Cash-Rent Tenant

What is a cash-rent tenant?

Cash-rent tenants means a producer who rents land from another producer or landowner for a fixed cash amount or fix quantity of crop or crop proceeds.

Additionally, cash-rent tenants include tenants who rent land for zero dollars or in exchange for compensation other than cash, and producers who cash-rent land from another producer or landowner and sublease that land on share to another tenant.

What does the cash-rent tenant rule require?

In order to be eligible for benefits subject to cash-rent tenant provisions, cash-rent tenants must provide either 1) a significant contribution of equipment and a significant contribution of active personal management and or 2) a significant contribution of active personal labor to their respective farming operation.

How does the cash-rent tenant rule apply to partnerships or entities?

For cash-rent tenants which are legal entities (such as corporations, LLC’s, or LP’s), the cash-rent tenant rule is evaluated at the entity level. The entity itself must provide the equipment contribution while the members collectively provide the requirement for active personal management or active personal labor, as applicable.

For joint operations such as general partnerships or joint ventures, each member is evaluated for cash-rent tenant qualification. Contributions of equipment can come from the member or joint operation, while the contributions of active personal labor or management must be made by the specific member.

What if the required criteria is not met?

If an operation fails to meet cash rent tenant provisions, a cropland factor will be applied to the overall payments made to the operation across its entire operation. This cropland factor will be based on the percent of cropland in the entire operation that is share rented or owned, and for which the operation otherwise meets the necessary eligibility criteria to be eligible for payment.