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2007 C-8022, Page 4

Taxes on land not eligible for either the principal residence

agreements began before January 1, 1978, go directly to Part

or agricultural exemptions most likely are not eligible for the

Farmland Preservation Tax Credit. The exception is rental

Important: Once a qualification formula is elected, all

property where the tenant spends at least 1,040 hours per

future claims must be filed using that formula.

year participating in the farming operation. To compute the

• Total Receipts Formula on line 9. This formula compares

taxes that can be claimed for credit, exclude the school

agricultural gross receipts to property taxes on the enrolled

operating tax and multiply the balance by the percentage of

land in each of the tax years preceding the tax year of this

exemption allowed by the local taxing authority.

claim. If gross receipts are more than five times property

Example:

taxes in at least three of the five tax years, this formula may

Taxes levied .................................................................. $2,000

be used.

School operating tax ........................................................ $350

• Average Receipts Formula on line 14. This compares

Principal residence exemption ......................................... 60%

the average of the agricultural gross receipts for three tax

years preceding the tax year of this claim to property taxes

$2,000

$1,650

on the enrolled land in the first year under the agreement. If

-350

x 60%

average receipts are more than five times property taxes in

$1,650

$990 can be claimed for credit

the first year, this formula may be used.

If the taxpayer has entered into more than one agreement

Line 5: Years preceding claim year. Enter each of the

with the MDA, the sum of the taxes under each agreement is

years immediately preceding the claim year. Enter the most

used to compute the credit. The amount of credit the taxpayer

current year in the 1st Year column.

will receive is based on adjusted business income. Taxes

levied on rental property cannot be claimed for credit unless

Line 6: Property taxes on enrolled land. Enter the property

the tenant is involved in the farm operation.

taxes for each year reported on line 5 that are attributable to

land enrolled on or after January 1, 1978. Do not include

Claiming a Credit for Farms Purchased in 2007

property taxes on land enrolled before January 1, 1978, or

That Were Already Enrolled in the Program

property taxes on structures or any other lands not enrolled

The farmland credit will be processed only if there is a

in an FDRA.

farmland agreement on file with the MDA IN THE SAME

Line 8: Agricultural Gross Receipts. Enter the agricultural

NAME AS THE TAXPAYER'S DEED. The taxpayer must

gross receipts for the tax years immediately preceding the tax

prorate the 2007 taxes for the period the land was owned and

year of this claim. Agricultural gross receipts are receipts

claim credit based on those taxes only.

from the business of farming as defined in the Internal Revenue

Line-by-Line Instructions

Service Regulation 1.175-3. (Also see Revenue Administrative

Bulletin 89-47, Agriculture Exemption.)

Lines not listed are explained on the form.

If the taxpayer's farm operation was incorporated during this

Line 3: Tax year of claim. Enter the ending month and

year of the annual accounting period in which this credit is

5-year period and the ownership before and after date of

incorporation is identical, report gross receipts for all five

claimed.

tax years. If the ownership changed, enter gross receipts only

Example: A participant with a tax year ending December 31

for those tax years since incorporation.

claims a credit for the 2007 property taxes in the tax year

Line 9: Total Receipts Formula. If the agricultural gross

ending in December 2007.

receipts on line 8 are more than the increased property taxes

Line 4: First year under FDRA. If agreements were entered

on line 7 in at least three of the five tax years and this

into on or after January 1, 1978, enter the ending month and

qualification is elected, check the box.

year of the accounting period in which the agreement was

first entered into. (Example: A participant with a tax year

Line 14: Average Receipts Formula. If the average gross

ending December 31, enters into an agreement January 5,

receipts on line 13 are more than the increased property taxes

on line 11 and this qualification is elected, check the box.

1990. The first year under the agreement is the year ending

December 1990.)

PART 2: Taxes That Can Be Claimed for Credit

PART 1: Gross Receipts Qualification applies only

List each agreement number and the amount of tax from the

to agreements entered into on or after January 1,

property tax statements in columns A through D. List the

1978.

corresponding agreement number on each property tax

statement and attach copies of the tax statements (bills) to the

If agreements were entered into on or after January 1, 1978,

return.

eligibility for a farmland credit must be determined using

one of the two qualification formulas provided below. If all

Column A: Enter the farmland preservation agreement

number assigned by the MDA. Agreement number or contract

Instructions For C-8022 Farmland Preservation Tax Credit - Michigan Department Of Treasury Page 2

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