Form Mi-1040cr5 - Michigan Farmland Preservation Tax Credit Instructions

the period you owned the land and claim your credit based

Land Owned With

only on those taxes.

Someone Other Than a Spouse

Filed for Bankruptcy

Taxes on land owned jointly are allocated to each owner.

If co-owners divide each item of revenue and expenses and

If you are enrolled in the Farmland and Open Space

choose to allocate the property taxes that same way, they

Preservation Act program and have petitioned for

may do so only if they attach a copy of a signed statement

bankruptcy (under U.S. Bankruptcy Code, chapters 7, 11,

by each owner. The statement must show each owner’s

12, or 13), claim your credit on MI-1040CR-5 and attach it

share of the revenues and expenses. This requirement can

to your Michigan income tax return.

be met by completing Part 2 of MI-1040CR-5. If a signed

You must prorate your credit for the part of the year ending

income distribution statement is not attached, the taxes

when the petition in bankruptcy was filed. The trustee in

must be allocated equally among the owners, with two

bankruptcy or the landowner as Debtor in Possession may

exceptions:

file a claim for the portion of the year following the date

• A husband and wife are considered one owner.

of petition. Bankruptcy estates are also required to file a

• An owner eligible to be claimed as a dependent by

Fiduciary Income Tax Return (MI-1041).

another owner cannot receive a share of the taxes and

Transferring an Agreement

cannot claim a credit for that farmland.

To transfer an agreement, you must show that all of the

Land Owned by a Limited Liability Company

land described under the agreement has been conveyed.

Property taxes on land owned by a limited liability

The MDARD will need a copy of the legal document

company are allocated to each member in a percentage

(e.g., deed, land contract) used for conveyance and the new

equal to the member’s share of ownership or distributive

owner’s name, address, Social Security number, and a fee

share of ordinary income as reported by the limited

of $25 per transfer.

liability company to the Internal Revenue Service (IRS).

For more information on the Farmland Preservation

Land Owned by an S Corporation or Trust

Agreement contact:

Farmland and Open Space Preservation Unit

Taxes on land owned by an S corporation are allocated

Environmental Stewardship Division

to each shareholder based on the shareholder’s share of

Michigan Department of Agriculture and Rural

the corporation’s stock. This percentage is on U.S. Form

Development

1120S, Schedule K-1. Exception: If the S corporation

P.O. Box 30449

had an FDRA before 1989, and in 1991 elected to file

under the SBT Act on C-8022, the S corporation must

Lansing, Michigan 48909

continue to file under the Michigan Business Tax (MBT).

Line-by-Line Instructions for

If the FDRA was not in the S corporation’s name before

Schedule CR-5 and MI-1040CR-5

January 1, 1989, the taxes on land covered by this

agreement must be claimed on the shareholders’ Michigan

Lines not listed are explained on the forms.

income tax using MI-1040CR-5. These taxes must be

Schedule CR-5

claimed by the shareholders even if the S corporation

elected to file C-8022 for other agreements that the S

Column A: Agreement number or contract number is found

corporation entered into before January 1, 1989.

in the lower-right corner of each agreement. The first two

numbers represent the county where the property is located.

For farmland owned by a grantor trust, if you are treated

The middle set of numbers is the actual contract number.

as the owner of that trust under IRC sections 671 through

The last six numbers are the year of expiration, (i.e., 123113 is

679, you must include a copy of that portion of the trust

December 31, 2013). The contract number retains its original

agreement that shows you are the owner of a grantor trust

series throughout the term of the agreement. However, a

holding title to the farmland.

letter may be added to indicate that the agreement was split

into multiple agreements. The final six numbers change

If the trust was created by the death of a spouse and

when the agreement is reduced or extended. Always use the

requires 100 percent of the income to be distributed to

contract number on your most recently recorded agreement

the surviving spouse, you must attach a copy of U.S.

and attach a copy of each 2013 tax statement that corresponds

Form 1041 and Schedule K-1, if required.

to the agreement number listed.

Column B: List the 2013 taxable value for each agreement

Claiming a Credit on a Farm

that you owned in 2013. The taxable value is found on your

Purchased in 2013 That Was

property tax statement(s) for each parcel. The total taxable

Already Enrolled in the Farmland Program

value for each agreement must be listed; do not list each

Your farmland credit will be processed only if there is a

individual parcel. You may also contact your local assessor

farmland agreement on file with the MDARD in the same

for this information.

name as your deed. You must prorate the 2013 taxes for

Form Mi-1040cr5 - Michigan Farmland Preservation Tax Credit Instructions - 2013 Page 5

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