TN 7 (06-90)

RS 01803.700 Material Participation


In many parts of the country it is not unusual for a farm owner to turn the operation of the farm over to a tenant in return for rent in the form of cash or a percentage of the agricultural or horticultural commodities raised.


The income of the landlord is includable in NESE if:

  • there is an agreement between the landlord and the tenant which contemplates that the landlord will materially participate in the production or management of the production of the commodities; and

  • the landlord does materially participate.


When any one of the 4 tests described in the following sections is met, the landlord is materially participating.

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RS 01803.700 - Material Participation - 11/15/2002
Batch run: 07/03/2014