1225. What combination of activities is required to demonstrate material participation in farm rental agreements?

A combination of factors showing material participation is required. Advancing, paying or standing for a significant part of production costs or furnishing a significant part of the equipment, tools and livestock helps to show that you may be materially participating. However, these two factors alone are not enough. Even paying all the expenses and furnishing all the equipment, tools and livestock are not enough to establish material participation. However, if you also participate in some other way to a significant degree, such as periodically inspecting the crop or advising and consulting with the tenant, you are participating to the required degree.

Last Revised: March, 2001