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A Did you actively participate in the operation of this farm during 2001? 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 (2001)
Form 4835 (2001) Page 2
Lines 5a through 5d. In general, you must mortgage interest and investment interest are
General Instructions report crop insurance proceeds in the year treated differently. You must allocate (classify)
Purpose of form. Use Form 4835 to report you receive them. Federal crop disaster your interest expense so it is deducted on the
farm rental income based on crops or payments are treated as crop insurance correct line of your tax return and it gets the
livestock produced by the tenant if you were proceeds. However, if you use the cash right tax treatment. These rules could affect
the landowner (or sub-lessor) and did not method of accounting and 2001 was the year how much interest you are allowed to deduct
materially participate (for self-employment tax of damage, you may elect to include certain on Form 4835. See the instructions for
purposes) in the operation or management of proceeds in income for 2002. To do this, Schedule F, lines 23a and 23b, on page F-5.
the farm. If you were a tenant, use Schedule check the box on line 5c and attach a Line 22. If you rented or leased vehicles,
F (Form 1040) to report farm income and statement to your return. See Pub. 225. machinery, or equipment, enter on line 22a
expenses. Generally, if you elect to defer any eligible the business portion of your rental cost. But if
Landowners (or sub-lessors) must not use crop insurance proceeds, you must defer all you leased a vehicle for a term of 30 days or
this form to report cash rent received for such crop insurance proceeds (including more, you may have to reduce your
pasture or farmland if the amount is based on Federal disaster payments). deduction by an inclusion amount. For
a flat charge. Report this income directly on For details on how to complete lines details, see the instructions for Schedule C,
Schedule E (Form 1040). 5a–5d, see the instructions for Schedule F, lines 20a and 20b, on page C-4.
Use this form only if the activity is a rental lines 8a–8d, on page F-3. Lines 30a through 30g. Enter expenses not
activity for purposes of the passive activity Line 6. Use this line to report income not listed on another line. See the instructions for
loss limitations. See the instructions for Form shown on lines 1 through 5d. See the Schedule F, lines 34a–34f, on page F-6.
8582, Passive Activity Loss Limitations, for instructions for Schedule F, line 10, on Line 33. To determine your deductible loss,
the definition of “rental activity.” page F-3. you may need to complete Form 8582.
If line 32 is more than zero, your tax may However, if you check box 33b, you must
be less if you figure it using Schedule J Part II—Expenses—Farm complete Form 6198, At-Risk Limitations,
(Form 1040). Rental Property before you complete Form 8582. See the
instructions for Schedule F, line 37, on page
Additional information. For more information, Capitalizing costs of property. If you F-6 for details.
including the definition of material produced real or tangible personal property or
participation (for self-employment tax Do not complete Form 8582 if either of the
acquired property for resale, certain expenses following applies.
purposes), see the instructions for Schedule F may have to be included in inventory costs or
and Pub. 225, Farmer’s Tax Guide. capitalized. These expenses include the direct ● You meet all three of the conditions listed
costs of the property and the share of any in the instructions for Schedule E, line 23, on
pages E-3 and E-4. Instead, enter your
Specific Instructions indirect costs allocable to that property.
However, these rules generally do not apply deductible loss on line 33c and on Schedule
Employer ID number. You need an employer to: E, line 39.
identification number (EIN) only if you had a
1. Expenses of producing any plant that ● You were a real estate professional (as
qualified retirement plan or were required to defined in the instructions for Schedule E, line
has a preproductive period of 2 years or less,
file an employment, excise, or alcohol, 23, on page E-4) and you materially
tobacco, or firearms tax return. If you need an 2. Expenses of raising animals, or participated in the operation of this activity
EIN, file Form SS-4, Application for Employer (under the passive loss rules). See the
3. Expenses of replanting certain crops if
Identification Number. Instructions for Form 8582 for the definition of
they were lost or damaged by reason of
Line A. Generally, you are considered to freezing temperatures, disease, drought, material participation. Your loss is not
actively participate if you participated in pests, or casualty. subject to the passive activity loss limitations.
making management decisions or arranging Instead, enter your deductible loss on line
for others to provide services (such as But you may be able to currently deduct 33c and on Schedule E, line 39. Also, include
repairs) in a significant and bona fide sense. rather than capitalize the expenses of the loss in the total for Schedule E, line 42.
Management decisions that are relevant in producing a plant with a preproductive period
this context include approving new tenants, of more than 2 years. For details, see the
deciding on rental terms, approving capital or instructions for Schedule F, Part II, on Paperwork Reduction Act Notice. We ask
repair expenditures, and other similar pages F-3 and F-4. for the information on this form to carry out
decisions. You do not, however, actively the Internal Revenue laws of the United
Do not reduce your expenses on States. You are required to give us the
participate if at any time during the year your lines 8–30f by the preproductive period
interest (including your spouse’s interest in information. We need it to ensure that you are
expenses you must capitalize. Instead, enter complying with these laws and to allow us to
the activity) was less than 10% (by value) of the total amount capitalized in parentheses
all interests in the activity. figure and collect the right amount of tax.
on line 30g. Reduce your total expenses by
this amount before entering an amount on You are not required to provide the
Part I—Gross Farm Rental line 31. On the line to the left of the line 30g information requested on a form that is
subject to the Paperwork Reduction Act
Income—Based on Production entry space, enter “263A.”
unless the form displays a valid OMB control
Line 1. Report income you received from Line 10. Expenses you paid or incurred for number. Books or records relating to a form
livestock, produce, grains, and other crops soil and water conservation may only be or its instructions must be retained as long as
based on production. Under both the cash deducted if they are consistent with a their contents may become material in the
and the accrual methods of reporting, you conservation plan approved by the Natural administration of any Internal Revenue law.
must report livestock or crop share rentals Resources Conservation Service of the Generally, tax returns and return information
received in the year you convert them into Department of Agriculture for the area in are confidential, as required by Internal
money or its equivalent. which your land is located. If no plan exists, Revenue Code section 6103.
your expenses must be consistent with a soil
Lines 2a and 2b. Enter on line 2a your total conservation plan of a comparable state The time needed to complete and file this
distributions from cooperatives as shown on agency. See the instructions for Schedule F, form will vary depending on individual
Form 1099-PATR. On line 2b report the line 14, on page F-4. circumstances. The estimated average time
taxable amount. See the instructions for is: Recordkeeping, 2 hr., 57 min.; Learning
Schedule F, lines 5a and 5b, on page F-2. Line 12. Enter your depreciation and about the law or the form, 5 min.;
section 179 expense deduction. For details, Preparing the form, 1 hr., 2 min.; and
Lines 3a and 3b. Enter on line 3a the total including whether you must file Form 4562,
payments you received. On line 3b report Copying, assembling, and sending the form
Depreciation and Amortization, see the to the IRS, 20 min.
only the taxable amount. See the instructions instructions for Schedule C (Form 1040), line
for Schedule F, lines 6a and 6b, on page F-2. 13, on page C-3. If you have comments concerning the
Lines 4a through 4c. Report the full amount accuracy of these time estimates or
of CCC loans forfeited, even if you reported Lines 19a and 19b. Interest allocation rules. suggestions for making this form simpler, we
the loan proceeds as income. For details on The tax treatment of interest expense differs would be happy to hear from you. See the
how to complete lines 4a–4c, see the depending on its type. For example, home Instructions for Form 1040.
instructions for Schedule F, lines 7a–7c, on
page F-3.