Form 4835, titled "Farm Rental Income and Expenses," is used by landowners or sub-lessors who receive rental income based on a share of crops or livestock produced by a tenant and who did not materially participate in the operation or management of the farm. This form is used to report income and expenses from production-based rental arrangements rather than fixed cash rent. Income reported on Form 4835 is generally not subject to self-employment tax.
Key Sections of Form 4835
Part I: Gross Farm Rental Income—Based on Production
Lines 1–6 — Report gross farm rental income received from production-based rental arrangements, including income received as a share of crops, livestock, or other agricultural production.
Line 7: Gross farm rental income — Enter the total gross farm rental income from lines 1 through 6.
Part II: Expenses—Farm Rental Property
Lines 8–30 — Report ordinary and necessary expenses related to the farm rental activity. These may include car and truck expenses, conservation expenses, depreciation, insurance, interest, repairs and maintenance, taxes, utilities, and other deductible expenses.
Line 31: Total expenses — Enter the total of all deductible expenses reported in Part II.
Line 32: Net farm rental income or (loss) — Subtract Line 31 from Line 7. This amount is generally transferred to Schedule E (Form 1040), Supplemental Income and Loss, according to the Schedule E instructions for the applicable tax year.
Reporting Losses and Passive Activity Rules
If you report a net loss on Line 32, you may be required to complete Form 8582, Passive Activity Loss Limitations, to determine the amount of loss that can be deducted.
If you report net income on Line 32 and otherwise qualify as an eligible farmer, you may be able to use Schedule J (Form 1040), Income Averaging for Farmers and Fishermen, to compute your tax.
When to Use Form 4835
- Use Form 4835 only if you are a landowner or sub-lessor who did not materially participate in the farm’s operation or management.
- Do not use Form 4835 if:
- You are a tenant — use Schedule F (Form 1040).
- You materially participated in farm operations — use Schedule F (Form 1040).
- You received cash rent — report on Schedule E (Form 1040), Part I.
- You are an estate, trust, partnership, or S corporation — report on Schedule E or Form 8825.
When to Use Form 4835
Use Form 4835 if:
You are a landowner or sub-lessor.
You receive rental income based on a share of crops, livestock, or other agricultural production.
You do not materially participate in the operation or management of the farm.
Do not use Form 4835 if:
You materially participated in the farm operation or management — report the activity on Schedule F (Form 1040).
You received fixed cash rent for the use of farmland or agricultural property — generally report the income on Schedule E (Form 1040).
You are reporting farm income as a tenant farmer conducting a farming business — generally report the activity on Schedule F (Form 1040).
Material Participation Definition
Material participation generally means being involved in the farm operation on a regular, continuous, and substantial basis. Examples may include making management decisions affecting farm production, providing significant labor, or otherwise participating in the farming operation to a degree that meets the material participation standards under IRS rules.
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. Tax rules may change annually. For complex situations, consult a CPA or tax attorney.