TN 7 (06-90)

A. INTRODUCTION

In many parts of the country it is not unusual for a farm owner to turn the operation of the farm over to a tenant in return for rent in the form of cash or a percentage of the agricultural or horticultural commodities raised.

B. POLICY

The income of the landlord is includable in NESE if:

• there is an agreement between the landlord and the tenant which contemplates that the landlord will materially participate in the production or management of the production of the commodities; and

• the landlord does materially participate.

C. PROCEDURE

When any one of the 4 tests described in the following sections is met, the landlord is materially participating.