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Is farm land rental passive?

is farm land rental passive?
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Answered in 1 minute by:
3/26/2018
Chad EA, CDFA®, CFP®
Chad EA, CDFA®, CFP®, CERTIFIED FINANCIAL PLANNER ®, Professional
Category: Tax
Satisfied Customers: 2,643
Experience: IRS Licensed Enrolled Agent, CDFA ® CFP ®, MBA
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Hello!

Farm land would not be passive income if the tax payer is actively working the land.

If the property owner is renting out the farm land, then the income would be passive income.

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Please let me know your follow up questions.

Thank you

Chad EA, CDFA®, CFP®
Chad EA, CDFA®, CFP®, CERTIFIED FINANCIAL PLANNER ®, Professional
Category: Tax
Satisfied Customers: 2,643
Experience: IRS Licensed Enrolled Agent, CDFA ® CFP ®, MBA
Verified
Chad EA, CDFA®, CFP® and 87 other Tax Specialists are ready to help you
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Customer reply replied 3 months ago
Thank you.

Thank you for the rating.

Have a great day!

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Customer reply replied 3 months ago
what about ordinary income from a k-1 (partnership) from farm activity? would this also be passive?

Ordinary income would not be passive income from a partnership

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Customer reply replied 3 months ago
even if they do not participate?

If one of the partners participated, then both of tax payers are active participants. --If neither partners participated then the renting out the farm land is passive income.

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Customer reply replied 3 months ago
this is not farm rental on this question. it is listed in box 1 of K-1 from a partnership farm activity

I go back to my original statement

"Farm land would not be passive income if the tax payer is actively working the land.

If the property owner is renting out the farm land, then the income would be passive income."

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Also, these are the instructions for the K-1 form 1065

Ordinary business income (loss). Determine whether the income (loss) is passive or nonpassive and enter on your return as follows. Passive loss Report on See the Partner’s Instructions Passive income Schedule E, line 28, column (g) Nonpassive loss See the Partner's Instructions Nonpassive income Schedule E, line 28, column (j)

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Customer reply replied 3 months ago
Thank you. Partner participates in farming activity. All partners are involved in decision making, purchasing, selling, improvements, etc so I can see this activity would be considered "non-passive". Sorry for any confusion on my questions.
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