Partnership farm rental

[rjholmes]

Brother and sister rent farm land and gets a percentage of crops grown and an agriculture program payment. They do not materially participate and are not farmers. The partnership return does not have a form 4835. If we use Sch F and check no on the "materially participate" question, it does not show up as passive income or loss. If yes is checked, then will IRS be looking for SE tax on any gain? Or will it be just ordinary business income or loss?

[TaxmannEA]

Are you doing the partnership return or the brother and/or sister?

[gkaiseril]

If the partnership has K1's use them to record the necessary information on Schedule E page 2 and the PAL forms.