Limited Liability Partnership - Farm Land Rent

Forum|Forum|4 months ago
February 9, 2026
1 reply
12 views

K-1 is showing it as non passive activity, yet the members spend little time managing and basically just collect land rent. How do I get this to present as a passive activity?

ProConnect Tax

PhoebeRoberts

Intuit Community Champion

Land rent is statutorily non-passive.

C

cr1969Author

Level 2

I'm confused, can you explain or guide me to additional resources? Everything I've read, indicated that without material participation, the activity of renting farmland to a farmer with little involvement from the members is a passive activity. Obviously I'm missing something and I'm striving to better understand. Your help is greatly appreciated Thanks

PhoebeRoberts

Intuit Community Champion

From https://www.cohenco.com/knowledge-center/insights/april-2018/the-tricky-business-of-classifying-income-from-land-rents-on-your-tax-return

While net losses from land rents are reported as passive, it’s a little more complicated in years with net taxable income. Regulation 1.469-2T(f)(1) creates rules regarding the recharacterization of passive income from "certain passive activities to be treated as income that is not from a passive activity." Section (f)(3) of that regulation applies to a taxpayer leasing land to an operator:

"If less than 30 percent of the unadjusted basis of the property … in a rental activity is subject to the allowance for depreciation … the taxpayer's net passive income from the activity shall be treated as not from a passive activity."

Sign up

Login with SSO

Let's get you signed in

Login with SSO

Scanning file for viruses.

This file cannot be downloaded