Question

passive or active participation

Forum|Forum|4 years ago
March 12, 2022
2 replies
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I own farmland and it is lease on cash basis. We maintain the wood lots around the field to make sure the field is clear branches and downed for the farmer and also maintain an access lane. I collect the rent, price insurance, and make any major decision. What type of participation would this be considered passive or active.

S

squamby

I don't know the answer, but I'm dumbfounded that people would still report cash income to the Feds, unless of course, someone paying cash is also handing you a 1099 statement.

M

mrjj84Author

I have a 1099 Misc for the rent.

P

PattiF

The rental income is passive and would be reported on a Schedule E.

Cash rent landlords may generally deduct the cost of ordinary and necessary expenses relating to the production of the rental income. These expenses might include taxes, interest, repairs, insurance, management fees, agents' commissions, and depreciation. Rental income, however, is passive income.

See Tax Implications of a Farmland Lease from Iowa State.

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