Fillable Form 4835 - Farm Rental Income And Expenses

Form 4835 (2014)

Page

Lines 3a and 3b. Enter on line 3a the total agricultural

Lines 19a and 19b. The tax treatment of interest expense

program payments you received. On line 3b report the

differs depending on its type. For example, home

taxable amount. See the instructions for Schedule F

mortgage interest and investment interest are treated

(Form 1040), lines 4a and 4b.

differently. You must allocate (classify) your interest

expense so it is deducted (or capitalized) on the correct

Lines 4a through 4c. Report the full amount of CCC

line of your tax return and it gets the right tax treatment.

loans forfeited, even if you reported the loan proceeds as

These rules could affect how much interest you are

income. See the instructions for Schedule F (Form 1040),

allowed to deduct on Form 4835. See the instructions for

lines 5a through 5c.

Schedule F (Form 1040), lines 21a and 21b.

Lines 5a through 5d. In general, you must report crop

Line 22a. If you rented or leased vehicles, machinery, or

insurance proceeds in the year you receive them. Federal

equipment, enter on line 22a the business portion of your

crop disaster payments are treated as crop insurance

rental cost. But if you leased a vehicle for a term of 30 days

proceeds. However, if you use the cash method of

or more, you may have to reduce your deduction by an

accounting and 2014 was the year of damage, you can

inclusion amount. See Leasing a Car in Pub. 463, Travel,

elect to include certain proceeds in income for 2015. To do

Entertainment, Gift, and Car Expenses.

this, check the box on line 5c and attach a statement to

your return. See chapter 3 of Pub. 225.

Lines 30a through 30g. Enter expenses not listed on

another line. See the instructions for Schedule F (Form

Generally, if you elect to defer any eligible crop

1040), lines 32a through 32f. If you are required to

insurance proceeds, you must defer all such crop

capitalize expenses, see How to report under Capitalizing

insurance proceeds (including federal crop disaster

costs of property on this page.

payments).

Line 31. If you entered capitalized expenses on line 30g,

For details on how to complete lines 5a through 5d, see

your total expenses on line 31 will equal the total of lines

the instructions for Schedule F (Form 1040), lines 6a

8 through 30f reduced by the amount on line 30g.

through 6d.

Line 33. If you received an applicable subsidy and

Line 6. Use this line to report income not shown on lines

checked “Yes” on line 33, your farm rental losses may be

1 through 5d. See the instructions for Schedule F (Form

reduced or eliminated if your Form 4835 activity is a trade

1040), line 8.

or business. An applicable subsidy is any direct or

Part II. Expenses—Farm Rental Property

counter-cyclical payment under title I of the Food,

Conservation, and Energy Act of 2008 (or any payment

Capitalizing costs of property. If you produced real or

you elected instead of this payment). A Commodity Credit

tangible personal property or acquired property for resale,

Corporation loan also qualifies as an applicable subsidy.

certain expenses may have to be included in inventory

See the instructions for Schedule F (Form 1040), line 35. If

costs or capitalized. These expenses include the direct

the excess farm loss rules apply, use one of the

costs of the property and the share of any indirect costs

worksheets in the Schedule F (Form 1040) instructions to

allocable to that property. For details and exceptions, see

determine if you have an excess farm loss. See the

Capitalizing costs of property in the instructions for

Instructions for Schedule F (Form 1040) for more details

Schedule F (Form 1040).

on how to complete the worksheets.

How to report. Do not reduce your expenses on lines 8

Line 34. To determine your deductible loss, you may

through 30f by the expenses you must capitalize. Instead,

need to complete Form 8582 regardless of whether you

enter the total amount capitalized in parentheses on line

checked box 34a or 34b. However, if you checked box

30g. On the line to the left of the line 30g entry space,

34b, you must complete Form 6198, At-Risk Limitations,

enter “263A.”

before you complete Form 8582. See the instructions for

Schedule F (Form 1040), line 36.

Line 10. Expenses you paid or incurred for soil and water

conservation, prevention of erosion, or endangered

Do not complete Form 8582 if either of the following

species recovery can be deducted only if they are

applies.

consistent with a conservation plan approved by the

• You meet all of the conditions listed under Exception for

Natural Resources Conservation Service of the

Certain Rental Real Estate Activities in the instructions for

Department of Agriculture or a recovery plan approved

Schedule E (Form 1040). Instead, enter your deductible

pursuant to the Endangered Species Act of 1973 for the

loss on line 34c and on Schedule E (Form 1040), line 40.

area in which your land is located. If no plan exists, your

expenses must be consistent with a plan of a comparable

• You were a real estate professional (as defined in the

state agency. Your deduction, however, cannot exceed

instructions for Schedule E (Form 1040)) and you

25% of your gross income from farming. See the

materially participated in the operation of this activity

instructions for Schedule F (Form 1040), line 12.

(under the passive loss rules). See the Instructions for

Form 8582 for the definition of material participation. Your

Line 12. Enter your depreciation and section 179 expense

loss is not subject to the passive activity loss limitations.

deduction. For details, including whether you must file

Instead, enter your deductible loss on line 34c and on

Form 4562, Depreciation and Amortization, see chapter 7

Schedule E (Form 1040), line 40. Also, include the loss in

of Pub. 225 and the Instructions for Form 4562.

the total for Schedule E (Form 1040), line 43.

Form 4835 - Farm Rental Income And Expenses - 2014 Page 3

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