I inherited a farm from my grandparents last year and decided (because I know nothing about farming) to do a crop sharing agreement. I would help the guy by paying 40% of the expenses and taking 40% of profits. The farm is in Alabama and I've been done there a couple of times to see the farm. I've also started taking a few classes to help prep me for the future but I was curious if I still need to pay self-employment taxes for my ownership this past year?

1 Answer 1


The IRS treats sharecropping as rental income/loss, since you are not the one farming. You'll file Form 4835 (Farm Rental Income and Expenses) and the income/loss from that form will be entered on Schedule E (Supplemental Income and Loss) Which then flows through to your 1040 (no self-employment tax).

There are typically exceptions based on how much time you spend working the farm, but I don't believe going down there a couple times is enough to be an issue. For a typical real-estate rental if you spend over 750 hours working at being a landlord then it's no longer Schedule E rental, I think that'd be the same threshold here as well.

Note that the expenses from your trips down offset income too, not just the 40% of expenses that you contribute to operations.

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