government payments - farm

[oceanlovin'ea]

Client rents farmland out of state.I know that it goes on Form 4835 - Farm Rental.

But he also received a few hundred dollars from government for direct and counter cyclical program and crop assistance program. He says the money always goes to the land owner.

TTB says that these payments are subject to SE tax. If that is correct, I would also have to put a schedule F in the return with this money on it. Am I correct?

Linda, EA

[AJsTax]

Usually those payments

go to the opoerator, not the owner. Depends how it is set up at the FSA office. Why should the land owner with no risk get the money that is designed to help cover risk of low prices? Unless the lease is a % lease. ( I rent land from family and get the payments, not the owner).
But , yes you have to do a Sch F for those. Can split the costs between the two incomes on the land.

[oceanlovin'ea]

percentage

The method of payment is figured on a percenage basis. He gets 1/3 of the income from sale of the corn.

Linda, EA

[monal]

farm lease contract

if lease is on a cash rental basis usually renter gets all of gov payments, or how ever contract is written
if lease is on crop shares usually split 1/3 goes to owner and 2/3 to renter but rental contracts should be checked to see how it is split. the terms of the contract is agreed upon by renter and owner as to how to split.

[oceanlovin'ea]

Crop shares

I believe this one is on crop shares basis.

Linda, EA