Form 4835-Farm Rental Income and Expenses

OMB No. 1545-0074 Farm Rental Income and Expenses Form 4835 (Crop and Livestock Shares (Not Cash) Received by Landowner (or Sub-Lessor))2008 (Income not subject to self-employment tax) Department of the TreasuryAttachment Internal Revenue Service (99)Attach to Form 1040 or Form 1040NR.See instructions on back.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 2008 (see instructions)?YesNo Part IGross Farm Rental Income—Based on Production. Include amounts conve rted to cash or the equivalent. 11 Income from production of livestock, produce, grains, and other crops 2a2a Cooperative distributions (Form(s) 1099-PATR) 2b2b Taxable amount3a 3a 3b 3b Agricultural program payments (see instructions) Taxable amount4 Commodity Credit Corporation (CCC) loans (see instructions):a 4a CCC loans reported under election b 4b 4c4c CCC loans forfeited Taxable amount5 Crop insurance proceeds and federal crop disaster payments (see instructions):a 5aAmount received in 2008 5b5b Taxable amountc If election to defer to 2009 is attached, check here5d 5dAmount deferred from 2007 6 6 Other income, including federal and state gasoline or fuel tax credit or refund (see instructions) 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 427 Part IIExpenses—Farm Rental Property. Do not include pe rsonal or living expenses. 8 Car and truck expenses (see21 Pension and profit-sharingSchedule F instructions). Alsoplans21 attach Form 4562 8 22 Rent or lease: 99 Chemicals a Vehicles, machinery,10 Conservation expenses (seeand equipment (seeinstructions)10 instructions) 22a 1111 Custom hire (machine work) b Other (land, animals, etc.)22b 12 Depreciation and section 17923 Repairs and maintenance 23 expense deduction not24 Seeds and plants 24 claimed elsewhere12 25 25 Storage and warehousing 13 Employee benefit programs26 Supplies 26 other than on line 21 (see27 Taxes 27 Schedule F instructions) 13 28 Utilities28 1414 Feed 29 Veterinary, breeding, and15 15 Fertilizers and lime medicine 29 16 16 Freight and trucking 30 Other expenses17 17 Gasoline, fuel, and oil (specify):18 18 Insurance (other than health) 30aa 19 Interest: 30bb a 19a 30c Mortgage (paid to banks, etc.)c b Other 19b 30dd 20 30eLabor hired (less employmente credits) (see Schedule F f 30f instructions)20 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, enterit here and on Schedule E, line 40. If the result is a loss, you must go to line 3332 33 If line 32 is a loss, check the box that describes your investment in this activity 33a All investment is at risk. (see instructions) 33b Some investment is not at risk. c You may have to complete Form 8582 to determine your deductible loss, regardless ofwhich box you checked (see instructions). If you checked box 33b, you must completeForm 6198 before going to Form 8582. In either case, enter the deductible loss here andon Schedule E, line 4033c For Paperwork Reduction Act Notice, see instructions on back. Cat. No. 13117WForm 4835 (2008) Form 4835 (2008) Page 2 General Instructionsnew tenants, deciding on rental terms, approvingwhether you must file Form 4562, Depreciationcapital or repair expenditures, and other similarand Amortization, see Pub. 225, chapter 7, and What’s Newdecisions. You do not, however, activelythe Instructions for Form 4562.participate if at any time during the year your Increased section 179 deduction. The dollarLines 19a and 19b. The tax treatment of interestinterest (including your spouse’s interest) in thelimit to expense certain business assets underexpense differs depending on its type. Foractivity was less than 10% (by value) of allsection 179 has increased to $250,000 for 2008.example, home mortgage interest andinterests in the activity.This limit will be reduced if property placed ininvestment interest are treated differently. You service for the year exceeds $800,000. Also, themust allocate (classify) your interest expense soPart I. Gross Farm Rentalhigher section 179 deduction for certain Gulfit is deducted on the correct line of your taxOpportunity Zone property has been extended.Income—Based on Productionreturn and it gets the right tax treatment. These rules could affect how much interest you areSpecial depreciation allowance. If you Line 1. Report income you received fromallowed to deduct on Form 4835. See thepurchase qualifying property in 2008, you canlivestock, produce, grains, and other crops basedinstructions for Schedule F, lines 23a and 23b,depreciate up to 50% of the adjusted basis. Seeon production. Under both the cash and thethat begin on page F-5.Pub. 946 for more information.accrual methods of reporting, you must report livestock or crop share rentals received in theLine 22a. If you rented or leased vehicles,Kansas disaster area. See Pub. 4492-A,year you convert them into money or itsmachinery, or equipment, enter on line 22a theInformation for Taxpayers Affected by the May 4,equivalent.business portion of your rental cost. But if you2007, Kansas Storms and Tornadoes. leased a vehicle for a term of 30 days or more, Lines 2a and 2b. Enter on line 2a your totalMidwestern disaster areas. See Pub. 4492-B,you may have to reduce your deduction by andistributions from cooperatives as shown onInformation for Affected Taxpayers in theinclusion amount. See Leasing a Car in Form 1099-PATR, Taxable Distributions ReceivedMidwestern Disaster Areas.Pub. 463.From Cooperatives. On line 2b report the taxable Other federally declared disaster areas. Seeamount. See the instructions for Schedule F, linesLines 30a through 30g. Enter expenses notPub. 535 and Pub. 946 for tax relief available for5a and 5b, on page F-3.listed on another line. See the instructions forother federally declared disasters occurring after Schedule F, lines 34a through 34f, that begin onLines 3a and 3b. Enter on line 3a the totalDecember 31, 2007. Also, go topage F-6. If you are required to capitalizeagricultural program payments you received. Onwww.fema.gov/news/disasters.fema for a list ofexpenses, see How to report under Capitalizingline 3b report the taxable amount. See thedesignated counties in federally declaredcosts of property in the previous column.instructions for Schedule F, lines 6a and 6b, ondisaster areas. page F-3.Line 31. If you entered capitalized expenses on line 30g, your total expenses on line 31 willLines 4a through 4c. Report the full amount ofPurpose of Formequal the total of lines 8 through 30f reduced byCCC loans forfeited, even if you reported the loanIf you were the landowner (or sub-lessor) and the amount on line 30g. proceeds as income. See the instructions fordid not materially participate (for Schedule F, lines 7a through 7c, on page F-3.Line 33. To determine your deductible loss, youself-employment tax purposes) in the operation may need to complete Form 8582. However, ifor management of the farm, use Form 4835 toLines 5a through 5d. In general, you must reportyou checked box 33b, you must complete Formreport farm rental income based on crops orcrop insurance proceeds in the year you receive6198, At-Risk Limitations, before you completelivestock produced by the tenant. See chapterthem. Federal crop disaster payments are treatedForm 8582. See the instructions for Schedule F,12 in Pub. 225, Farmer’s Tax Guide, for theas crop insurance proceeds. However, if you useline 37, on page F-7.definition of material participation for landlords.the cash method of accounting and 2008 was the year of damage, you can elect to include certainDo not complete Form 8582 if either of theUse this form only if the activity was a rentalproceeds in income for 2009. To do this, checkfollowing applies.activity for purposes of the passive activity lossthe box on line 5c and attach a statement to your ●limitations. See the Instructions for Form 8582,You meet all of the conditions listed underreturn. See chapter 3 of Pub. 225.Passive Activity Loss Limitations, for theException for Certain Rental Real Estate definition of “rental activity.”Generally, if you elect to defer any eligible cropActivities in the instructions for Schedule E on insurance proceeds, you must defer all such croppage E-2. Instead, enter your deductible loss onIf you have net income on line 32, your tax insurance proceeds (including federal cropline 33c and on Schedule E, line 40.may be less if you figure it using Schedule Jdisaster payments). ● You were a real estate professional (as(Form 1040). For details on how to complete lines 5a throughdefined in the instructions for Schedule E on Do not use Form 4835 if you were a/an:5d, see the instructions for Schedule F, lines 8apage E-2) and you materially participated in the through 8d, on page F-3.operation of this activity (under the passive loss● Tenant—instead use Schedule F (Form 1040) rules). See the Instructions for Form 8582 for theto report farm income and expenses;Line 6. Use this line to report income not showndefinition of material participation. Your loss is on lines 1 through 5d. See the instructions for● Landowner (or sub-lessor) and materiallynot subject to the passive activity lossSchedule F, line 10, that begin on page F-3.participated in the operation or management oflimitations. Instead, enter your deductible loss on the farm—instead use Schedule F (Form 1040) toline 33c and on Schedule E, line 40. Also,report farm income and expenses;Part II. Expenses—Farm Rentalinclude the loss in the total for Schedule E, Propertyline 43.● Landowner (or sub-lessor) and received cashrent for pasture or farmland based on a flat Capitalizing costs of property. If you produced charge—instead report as income on Schedule Ereal or tangible personal property or acquired(Form 1040), Part I;Paperwork Reduction Act Notice. We ask forproperty for resale, certain expenses may have to the information on this form to carry out thebe included in inventory costs or capitalized.● Estate or trust with rental income and expensesInternal Revenue laws of the United States. Youfrom crop and livestock shares—instead reportThese expenses include the direct costs of theare required to give us the information. We needon Schedule E (Form 1040), Part I; orproperty and the share of any indirect costsit to ensure that you are complying with these allocable to that property. For details andlaws and to allow us to figure and collect the● Partnership or S corporation with exceptions, see Capitalizing costs of property inrental income and expenses from crop andright amount of tax.the instructions for Schedule F, on page F-4.livestock shares—instead report on Form 8825. How to report. Do not reduce your expensesYou are not required to provide the Additional information. See the instructions foron lines 8 through 30f by the expenses you mustinformation requested on a form that is subjectSchedule F and Pub. 225 for more information.capitalize. Instead, enter the total amountto the Paperwork Reduction Act unless the form capitalized in parentheses on line 30g. On the linedisplays a valid OMB control number. Books orSpecific Instructionsto the left of the line 30g entry space, enterrecords relating to a form or its instructions must“263A.”be retained as long as their contents may Employer ID number. You need an employer become material in the administration of anyidentification number (EIN) only if you had aLine 10. Expenses you paid or incurred for soilInternal Revenue law. Generally, tax returns andqualified retirement plan or were required to fileand water conservation can be deducted only ifreturn information are confidential, as requiredan employment, excise, estate, trust,they are consistent with a conservation planby Internal Revenue Code section 6103.partnership, or alcohol, tobacco, and firearmsapproved by the Natural Resources Conservation The average time and expenses required totax return. If you need an EIN, see theService of the Department of Agriculture for thecomplete and file this form will vary dependingInstructions for Form SS-4.area in which your land is located. If no planon individual circumstances. For the estimated exists, your expenses must be consistent with aLine A. Generally, you are considered to activelyaverages, see the instructions for your incomesoil conservation plan of a comparable stateparticipate if you participated in makingtax return.agency. See the instructions for Schedule F, linemanagement decisions or arranging for others to 14, on page F-5.provide services (such as repairs) in a significantIf you have suggestions for making this form and bona fide sense. Management decisions thatLine 12. Enter your depreciation and section 179simpler, we would be happy to hear from you.are relevant in this context include approvingexpense deduction. For details, includingSee the instructions for your income tax return.