What this line means
Net farm rental income or loss from Form 4835. This line is for landowners who rent farm land to a tenant under an arrangement where the rent is based on a share of the crops or livestock produced by the tenant. You report the income and expenses on Form 4835 and carry the net result here. This is not for standard cash-rent farm leases — those go on Part I of Schedule E as regular rental income.
Does this apply to you?
- You own farm land and rent it to a tenant under a crop-share or livestock-share arrangement
- You received a share of crops or livestock as rent for the use of your farm land
- You do not materially participate in the farming operation (if you do, use Schedule F instead)
- You filed Form 4835 reporting your share of the farm income and related expenses
Easy to overlook
Crop-share rent is not the same as cash rent If a tenant pays you a fixed dollar amount per acre, that is cash rent reported on Part I of Schedule E as regular rental income. Crop-share arrangements — where you receive a percentage of the crop or its sale proceeds — go on Form 4835 and flow to line 39. The distinction determines which form you file and whether the income is subject to self-employment tax. Crop-share landlords who do not materially participate owe no self-employment tax on this income. 1 IRS Schedule E instructions — Line 39
Material participation changes which form you use If you materially participate in the farming operation — making management decisions about crops, schedules, or equipment — you report on Schedule F, not Form 4835. The income then becomes self-employment income subject to SE tax. The IRS looks at seven material participation tests. Landowners who only inspect the property once a year and collect a crop share do not materially participate. 2 IRS Form 4835 instructions — Farm Rental Income and Expenses
Watch out for this
Reporting crop-share income on Schedule F when you do not materially participate in the farming. Schedule F is for farmers who actively farm or materially participate. If the tenant does all the work and you receive a share of the crop as rent, Form 4835 is the correct form. Using Schedule F incorrectly triggers self-employment tax on income that is not subject to it.
Footnotes
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IRS Schedule E (Form 1040) Instructions, Line 39. https://www.irs.gov/instructions/i1040se ↩
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IRS Form 4835 Instructions, Farm Rental Income. https://www.irs.gov/instructions/i4835 ↩