In support of the price received for the sale of farm commodities.

Made for the diversion of cropland to conservation uses.

The Conservation Reserve Program is a voluntary program for agricultural landowners that provides landowners with annual payments in return for planting crop land or certain marginal pastureland in resource-conserving vegetive covers.

Generally CRP payments received by a farmer are included when determining NESE. However, effective with tax years beginning after 12/31/07 CRP payments are excluded when determining NESE when received by a farmer who is receiving Social Security Retirement or Disability benefits. See 2008 (or pertinent tax year) IRS Instructions for Schedule SE and 2008 (or pertinent tax year) IRS Form Schedule SE at http://www.irs.gov/ .

Except for non-materially participating landlords, these payments are always includable in determining NESE since the payments are made to individuals engaged in farming activities, i.e., they require activity to produce the crop on which the payment is based.

1. a. 

   These payments are includible in determining NESE for active farm operators or materially participating landlords. An active farmer is one engaged in any other farming activity from which he expects to receive any income.

2. b. 

   Diversion payments are often based on contracts which run for a number of years. The status of the individual with respect to farming activities may change during the length of the contract.

3. c. 

   Payments made under a diversion program might not be considered in determining NESE if:

   • •

     The individual is not an active farmer or materially participating landlord in the year in which the payment is made, and

   • •

     the terms of the contract under which the payments are made are subject to yearly verification such that the contract could be terminated by either party in any year.