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Screen 4835 - Farm Rentals (1040)
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Overview
Use this screen to enter general farm information and all farm income and deductions if the client is a landowner or sub-lessor of a farm.
Use the State allocation spreadsheet for UltraTax/1040 multi-state processing for the 4835 screen. Enter all multi-state data at the federal level via the State allocation spreadsheet for each unit of a single entity.
With the State allocation spreadsheet, individual allocation percentages and allocated net income amounts, in total, are not required to foot with the federal amount, so individual state's law differences can be conveniently taken into consideration.
For more information, refer to Processing multiple-state returns.
Auto Expenses
Enter all car / truck information in the asset module even if using the standard mileage method.
At-Risk Limitation
Enter amounts that are at-risk in the 6198 screen. See the overview of the 6198 screen for further information.
note
For New Hampshire returns, enter
J
or leave the T, S, J
field blank if 100 percent of Form BT-Summary activities are to be allocated to the taxpayer. Only those activities coded S
are assigned to the spouse.Source data entry
The UltraTax CS Source Data Entry utility enables you to enter data on facsimile versions of forms your clients submit for the preparation of their tax returns. Once the facsimile forms are completed, you can export the data and transfer it into your client data files via the data sharing feature. For more information including a list of available facsimiles, refer to the UltraTax CS Source Data Entry overview.
Form 4835 - General Questions
Enter information in this section to complete the top part of Form 4835 and to classify income and expenses.
State
When processing a state return, enter the two-character postal code for the state to which this unit belongs. This code is used by the various state applications to help determine in-state and out-of-state amounts.
note
A postal code entry is required for proper state processing.
Use the St CO screen to enter the percentage of federal net income or the amount of net income attributable to a specific state for Schedules C, E, F and Form 4835 activities. This screen is also used to enter state-specific (Arkansas, California, Hawaii, Kentucky, Massachusetts, Montana, New York, Oregon, and Wisconsin only) passive (regular and AMT) and section 179 carryover information (including Alabama and New Hampshire) for Schedules C, E, F and Form 4835 activities. UltraTax CS automatically transfers information entered in this screen to the appropriate state for use in state specific calculations. For more information, access the input screen help for the appropriate state application by pressing F1 from within a state input screen.
note
For New Hampshire returns, UltraTax CS uses the two-digit state postal code identifying the location of each business activity to process apportionment Forms BET-80 and DP-80.
Refer to the State fields in UltraTax/1040 for more information.
Was there active participation...?
Active participation is assumed in the operation of this farm. Enter
2
if the client did not actively participate.note
If you enter
2
, it is assumed that the activity does not qualify for the $25,000 rental real estate allowance on Form 8582, and a passive activity code of 1
is assigned automatically in the 4835-2 screen.Trade or business to which net investment income tax applies
It is assumed that income from a farm rental activity is included in net investment income for Form 8960, unless the
Passive activity code
on the 4835-2 screen is 3
or 4
.Enter a code in this field to assign the net investment income treatment for this activity if it is different from the default treatment. Enter
1
if the income from this trade or business should be included in the calculation of net investment income on Form 8960. Enter 2
if the income should not be included.State use code
In the statement, enter the applicable state use code for processing the 1040 state return and the appropriate ID number for the state return selected.
Code | Description | State number |
|---|---|---|
1 | Form OP-424: CT | Enter Seven-digit SOS ID number |
2 | Form IT-204-LL: NY | State number is not applicable |
3 | Form 568: CA | Enter the 7, 9, 10, 11 or 12 digit SOS file number. If no number has been assigned, enter None , None 1 , etc. |
4 | FAE 170: TN | Enter Tennessee account number. If no number has been assigned, enter None , None 1 , etc. |
5 | Form 725: KY | Enter Kentucky six-digit LLC account number |
7 | Form 05-158: TX | Enter 10-digit SOS file number |
8 | Tax identification number: HI | Enter Hawaii general/excise use 12-digit tax identification number. Do not include letters or dashes. |
9 | Form LC: KS | Enter up to seven-digit business entity ID number. If no number has been assigned, enter None . |
10 | Qualified oil & gas activity: MI | State number is not applicable |
11 | Personal service income: SC | State number is not applicable |
12 | Form PPT: AL | Enter six-digit SOS file number |
13 | Form RI-1065: RI | Enter the nine-character SOS ID number |
14 | Form BT Summary (LLC): NH | Enter the nine-character Department Identification Number (DIN), format NL and seven numbers |
15 | Form LLC Annual Report: MA | Enter the nine-digit ID number assigned by the Secretary of Commonwealth |
16 | LLC Franchise Tax Report: AR | Enter the nine-digit Arkansas filing number |
19 | Forms PHL NPT/BIRT: PA | Enter the 7-digit Philadelphia account number |
21 | Schedule DE: WI | State number is not applicable |
note
Michigan Note:
Net profit from the activity will be included on the Michigan Oil and Gas Worksheet. Total amounts from the Michigan Oil and Gas Worksheet are included on the MI-1040 Schedule 1.note
New York Note:
Code 17 for NY MCTMT is not applicable to Form 4835.To activate AR, CA, KS, KY, MA, NC, NH, NY, PA, TN, and TX LL/LLC returns, choose File > Client properties, select desired state tab, and mark the box for the form/return in the Other return(s) group box.
City code / City name
Enter the city code for the city in which the farm is located. This code is used by the various state / city applications to aid in determining in-city and out-of-city income. After you select a city code, the
City name
field completes automatically.State allocation
To access the State allocation spreadsheet, the following conditions must be present in the current client.
- The client being processed must include at least one state return.
- You must be viewing Client Organizer Data Entry or Input Screen Data Entry.
- For the 4835 and F screens, data must exist in theDescriptionfield.
- For the C screen, data must exist inPrincipal businessfield.
- For the Rent screen, data must exist inProperty kind/locationfield.
When these conditions have been met, access the spreadsheet by clicking the Allocation icon in this screen.
Two methods (percentage or amount) of allocation can be used to allocate federal unit net income to the applicable states displayed in the State allocation spreadsheet.
note
Amount fields applicable to one state may not be applicable to another state. Those amount fields that do not apply to a particular state have been disabled (shaded). Amount fields that are not shaded are considered enabled for the applicable state. For all states, other than Michigan, Oklahoma, and South Carolina (for reporting out-of-state income), allocations apply
only
to part-year resident and nonresident processed states.- Percentage:Enter a percentage in XXX.XX format in the first field available in the State allocation spreadsheet. Select the state to which this percentage applies from the fieldview. Click the Apply button. UltraTax CS automatically calculates the amounts attributable to that state and display the amounts in the spreadsheet. The percentage entered for that particular state will appear below the state name for easy reference. If enabled, individual item amounts can be changed (overwritten) on the spreadsheet from the calculated amount.
- Amount:In cases where a percentage of the federal amounts do not apply, individual item amounts, if enabled, may be entered in the spreadsheet for the applicable state. Zero (0) is a valid entry and will prevent the state amount from defaulting to the federal calculated amount. If an individual item amount field is left blank, the federal amount, if present, will be used in the state's calculation.
Build-up states that report or otherwise calculate income from these Schedules C, E, F and Form 4835 activities on an amount by amount basis may be allocated using a percentage only, while passive carryover amounts may be allocated by entering the state specific carryover amounts within the State allocation spreadsheet.
Other states, which are typically AGI states that require net activity amounts only, may be allocated by percentage or by entering the net amount of activity income/(allowable loss) attributable to the specific state.
note
- Passive activity carryover amounts are disabled for AGI states other than Kentucky, Montana, New York, and Oregon.
- Unlike income allocations, passive activity and section 179 carryover amounts apply to all residency statuses for AR, CA, HI, KY, MA, MT, OR, and WI, and part-year resident and nonresident statuses for NY.
The State allocation spreadsheet may be printed in a report format for future reference. Click the Print or Preview button in the lower portion of the spreadsheet. If licensed, you can also print to FileCabinet CS.
note
You can enter
0
(zero) in all of these fields.Considered farming business for income averaging
Enter
X
to indicate that this farm rental activity meets the definition of farming business for income averaging purposes. See the instructions for Schedule J - Income Averaging for Farmers and Fishermen for definition details. UltraTax CS includes the activities income or loss in determining the amount of taxable income from farming and fishing. Taxable farming and fishing income is then used to determine the amount of "Elected farm income" on Schedule J, line 2a when income averaging is beneficial to use.Community property designation
If the taxpayer is married, files a separate federal return, and resides in one of the following community property states - AZ, CA, ID, LA, NM, NV, TX, WA, or WI (or for registered domestic partners, files a Single or Head of Household federal return, and resides in CA, NV or WA) - use this field to identify whether or not the farm rental income/loss is generated from community property. By default, a blank entry (i.e. no entry) is treated as community property and an entry of
N
as non-community property (i.e. separate property). Farm Rental units indicated as community property will be allocated 50/50 to the taxpayer and the spouse when two separate clients are created via the Filing Status Optimization utility with the Split income according to Community Property rules option enabled.For more information about the Filing Status Optimization utility and the option for community property returns, refer to Using the Filing Status Optimization utility (1040) and Filing Status Optimization dialog.
note
- This field is disabled if a community property state return is not attached or the taxpayer's primary residence indicated on the 1040 screen is not a community property state.
- Any entry in this field will proforma to all subsequent years, if applicable.
Inactive activity for
2025
Enter
X
to indicate that this Form 4835 activity was not active for the current tax year. Any data in the activity's input screens and asset detail is ignored. This unit will proforma to next year. When activity resumes, unmark this field.Disposition of activity
Enter
1
for a complete disposition of the activity. Prior-year suspended losses will be released and the activity, plus any other related input screens, will be deleted during next year's proforma process. If the activity has any passive activity credit carryforwards, the activity will proforma to keep the passive credits available to use against other passive income, per Form 8582-CR instructions.Enter
2
if this is a passive activity that was sold on an installment basis. UltraTax CS treats installment dispositions as follows:- UltraTax CS calculates any allowed losses for the current tax year by multiplying the overall loss by the ratio of current-year gain recognized, divided by unrecognized gain as of the beginning of the tax year. Losses in excess of the allowed amount are suspended and proforma'd to the following tax year.
- When the gain recognized in the current year exceeds all of the current and carryforward losses, all losses are allowed in the current year. Also, UltraTax CS deletes any other related input screen during next year's proforma process. Any activity that is coded2with no passive loss carryovers, plus any other related input screen, is deleted during next year's proforma process.
note
UltraTax CS continues to proforma installment sales for activities that are deleted during the proforma process to the InstPY screen in the Personal Sale folder.
Income Items
Income from production
Use this field to enter income from the production of livestock, produce, grains, and other crops.
Federal Withholding
note
The federal withholding entered in this field is also used for certain states that calculate a "federal tax adjustment" for a taxpayer and spouse (split return); this amount (for state allocation purposes), will go to the taxpayer or spouse based on the overall activity's T/S/J code at the top of the screen.
State Withholding
State withholding may be entered in the statement attached to this field. If state withholding is present, to indicate who was issued Form 1099-B with state withholding, also enter a T or S in the T/S/J column and the state postal code associated to the state withholding in the Withholding State column. Many states include withholding records in the state electronic file or on withholding forms, and additional information related to the withholding may be required and entered at the state level. Entering a T/S/J code or postal code here does not modify the state source income for the activity. Use the Multi-state allocation spreadsheet to allocate the activity income and use the T, S, J field to indicate to whom the activity income or loss belongs.
Distributions received from cooperatives - total / taxable
When an amount is entered in the
Distributions received from cooperatives - total
field, the same amount is automatically entered in the Distributions received from cooperatives - taxable
field. You can enter a different amount in the Distributions received from cooperatives - taxable
field, including 0
(zero), if applicable.note
Cooperative distributions for Form 4835 may also be entered on the 1099P screen of this activity's folder. UltraTax CS includes the amounts from the 1099P screen on Form 4835, line 2a, Cooperative distributions and Form 4835, line 2b, Taxable amount. Amounts from the 1099P screen included on these lines will appear in a Not Required Statement for Form 4835. The following 1099P screen fields will be reported on Form 4835, line 2a.
- Patronage dividends (Box 1)
- Nonpatronage distributions (Box 2)
- Per-unit retain allocations (Box 3)
- Redemption of nonqualified notices and retain allocations (Box 5)
The following field will be reported on Form 4835, line 2b.
- Taxable cooperative distributions
Agricultural program payments - total / taxable
When you enter an amount in the
Agricultural program payments - total
field, the Agricultural program payments - taxable
field completes automatically with the same amount. You can enter a different amount in the Agricultural program payments - taxable
field, including 0
(zero), if applicable.CCC loans reported under election
In the attached statement, enter a description and amount of any Commodity Credit Corporation (CCC) loan proceeds reported as income under the election described in the Schedule F instructions for lines 5a through 5c. Amounts transfer to Form 4835, line 4a. A custom fieldview is available in the attached statement.
Elect to include CCC loans in income
Enter
X
in this field to elect to include CCC loans in income. The tax election automatically prints with the return. If the return is being filed electronically, the tax election will be included in the electronic file.note
If you make this election in the 4835 screen, do not make the same election in the Elect screen in the Elections folder, as duplicate elections may print.
Total / Taxable CCC loans forfeited
When you enter an amount in the
Total CCC loans forfeited statement
field, the Taxable CCC loans forfeited statement
field completes automatically with the same amount. Enter a different amount in the Taxable CCC loans forfeited
field, including 0
(zero), if applicable.Total / Taxable crop insurance proceeds...
When you enter an amount in the
Total crop insurance proceeds received in the current year
field, the Taxable crop insurance proceeds received in the current year
field completes automatically with the same amount. Enter a different amount in the Taxable crop insurance proceeds received in the current year
field, including 0
(zero), if applicable.note
If the taxpayer received Form 1099-MISC,the total and taxable crop insurance proceeds can be entered on the 1099M screen, associated with this activity and unit. Enter information in this field and in the 1099M screen. UltraTax CS includes the amounts in the 1099M screen on Form 4835, line 5 and provide a statement as an audit trail of total and taxable crop insurance proceeds entered on the 4835 screen and on the 1099M screen.
Elect crop insurance deferral to next year
Use this statement to make the election to defer the income from crop insurance proceeds until next year. The information entered in this statement will print on the election statement with the return.
note
When this election is made on the 4835 screen, do not make the same election in the Elect screen in the Elections folder, as duplicate elections may print
Other income
Enter any other income in the attached statement. A custom fieldview is available in the attached statement.
note
If Form 1099-MISC was received by the taxpayer, the other income in the 1099M screen associated with this activity can also be entered. Amounts can be entered in this field and in the 1099M screen. UltraTax CS includes the amounts in the 1099M screen on the Form 4835, line 6, Other income statement. The following fields in the 1099M screen will be reported as Form 4835 other income.
- Box 1 Rents
- Box 3 Other income
Election for Section 451(e) sale of livestock due to weather-related conditions
Use this statement to elect to defer income from the sale of livestock due to weather-related conditions under Section 451(e) and Regulation 1.451.7. Enter the information required for the election as outlined in IRS Publication 225 - Farmer's Tax Guide. The election will be used only for farm activities using the cash accounting method. The tax election prints automatically with the return. If the return is being filed electronically, the tax election is included in the electronic file.
note
If you make this election in the 4835 screen, do not make the same election in the Elect screen in the Elections folder, as duplicate elections will print.
Election for Section 1033(e) deferral of gain on sale of livestock due to weather-related conditions
Use this statement to defer recognition of gain from the sale of draft, dairy, or breeding livestock due to weather-related conditions under Section 1033(e). See Internal Revenue Code Section 1033(e) for more information. The tax election prints automatically with the return. If the return is being filed electronically, the tax election is included in the electronic file.
note
If you make this election in the 4835 screen, do not make the same election in the Elect screen in the Elections folder, as duplicate elections will print.
Other income from recapture: Section 179... / Section 280F... (Force)
Use these fields to enter the information required to complete Form 4797, Part IV, Recapture Amounts Under Section 179 and 280F(b)(2) When Business Use Drops to 50% or Less. The recapture amount reports as other income on Form 4835.
In the
Section 179...
fields, enter amounts to calculate the section 179 recapture.In the
Section 179... (Force)
fields, enter amounts to override (force) the calculated amounts, if necessary.Expenses
Car / truck expenses (Force)
Enter an amount in this field, or a
0
(zero) if applicable, if you want to override the calculated amount from the Auto Worksheet for car / truck expenses.Depreciation (Force)
If you retrieve depreciation expense using tax code 712 or manually enter the expense amount here, the amount in this field is used rather than the amount calculated on Form 4562.
Rent / lease - machinery
The calculated amount on the Auto Worksheet for vehicle rentals is added to any amount you enter in this field.
Taxes
Enter
11
in the Code
field to indicate the LLC tax paid. Amounts entered with code 11 are subtracted from the activities expenses on the California 540/540NR return.Enter
13
in the Code
field to indicate the taxes are attributable to the Unincorporated Business Franchise Tax. Amounts using code 13 do not transfer to the Taxes
statement on the District of Columbia UB4835 screen.note
Total taxes reported on Form 4835, line 27 may be reduced (but not below zero) by the buyer's part of real estate taxes identified with code
1
(Real estate taxes paid; reduce real estate taxes deducted) on the Sale screen in the Farm Rental folder. A diagnostic message is issued when reimbursements of tax exceed the total taxes paid.Other expenses
Only use tax code 730 to retrieve amortization from Write-Up CS into the attached statement if you do not have amortization amounts in a corresponding Form 4562 in UltraTax CS. Otherwise, the amortization amounts appear twice when you print the statement. A custom fieldview is available in the attached statement.
Preproductive period
Enter the preproductive period expenses that are being capitalized. The amount you enter prints as a negative number in the
Other expenses
field with the description 263A.Small taxpayer safe harbor election
Enter a description of each eligible property for which the taxpayer is applying the safe harbor provision under IRC Regulation 1.263(a)-3(h). For purposes of this election, in general, a small taxpayer is defined as an individual whose average annual gross receipts for the three preceding tax years is less than or equal to $10 million. Under the safe harbor, the taxpayer may deduct (rather than capitalize) certain amounts paid for improvements made to the eligible building property. The election prints automatically and is included in the contents of the e-file, when filing electronically. The election is applied on a year-by-year basis, and once made, the election is irrevocable.
note
The small taxpayer safe harbor election must be filed with the return annually and applies only to the current tax year. Therefore, if data was entered in this statement in the prior year, the information proformas to the subsequent tax year. An FYI diagnostic is produced when proforma'd election information is present. If the election does not apply for the current tax year, remove the data in the statement.