Part 2 Farmers and Rental Real Estate question: farmland to a tenant for a share of the crops

Part 2Farmers and Rental Real Estate

Ed, a retired farmer, rents his farmland to a tenant for a share of the crops and does not materially participate in operating the farm. How does he report the rent?

A As a capital gain on Schedule D
B On Form 4835, not subject to self-employment tax
C On Schedule C, subject to self-employment tax
D On Schedule F, subject to self-employment tax on the rent

Show the answer and explanation

Answer: B. On Form 4835, not subject to self-employment tax

A landowner who receives crop-share rents and does not materially participate in operating or managing the farm reports the income on Form 4835 (carried to Schedule E) and does not owe self-employment tax on it. A landlord who materially participates reports on Schedule F and owes self-employment tax. Source: IRC 1402(a)(1); Pub. 225 (2025), Rents (Including Crop Shares). Tax year: 2025 (law as of 31 Dec 2025).

Common mistake

Treating all crop-share rent as Schedule F income.

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