Form 4835 is used to report farm rental income and expenses when a landowner or sub-lessor receives crop or livestock shares from a tenant farmer and does not materially participate in the farming operation. The form is used for production-based rental arrangements (sharecropping) rather than cash rent. It is attached to Form 1040, 1040-SR, or 1040-NR and is generally not subject to self-employment tax.
Part I: Gross Farm Rental Income — Based on Production
Line 1: Report income received as shares of crops, livestock, or other agricultural products from a tenant farmer. Include the fair market value of property received or amounts converted to cash or its equivalent.
Line 2a: Enter total distributions from agricultural cooperatives as shown on Form 1099-PATR.
Line 2b:Enter the taxable portion of cooperative distributions.
Line 3a:Enter total agricultural program payments received (e.g., USDA farm program payments related to rental activity).
Line 3b:Enter the taxable portion of agricultural program payments.
Line 4a:Enter Commodity Credit Corporation (CCC) loans reported as income if an election is made to treat them as income.
Line 4b:Enter CCC loans forfeited.
Line 4c:Enter taxable amount of CCC loan activity.
Line 5a:Enter crop insurance proceeds and federal crop disaster payments received in the tax year.
Line 5b:Enter taxable portion of crop insurance proceeds.
Line 5d:Enter crop insurance or disaster payments deferred from a prior year (if applicable).
Line 6:Enter other farm rental income not included on Lines 1 through 5d.
Line 7:Total gross farm rental income (add Lines 1 through 6). This amount flows to Schedule E (Form 1040).
Part II: Expenses — Farm Rental Property
Report ordinary and necessary expenses related to farm rental activity, such as:
- Repairs and maintenance
- Taxes
- Insurance
- Depreciation (if applicable)
- Supplies
- Utilities
- Other operating expenses related to the rental activity
Expenses must be directly connected to the farm rental property and cannot include personal or non-rental expenses.
Special Rules and Considerations
- Material participation rule: If the taxpayer or spouse materially participates in the farming operation, income must be reported on Schedule F (Form 1040), not Form 4835.
- Cash vs. accrual method: Income is reported when received or constructively received, depending on the taxpayer’s accounting method.
- Passive activity rules: Losses may be limited under Form 8582 (Passive Activity Loss Limitations).
- Form 4835 applies only to farm rental income based on production (crop/livestock shares), not cash rent arrangements.
Source:
Form 4835 (2025) - Farm Rental Income and Expenses
Disclaimer: Always verify details with the current year’s Federal or State Department of Revenue Forms and Instructions. For complex situations, consult a CPA or tax attorney.