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A Did you actively participate in the operation of this farm during 2002 (see instructions)? Yes No
Part I Gross Farm Rental Income—Based on Production. Include amounts converted to cash or the equivalent.
You may need to complete Form 8582 to determine your deductible loss, regardless of which
box you check (see instructions). However, if you checked 33b, you must complete Form 6198
before going to Form 8582. In either case, enter the deductible loss here and on
Schedule E, line 39 33c
For Paperwork Reduction Act Notice, see instructions on back. Cat. No. 13117W Form 4835 (2002)
Form 4835 (2002) Page 2
Lines 5a through 5d. In general, you must right tax treatment. These rules could affect
General Instructions report crop insurance proceeds in the year how much interest you are allowed to deduct
Purpose of form. Use Form 4835 to report you receive them. Federal crop disaster on Form 4835. See the instructions for
farm rental income based on crops or payments are treated as crop insurance Schedule F, lines 23a and 23b, on page F-5.
livestock produced by the tenant if you were proceeds. However, if you use the cash Line 22. If you rented or leased vehicles,
the landowner (or sub-lessor) and did not method of accounting and 2002 was the year machinery, or equipment, enter on line 22a
materially participate (for self-employment tax of damage, you may elect to include certain the business portion of your rental cost. But if
purposes) in the operation or management of proceeds in income for 2003. To do this, you leased a vehicle for a term of 30 days or
the farm. If you were a tenant, use Schedule check the box on line 5c and attach a more, you may have to reduce your
F (Form 1040) to report farm income and statement to your return. See Pub. 225. deduction by an inclusion amount. See the
expenses. Generally, if you elect to defer any eligible instructions for Schedule C, lines 20a and
Landowners (or sub-lessors) must not use crop insurance proceeds, you must defer all 20b, on page C-5.
this form to report cash rent received for such crop insurance proceeds (including Lines 30a through 30g. Enter expenses not
pasture or farmland if the amount is based on Federal disaster payments). listed on another line. See the instructions for
a flat charge. Report this income directly on For details on how to complete lines Schedule F, lines 34a through 34f, on page
Schedule E (Form 1040). 5a through 5d, see the instructions for F-6.
Use this form only if the activity is a rental Schedule F, lines 8a through 8d, on page F-3. Line 33. To determine your deductible loss,
activity for purposes of the passive activity Line 6. Use this line to report income not you may need to complete Form 8582.
loss limitations. See the Instructions for Form shown on lines 1 through 5d. See the However, if you check box 33b, you must
8582, Passive Activity Loss Limitations, for instructions for Schedule F, line 10, on complete Form 6198, At-Risk Limitations,
the definition of “rental activity.” page F-3. before you complete Form 8582. See the
If line 32 is more than zero, your tax may instructions for Schedule F, line 37, on page
be less if you figure it using Schedule J Part II—Expenses—Farm F-6.
(Form 1040). Rental Property Do not complete Form 8582 if either of the
Additional information. For more information, following applies.
Capitalizing costs of property. If you
including the definition of material produced real or tangible personal property or ● You meet all three of the conditions listed
participation (for self-employment tax acquired property for resale, certain expenses under Exception for Certain Rental Real
purposes), see the Instructions for Schedule F may have to be included in inventory costs or Estate Activities in the Instructions for
and Pub. 225, Farmer’s Tax Guide. capitalized. These expenses include the direct Schedule E on page E-2. Instead, enter your
costs of the property and the share of any deductible loss on line 33c and on Schedule
E, line 39.
Specific Instructions indirect costs allocable to that property.
However, these rules generally do not apply ● You were a real estate professional (as
Employer ID number. You need an employer to expenses of: defined in the Instructions for Schedule E on
identification number (EIN) only if you had a page E-1) and you materially participated in
● Producing any plant that has a
qualified retirement plan or were required to the operation of this activity (under the
preproductive period of 2 years or less,
file an employment; excise; or alcohol, passive loss rules). See the Instructions for
tobacco, or firearms tax return. If you need an ● Raising animals, or Form 8582 for the definition of material
EIN, file Form SS-4, Application for Employer ● Replanting certain crops if they were lost or participation. Your loss is not subject to the
Identification Number. damaged by reason of freezing temperatures, passive activity loss limitations. Instead, enter
Line A. Generally, you are considered to disease, drought, pests, or casualty. your deductible loss on line 33c and on
actively participate if you participated in But you may be able to currently deduct Schedule E, line 39. Also, include the loss in
making management decisions or arranging rather than capitalize the expenses of the total for Schedule E, line 42.
for others to provide services (such as producing a plant with a preproductive period
repairs) in a significant and bona fide sense. of more than 2 years. See Election To Deduct
Management decisions that are relevant in Certain Preproductive Period Expenses in the Paperwork Reduction Act Notice. We ask
this context include approving new tenants, Instructions for Schedule F on page F-4. for the information on this form to carry out
deciding on rental terms, approving capital or the Internal Revenue laws of the United
Do not reduce your expenses on States. You are required to give us the
repair expenditures, and other similar lines 8 through 30f by the preproductive
decisions. You do not, however, actively information. We need it to ensure that you are
period expenses you must capitalize. Instead, complying with these laws and to allow us to
participate if at any time during the year your enter the total amount capitalized in
interest (including your spouse’s interest) in figure and collect the right amount of tax.
parentheses on line 30g. Reduce your total
the activity was less than 10% (by value) of expenses by this amount before entering an You are not required to provide the
all interests in the activity. amount on line 31. On the line to the left of information requested on a form that is
the line 30g entry space, enter “263A.” subject to the Paperwork Reduction Act
Part I—Gross Farm Rental Line 10. Expenses you paid or incurred for
unless the form displays a valid OMB control
number. Books or records relating to a form
Income—Based on Production soil and water conservation may only be or its instructions must be retained as long as
Line 1. Report income you received from deducted if they are consistent with a their contents may become material in the
livestock, produce, grains, and other crops conservation plan approved by the Natural administration of any Internal Revenue law.
based on production. Under both the cash Resources Conservation Service of the Generally, tax returns and return information
and the accrual methods of reporting, you Department of Agriculture for the area in are confidential, as required by Internal
must report livestock or crop share rentals which your land is located. If no plan exists, Revenue Code section 6103.
received in the year you convert them into your expenses must be consistent with a soil
conservation plan of a comparable state The time needed to complete and file this
money or its equivalent. form will vary depending on individual
agency. See the instructions for Schedule F,
Lines 2a and 2b. Enter on line 2a your total line 14, on page F-4. circumstances. The estimated average time
distributions from cooperatives as shown on is: Recordkeeping, 2 hr., 57 min.; Learning
Form 1099-PATR, Taxable Distributions Line 12. Enter your depreciation and about the law or the form, 4 min.;
Received From Cooperatives. On line 2b section 179 expense deduction. For details, Preparing the form, 1 hr., 1 min.; and
report the taxable amount. See the including whether you must file Form 4562, Copying, assembling, and sending the form
instructions for Schedule F, lines 5a and 5b, Depreciation and Amortization, see the to the IRS, 20 min.
on page F-2. instructions for Schedule C (Form 1040), line
13, on page C-4. If you have comments concerning the
Lines 3a and 3b. Enter on line 3a the total accuracy of these time estimates or
payments you received. On line 3b report Lines 19a and 19b. Interest allocation rules. suggestions for making this form simpler, we
only the taxable amount. See the instructions The tax treatment of interest expense differs would be happy to hear from you. See the
for Schedule F, lines 6a and 6b, on page F-2. depending on its type. For example, home Instructions for Form 1040.
mortgage interest and investment interest are
Lines 4a through 4c. Report the full amount treated differently. You must allocate (classify)
of CCC loans forfeited, even if you reported your interest expense so it is deducted on the
the loan proceeds as income. See the correct line of your tax return and it gets the
instructions for Schedule F, lines 7a through
7c, on page F-3.