Form 4835 is where a landowner, or sub-lessor, reports farm rental income paid in crops or livestock produced by the tenant, along with the related expenses, when the landowner didn't materially participate in running the farm. The net result goes to Schedule E, and because it's rental income it isn't subject to self-employment tax.
Everything below comes from the IRS Form 4835 for 2025 and the instructions printed with it, as of October 2026.
Form 4835, Schedule F or Schedule E?
The form only fits one situation, so start here:
| You are | And | Report on |
|---|---|---|
| Landowner or sub-lessor | Paid in crop or livestock shares, no material participation | Form 4835 |
| Landowner or sub-lessor | You materially participated in operating or managing the farm | Schedule F |
| Tenant | You farm the land | Schedule F |
| Landowner | Cash rent for pasture or farmland at a flat charge | Schedule E, Part I |
| Estate or trust | Crop or livestock share rent | Schedule E, Part I |
| Partnership or S corporation | Crop or livestock share rent | Form 8825 |
The insight most landowners miss is that the deciding test for this form is material participation for self-employment tax purposes, which is a different question from the active participation box on line A. You can actively participate, for example by approving tenants and repairs, and still use Form 4835 because you didn't materially participate. If you did materially participate, it's Schedule F and self-employment tax.
Line A: active participation
You're generally considered to actively participate if you took part in management decisions or arranged for others to provide services, such as repairs, in a significant and bona fide sense. The instructions give approving new tenants, deciding rental terms and approving capital or repair spending as examples. You don't actively participate if, at any time in the year, your interest (with your spouse's) was less than 10% by value of all interests in the activity. The answer matters later, when the passive loss rules decide how much of a loss you can use.
Part I: gross farm rental income
- Line 1: income from livestock, produce, grains and other crops based on production. Under both cash and accrual methods, you report crop or livestock shares in the year you convert them into cash or its equivalent.
- Lines 2a and 2b: cooperative distributions from Form 1099-PATR and the taxable part.
- Lines 3a and 3b: agricultural program payments and the taxable part.
- Lines 4a to 4c: Commodity Credit Corporation loans reported under election or forfeited.
- Lines 5a to 5d: crop insurance proceeds and federal crop disaster payments, including any election to defer to 2026.
- Line 6: other income, including federal and state gasoline or fuel tax credits or refunds.
- Line 7: the total, which also goes on Schedule E line 42.
The timing rule on line 1 is easy to get wrong. Grain received as share rent in the autumn and held in storage isn't income until it's sold or otherwise converted, whichever accounting method you use.
Gifting crop shares doesn't avoid the income
Pub. 225, the Farmer's Tax Guide, adds a rule many landowners don't expect. Crop shares you receive as a landlord and give to someone else are treated as converted to cash when you make the gift, so you report their fair market value as income even though someone else receives the payment, and even if the gift goes to a qualified charity. Its example: a landlord tells the elevator company to reissue the warehouse receipts in the children's names before any grain is sold; the landlord still reports the fair market value in the year of the gift. Pub. 225 also confirms that a crop-share loss outside self-employment income may be limited by the passive loss rules.
Part II: expenses
Lines 8 to 30 cover the usual farm costs: car and truck expenses, chemicals, conservation, custom hire, depreciation and section 179 not claimed elsewhere, feed, fertilizer, freight, fuel, insurance other than health, mortgage and other interest, hired labor, rent or lease of machinery and land, repairs, seeds and plants, storage, supplies, taxes, utilities, and veterinary and breeding costs. Personal or living expenses don't belong here. Line 31 totals them, and line 32 is the net farm rental income or loss.
When the result is a loss
Net income on line 32 goes straight to Schedule E line 40. A loss sends you to line 34 first, where you tick whether all your investment is at risk or some isn't:
- You may have to complete Form 8582, the passive activity loss form, to find the deductible loss, whichever box you tick.
- If some investment isn't at risk (box 34b), complete Form 6198 before Form 8582.
- Enter the deductible loss on line 34c and on Schedule E line 40.
And if line 32 shows income, the instructions note your tax may be lower if you figure it using Schedule J, farm income averaging.
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Spouses and qualified joint ventures
If you and your spouse were the only members of a jointly owned farm rental business, file a joint return and elect qualified joint venture treatment, you avoid filing a partnership return. Where neither of you materially participated, you each file a separate Form 4835 for your share. You only need an EIN on the form if you had a qualified retirement plan or had to file employment, excise, estate, trust, partnership or alcohol, tobacco and firearms returns.
Fuel used on a farm can also qualify for a tax credit, which our fuel tax credit guide explains.
The verdict
If you own farmland, take a share of the crop instead of cash, and leave the farming to your tenant, Form 4835 keeps that income off self-employment tax. Keep a record of when share crops are sold, because that's when the income lands, and keep notes of the management decisions you make so the line A answer holds up. Cash rent belongs on Schedule E instead.
Frequently asked questions
Who files Form 4835?
A landowner or sub-lessor who received farm rental income based on crops or livestock produced by the tenant and didn't materially participate in operating or managing the farm.
Is Form 4835 income subject to self-employment tax?
No. The form reports farm rental income that isn't subject to self-employment tax.
Should cash farm rent go on Form 4835?
No. Cash rent for pasture or farmland based on a flat charge is reported on Schedule E, Part I.
When is crop share rent taxable?
In the year you convert the crops or livestock into cash or its equivalent, under both the cash and accrual methods.
Where does the Form 4835 total go?
Gross farm rental income goes on Schedule E line 42, and the net income or deductible loss goes on Schedule E line 40.
