Form 4835, Farm Rental Income and Expenses, is used by landowners or sub-lessors who do not materially participate in the operation or management of a farm to report farm rental income based on crop or livestock shares received from tenants.
The form follows specific IRS rules for reporting Commodity Credit Corporation (CCC) loan transactions as part of gross farm rental income.
Reporting CCC Loans on Form 4835
CCC loan transactions are reported in Part I of Form 4835 as follows:
- Line 4a – CCC loans reported under election:
Report CCC loans if the taxpayer elected to treat the loan proceeds as income in the year received.
- Line 4b – CCC loans forfeited:
Report the full amount of CCC loans forfeited to the government.
- Line 4c – Taxable amount of CCC loans forfeited:
Report the taxable portion of CCC loan forfeitures after applying IRS rules.
Important IRS Rule
- CCC loan amounts reported on Form 4835 are included in determining gross farm rental income.
- Even if CCC loan proceeds were previously reported as income, forfeited CCC loans must still be properly reported according to IRS instructions.
- The taxable portion is determined based on prior reporting elections and IRS commodity loan rules.
Additional Income Reporting on Form 4835
- Agricultural program payments are included in gross farm rental income.
- Other farm-related income (such as fuel tax credits or refunds) is included in “Other income.”
- Total gross farm rental income is calculated on Line 7.
Expenses and Net Income
- Allowable rental expenses (insurance, taxes, repairs, etc.) are deducted in Part II.
- Net farm rental income or loss is calculated by subtracting total expenses from gross income.
- If a loss occurs, passive activity loss rules may apply, and Form 8582 may be required.
Source:
Form 4835 (2025) - Instructions
Disclaimer: Always verify details with the current year’s Federal or State Department of Revenue Forms and Instructions. Tax laws and forms may change annually. For complex situations, consult a CPA or tax attorney.