Conservation Reserve Program Payments: Self-Employment Income, Rental Income, or Something Else? [April 14, 2008]   [open pdf - 173KB]

"Under the Conservation Reserve Program (CRP), owners and operators of eligible land may enter into a contract with the Secretary of Agriculture to enroll land in the program and convert it to less intensive use under an approved conservation plan. In return, participants receive an annual payment that the statute refers to as 'rent.' Legislation establishing and extending the program has been silent as to the appropriate tax treatment of these payments. For many years, the Internal Revenue Service (IRS) generally treated the payments as farming income when received by someone who was engaged in the trade or business of farming, but as rental income when received by others. The IRS's position appears to have changed to one that would treat all Conservation Reserve Program payments as farming income and, thus, subject to self-employment tax. Recently, the IRS published a proposed revenue ruling that explains its treatment of CRP payments as income from the trade or business of farming and, thus, subject to self-employment tax."

Report Number:
CRS Report for Congress, RL34457
Public Domain
Retrieved From:
National Agricultural Law Center: http:nationalaglawcenter.org/
Media Type:
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