income from production of livestock, produce, grains, and other crops . . . . . . . .
2b Taxable amount
2a
Cooperative distributions (Form(s) 1099-PATR)
3b Taxable amount
Agricultural program payments (see instructions) 3a
Commodity Credit Corporation (CCC) loans (see instructions):
CCC loans reported under election . . . . . . . . . . . . . . . . . . .
4c Taxable amount
4b
CCC loans forfeited . . . . . . . .
Crop insurance proceeds and federal crop disaster payments (see instructions):
5b Taxable amount
5a
Amount received in 2009 . . . . . . .
5d Amount deferred from 2008
If election to defer to 2010 is attached, check here ©
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

.

Cat. No. 13117W

%

32
33a
33b

All investment is at risk.
Some investment is not at risk.

33c
Form 4835 (2009)

Page 2

Form 4835 (2009)

General Instructions

activity was less than 10% (by value) of all
interests in the activity.

What’s New

Part I. Gross Farm Rental
Income—Based on Production

Section 179 deduction increased. The dollar
limit to expense certain business assets under
section 179 is $250,000 for 2009. This limit will
be reduced if property placed in service for the
year exceeds $800,000. For more information,
see Pub. 946, How To Depreciate Property.
Special depreciation allowance extended. For
qualifying property placed in service in 2009, you
may be able to take a depreciation deduction
equal to 50% of the adjusted basis. See Pub.
946 for more information.
Deduction for endangered species recovery
expenses. You can choose to deduct expenses
you paid for endangered species recovery, if the
expenses are consistent with a recovery plan
approved pursuant to the Endangered Species
Act of 1973 for the area in which your land is
located. For more information, see chapter 5 in
Pub. 225, Farmer's Tax Guide.

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.
Additional information. See the instructions for
Schedule F 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

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 reporting, 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, lines 5a and 5b, on page F-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, lines 6a and 6b, on
page F-3.
Lines 4a through 4c. Report the full amount of
CCC loans forfeited, even if you reported the
loan proceeds as income. See the instructions
for Schedule F, lines 7a through 7c, on page F-3.
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 2009 was
the year of damage, you can elect to include
certain proceeds in income for 2010. 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,
lines 8a through 8d, on page F-3.
Line 6. Use this line to report income not shown
on lines 1 through 5d. See the instructions for
Schedule F, line 10, that begin on page F-3.

Part II. Expenses—Farm Rental
Property
Capitalizing costs of property. 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 property in
the instructions for Schedule F, on page F-4.
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. See the
instructions for Schedule F, line 14, on page F-5.
Line 12. Enter your depreciation and section 179
expense deduction. For details, including

whether you must file Form 4562, Depreciation
and Amortization, see Pub. 225, chapter 7, 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, lines 23a
and 23b, that begin on page F-5.
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, Gifts, and Car
Expenses.
Lines 30a through 30g. Enter expenses not
listed on another line. See the instructions for
Schedule F, lines 34a through 34f, that begin on
page F-6. If you are required to capitalize
expenses, see How to report under Capitalizing
costs of property in the previous column.
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 33. To determine your deductible loss, you
may need to complete Form 8582. However, if
you checked box 33b, you must complete Form
6198, At-Risk Limitations, before you complete
Form 8582. See the instructions for Schedule F,
line 37, on page F-7.
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 on page E-2.
Instead, enter your deductible loss on line 33c
and on Schedule E, line 40.
● You were a real estate professional (as defined
in the instructions for Schedule E on page E-2)
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 33c and on
Schedule E, line 40. Also, include the loss in the
total for Schedule E, line 43.
Paperwork Reduction Act Notice. We ask for
the information on this form to carry out the
Internal Revenue laws of the United States. You
are required to give us the information. We need
it to ensure that you are complying with these
laws and to allow us to figure and collect the
right amount of tax.
You are not required to provide the information
requested on a form that is subject to the
Paperwork Reduction Act unless the form
displays a valid OMB control number. Books or
records relating to a form or its instructions must
be retained as long as their contents may
become material in the administration of any
Internal Revenue law. Generally, tax returns and
return information are confidential, as required by
Internal Revenue Code section 6103.
The average time and expenses required to
complete and file this form will vary depending
on individual circumstances. For the estimated
averages, see the instructions for your income
tax return.
If you have suggestions for making this form
simpler, we would be happy to hear from you.
See the instructions for your income tax return.