Agriculture payments


D

DLC

I am a retired individual receiving Social Security payments and who in
2010 has received payments from the Conservation Reserve Program (CRP)
program and the Environmental Quality Incentives (EQIP)Program for
activities performed on our treefarm.

It appears that the CRP income is not subject to self employment tax,
but the EQIP income is subject.

As both of these programs have common focus, it is not clear why the
income is treated differently.

Do I understand the rule correctly?

Thanks
 
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A

Alan

I am a retired individual receiving Social Security payments and who in
2010 has received payments from the Conservation Reserve Program (CRP)
program and the Environmental Quality Incentives (EQIP)Program for
activities performed on our treefarm.

It appears that the CRP income is not subject to self employment tax,
but the EQIP income is subject.

As both of these programs have common focus, it is not clear why the
income is treated differently.

Do I understand the rule correctly?

Thanks
My best guess is that the payments you are receiving under CRP are for
rent and not cost sharing. As such, the income goes on Schedule E. If it
was for cost sharing, then the income would go on Schedule F which would
be subject to SE tax. The payments under EQIP are for foregone income
less foregone costs for conservation practices. As it relates to running
a "farm" it goes on Schedule F.
 
D

dpb

DLC said:
I am a retired individual receiving Social Security payments and who in
2010 has received payments from the Conservation Reserve Program (CRP)
program and the Environmental Quality Incentives (EQIP)Program for
activities performed on our treefarm.

It appears that the CRP income is not subject to self employment tax,
but the EQIP income is subject.

As both of these programs have common focus, it is not clear why the
income is treated differently.

Do I understand the rule correctly?
I think so...we have CRP but not EQIP so can't speak for it.

On CRP, the initial Act designated that payments were "rent" but the IRS
decided to not agree and decreed it counted as SE income. Jerry Moran
and some other ag states introduced and got thru legislation a few years
ago that decreed unambiguously that CRP is not SE income. I don't know
that EQIP made it; probably owing to the smaller enrollment base.

I'm on FSA County Committee; I'll see what I can find out in the AM; I'm
sorta' presuming not many of the regulars here deal with many farm
operations.

--
 
D

DLC

I am a retired individual receiving Social Security payments and who in
2010 has received payments from the Conservation Reserve Program (CRP)
program and the Environmental Quality Incentives (EQIP)Program for
activities performed on our treefarm.

It appears that the CRP income is not subject to self employment tax,
but the EQIP income is subject.

As both of these programs have common focus, it is not clear why the
income is treated differently.

Do I understand the rule correctly?

Thanks
To expand my question:

The CRP consists of:
rent 10%
cost sharing of tree planting expenses 50%
project incentive 40%.

These all were on the same 1099-G

The EQIP was for removing grapevines from a portion of our woodland.

I haven't received a 1099-G yet for this.

Thanks
 
A

Alan

To expand my question:

The CRP consists of:
rent 10%
cost sharing of tree planting expenses 50%
project incentive 40%.

These all were on the same 1099-G

The EQIP was for removing grapevines from a portion of our woodland.

I haven't received a 1099-G yet for this.

Thanks
Everything sounds like it goes on Schedule F except for the rent.
 
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D

dpb

DLC said:
To expand my question:

The CRP consists of:
rent 10%
cost sharing of tree planting expenses 50%
project incentive 40%.

These all were on the same 1099-G

The EQIP was for removing grapevines from a portion of our woodland.

I haven't received a 1099-G yet for this.
....

There are at least some conditions under which part or all of the
cost-share payments are deductible; your situation is different than
ours out here in the High Plains w/ CRP and no forest ground so I can
only suggest reading Pub 225 carefully and talk to both a local tax
preparer experienced in farm tax issues as well as w/ the local FSA
office--they're not tax experts per se, of course, and can't give actual
tax advice but they should certainly have enough experience w/ the local
conditions and program participation to understand the basic mechanics
for your area as well as know who are knowledgeable locals.

<http://www.irs.gov/publications/p225/ch03.html>

It still says CRP goes on F line 6; having retired and all our ground is
in continuous CRP, I report on 4835 instead of filing a Form F.

--
 
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