Form 4835 - Commodity Credit Corporation (CCC) Loans and Farm Rental Income
Form 4835, titled "Farm Rental Income and Expenses," is used by landowners or sub-lessors who receive rental income based on crops or livestock produced by tenants. This form is specifically designed for reporting farm rental income when the landowner does not materially participate in the farm’s operation or management.
When to Use Form 4835
- Landowners or sub-lessors who do not materially participate in the farm’s operation or management.
- Those receiving rental income based on crop or livestock production (e.g., sharecropping arrangements).
- Not to be used if you are a tenant, materially participated in farm operations, or received flat cash rent — in those cases, use Schedule F (Form 1040) or Schedule E (Form 1040).
Reporting CCC Loan Forfeitures
Commodity Credit Corporation (CCC) loans forfeited must be reported in full on Form 4835, even if the loan proceeds were previously reported as income. This is specified on lines 4a through 4c of the form. For guidance, refer to the instructions for Schedule F (Form 1040), lines 5a through 5c.
Key Reporting Instructions
- Lines 2a and 2b: Report total distributions from cooperatives (as shown on Form 1099-PATR) and the taxable amount. Refer to Schedule F (Form 1040), lines 3a and 3b.
- Lines 3a and 3b: Report total agricultural program payments received and the taxable amount. Refer to Schedule F (Form 1040), lines 4a and 4b.
- Lines 8 through 30f: Enter expenses, but do not reduce them by capitalized expenses. Instead, enter capitalized expenses in parentheses on line 30g and label it “263A.”
- Line 31: Total expenses are calculated by subtracting capitalized expenses (line 30g) from the sum of lines 8 through 30f.
Net Farm Rental Income and Losses
- If gross income (line 7) exceeds total expenses (line 31), the difference is net farm rental income.
- If there are prior year unallowed passive activity losses, use Form 8582 to determine how much can be claimed before entering net income on line 32.
- If a net loss occurs after applying passive activity losses, enter zero on line 32 and report the loss on line 34c, marking “PAL” on the dotted line.
Additional Considerations
- Form 4835 is used only if the activity qualifies as a rental activity under passive activity loss rules (see Form 8582 instructions).
- If you and your spouse jointly own the rental activity and each owns less than 10% of the interest, you may each file a separate Form 4835 to report your share.
- For more information on material participation, refer to Schedule C (Form 1040) instructions, line G.
Source:
About Form 4835 - Farm Rental Income and Expenses
About Form 8582 - Passive Activity Loss Limitations
About Schedule F - Profit or Loss From Farming
About Publication 225 - Farmer’s Tax Guide
Disclaimer: Always verify details with official Federal or State Department of Revenue Forms and Instructions.