Updated October 19, 2026. Quick answer: Form 4835 reports farm rental income from crop and livestock shares, for a landowner or sublessor who did not materially participate in running the farm. Net income from line 32 is entered on Schedule E (Form 1040), line 40, and the form is attached to the individual return.
What Form 4835 is for
The form is titled “Farm Rental Income and Expenses” with the subtitle “Crop and Livestock Shares (Not Cash) Received by Landowner (or Sub-Lessor)” and the note “Income Not Subject to Self-Employment Tax”.
The purpose statement reads: “If you were the landowner (or sublessor) and did not materially participate (for selfemployment tax purposes) in the operation or management of the farm, use Form 4835 to report farm rental income based on crops or livestock produced by the tenant.” The form also limits itself to certain activities: “Use this form only if the activity was a rental activity for purposes of the passive activity loss limitations.”
On filing, the form says “Attach to Form 1040, 1040-SR, or 1040-NR.” The IRS keeps a page for the form at the Form 4835 page.
Who should not use Form 4835
The instructions open the list with “Do not use Form 4835 if you were a/an:” A tenant is the first entry and reports on Schedule F (Form 1040) instead.
A landowner who did take part in the farm’s operation also belongs on Schedule F: “Landowner (or sublessor) and materially participated in the operation or management of the farm”. A landowner paid a flat charge is different too: “Landowner (or sublessor) and received cash rent for pasture or farmland based on a flat charge”, which goes on Schedule E (Form 1040), Part I.
Entities have their own routes: “Partnership or S corporation with rental income and expenses from crop and livestock shares” report on Form 8825, and an “Estate or trust with rental income and expenses from crop and livestock shares” reports on Schedule E (Form 1040), Part I.
For the definition of participation, the form points to “chapter 12 in Pub. 225, Farmer’s Tax Guide”.
Part I: gross farm rental income
Part I is labelled “Gross Farm Rental Income”. Line 1 carries the timing rule: “Under both the cash and the accrual methods of accounting, you must report livestock or crop share rentals received in the year you convert them into money or its equivalent.”
| Line | As printed on the form |
|---|---|
| Line A | “Did you actively participate in the operation of this farm during 2025?” |
| Line 1 | “Income from production of livestock, produce, grains, and other crops” |
| Line 2a | “Cooperative distributions (Form(s) 1099-PATR)” |
| Line 3a | “Agricultural program payments (see instructions)” |
| Line 5a | “Amount received in 2025” |
| Line 6 | “Other income, including federal and state gasoline or fuel tax credit or refund” |
| Line 7 | “Gross farm rental income. Add amounts in the right column for lines 1 through 6.” |
Line A has a participation test of its own: “You do not, however, actively participate if at any time during the year your interest (including your spouse’s interest) in the activity was less than 10% (by value) of all interests in the activity.”
Crop insurance has a deferral option for cash method filers: “you may be able to postpone reporting eligible crop insurance proceeds as income until the year following the year the damage occurred”. The form adds “Generally, if you elect to defer any eligible crop insurance proceeds, you must defer all such crop insurance proceeds”.
Part II: expenses
Part II carries the instruction “Do not include personal or living expenses.” The lines run from 8 to 30g, and the table shows a selection as printed.
| Line | As printed on the form |
|---|---|
| Line 8 | “Car and truck expenses (see Schedule F (Form 1040) instructions).” |
| Line 12 | “Depreciation and section 179 expense deduction not claimed elsewhere” |
| Line 14 | “Fertilizers and lime” |
| Line 18 | “Insurance (other than health)” |
| Line 20 | “Labor hired (less employment credits)” |
| Line 22b | “Other (land, animals, etc.)” |
| Line 29 | “Veterinary, breeding, and medicine” |
| Line 31 | “Total expenses. Add lines 8 through 30g.” |
| Line 32 | “Net farm rental income or (loss). Subtract line 31 from line 7.” |
| Line 34 | “If line 32 is a loss, check the box that describes your investment in this activity.” |
Two lines carry limits. On line 10 the deduction for conservation “cannot exceed 25% of your gross income from farming”. On line 22a, “if you leased a vehicle for a term of 30 days or more, you may have to reduce your deduction by an inclusion amount”.
| Where it applies | As printed on the form |
|---|---|
| Line A, active participation | “was less than 10% (by value) of all interests in the activity” |
| Line 10, conservation expenses | “cannot exceed 25% of your gross income from farming” |
| Line 22a, leased vehicle | “if you leased a vehicle for a term of 30 days or more” |
If costs must be capitalized, “enter the total amount capitalized in parentheses on line 30g”. The form then gives a short code to write beside that entry.
Line 32 and losses
A positive result moves to Schedule E: “If the result is income, enter it here and on Schedule E (Form 1040), line 40.” A loss follows a different path: “If the result is a loss, you must go to line 34.”
The instructions warn that “If you have a loss, you must apply the atrisk rules and the passive activity loss rules.” They add: “After applying these rules, the amount of your allowable loss may be smaller than the amount figured by subtracting line 31 from line 7.”
For line 34, “You may have to complete Form 8582 to determine your deductible loss, regardless of which box you checked.” “If you checked box 34b, you must complete Form 6198 before going to Form 8582.”
Two cases skip Form 8582 entirely, one being “You were a real estate professional (as defined in the Instructions for Schedule E (Form 1040)) and you materially participated in the operation of this activity”. The other is the one the form calls “Exception for Certain Rental Real Estate Activities”.
Spouses, EIN and other details
A married couple can elect a different treatment: “If you and your spouse each materially participated as the only members of a jointly owned and operated farm rental business, and you filed a joint return for the tax year, you can make an election to be taxed as a qualified joint venture instead of a partnership.”
If neither spouse materially participated, “you each can file a separate Form 4835 to report your share of farm rental income based on crops or livestock produced by the tenant”.
An EIN is not automatic: “You need an EIN only if you had a qualified retirement plan or were required to file an employment, excise, estate, trust, partnership, or alcohol, tobacco, and firearms tax return.” With net income, “your tax may be less if you figure it using Schedule J (Form 1040)”. For the farm reporting side, see the Schedule F page and the Form 8582 page.
Which revision applies
The edition read for this page is Form 4835 (2025), created 1/7/26, which carries its own instructions inside the form PDF and is the revision irs.gov served when it was read on 2026-10-19. Check the year printed on the form you are filing, because a different year can change the line layout, the line references to Schedule E and the instructions.
Common mistakes
- Using this form as a tenant or an active operator. The form says “Do not use Form 4835 if you were a/an:” and lists the tenant and the materially participating landowner among them.
- Reporting a flat cash rent here. The form says “Landowner (or sublessor) and received cash rent for pasture or farmland based on a flat charge”
- Entering a loss straight on line 32. The form says “If line 31 is more than line 7, don’t enter your loss on line 32.”
- Forgetting the loss rules after a loss. The form says “If you have a loss, you must apply the atrisk rules and the passive activity loss rules.”
Related: Schedule E, passing down the farm, and Schedule 1 lines 3 to 6.
Sources
- Form 4835 (2025), Farm Rental Income and Expenses: https://www.irs.gov/pub/irs-pdf/f4835.pdf
Read from the agency documents linked above on October 19, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.