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Farm Contract Recommendations

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CottonwoodCanyon

Well-Known Member
Calling all farm experts! We have a farm in Nebraska that we have always done a crop share situation with the neighboring farmer and it has worked out great but he is growing and wanting to move towards a cash rent situation for this next year. We've liked having a hand in the farm operation but he has thrown out a very good price per acre and we do trust him so we're leaning towards doing that. That being said, what would you all recommend be written into a cash rent contract on 3-year periods? Reference to soil health, cover crops, reserving the right to buy back/not harvest a few acres every year for food plot, hunting/recreation concerns, etc. Other things to consider?
 
CottonwoodCanyon said:
Calling all farm experts! We have a farm in Nebraska that we have always done a crop share situation with the neighboring farmer and it has worked out great but he is growing and wanting to move towards a cash rent situation for this next year. We've liked having a hand in the farm operation but he has thrown out a very good price per acre and we do trust him so we're leaning towards doing that. That being said, what would you all recommend be written into a cash rent contract on 3-year periods? Reference to soil health, cover crops, reserving the right to buy back/not harvest a few acres every year for food plot, hunting/recreation concerns, etc. Other things to consider?
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Not an expert, but a few thoughts:
Annual soil tests with amendments to maintain fertility
Reserve hunting/recreation rights
Verified crop yields
Conservation practices? No-till? Buffer strips? Wind break? Contour buffers? Cover crops?
Field tile?
Out clause if things go off the rails? Probably a double edge sword if grain markets crash.
Does he do ALL the work or hire ag chems spayed? If there are third parties, I'd want some protection from a lien on the property for unpaid services.

Sure others will add more.
 
Mine are fairly simple, but I do add the rate/dates/amount due & acres left for food plot …

I keep recreational use, and I put in that the farmers access is for agriculture purposes only .

I never buy back crop, I just factor in 2 acres for standing crop, on say 80 or 100 acres of crop total and we adjust the rate accordingly. Then give them a map before harvest … so they don’t skimp on prep/fertilizer on the food plot acres.
 
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I don't know how you care to implement it, but I've recently ran into fixing broken field tiles being point of tension for one of my fields.

I just went and did it myself before it got out of control, but a couple years of neglecting broken ones can really create a mess of your place.
 
Nevermind previous comment. I missed the 3 year period you stated. Definitely more risk in a straight up cash agreement but does it pencil out ok if corn is in the 3.50-3.75 range? Obviously it wont be as good but will you be sitting pretty good if it goes up the same amount? Most people I talk to are pretty weary of cash rentals right now but they have already been given horrible terms to begin with. If it sounds good no matter any likely scenario it could be better than what most people are dealing with. Not that that really helps
 
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Snail3496 said:
I don't know how you care to implement it, but I've recently ran into fixing broken field tiles being point of tension for one of my fields.

I just went and did it myself before it got out of control, but a couple years of neglecting broken ones can really create a mess of your place.
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Currently no tile on that farm but good to consider for the future.
 
CottonwoodCanyon said:
Can you elaborate on that? We just signed up for CRP buffer strips that will be planted this spring. Other than that, ag is the only income on the farm.
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If you have CRP then you'll be fine. If you strictly cash rent, you can't claim to be farming and file a schedule F. Which for most would be terrible for write offs. Thats one reason many people crop share or custom farm if they don't have other farm income.
 
IowaBowHunter1983 said:
everything that goes on a schedule F for expenses, depreciation, etc. simply cash renting does not qualify a person for filing a schedule F.
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Here’s what we write off for the past 20+ years with cash rent contracts—
Property taxes, Interest on the loan, insurance, maintenance, travel time, any fence, tile, mowing etc..

Buildings can be depreciated.
 
Hardwood11 said:
Here’s what we write off for the past 20+ years with cash rent contracts—
Property taxes, Interest on the loan, insurance, maintenance, travel time, any fence, tile, mowing etc..

Buildings can be depreciated.
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I'm not your accountant but that is what my CPA has always told me and everything I have ever read.

Typical cash rent landlords are not farmers. They report their income on IRS Form 1040, Schedule E, Supplemental Income and Loss.

Who Files a Schedule F?

For tax purposes generally, all individuals, partnerships, or corporations that cultivate, operate, or manage farms for gain or profit--either as owners or tenants--are farmers. See Treas. Reg. §1.61-4(d). Individuals, trusts, partnerships, S corporations, LLCs taxed as partnerships, and...
www.calt.iastate.edu www.calt.iastate.edu
 
Hardwood11 said:
Here’s what we write off for the past 20+ years with cash rent contracts—
Property taxes, Interest on the loan, insurance, maintenance, travel time, any fence, tile, mowing etc..

Buildings can be depreciated.
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You might want to delete this Hardwood to get rid of 20 years of evidence. Haha.
I don't think this is correct. I agree with IBH1983 on this one.
 
It’s accurate, my father in law was an accountant… when he retired another accountant took over . He has 50 years experience. He’s 80 years old and still working .

The scheduled forms might be different, but I guarantee you can write off items if you receive cash rent. They know what they are doing .

I’m not doing the tax forms on my own.
 
JBAGS said:
You might want to delete this Hardwood to get rid of 20 years of evidence. Haha.
I don't think this is correct. I agree with IBH1983 on this one.
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I just confirmed the forms and write offs with my accountant , called my buddy who has 800 acres and cash rents … same exact write offs.

All the same write offs discussed.
Taxes, insurance , interest, mileage for maintenance, repairs, depreciation on buildings …..mowing of CRP etc…

Please feel free to tell us what we shouldn’t be writing off ?? Be specific.
 
I agree with Hardwood here. I’ve had a very experienced cpa who has advised me and taken the same deductions as Hardwood for 20 plus years. Keep in mind most of those years were when I was a nrlo. Mortgage interest, mileage to and from the farm, equipment, maintenance, building depreciated over time, etc. Keep in mind crp must be maintained as well. Efforts to do so is deductible. Hardwood is 100% correct, or his accountant is, and mine.
 
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Windlooker said:
I agree with Hardwood here. I’ve had a very experienced cpa who has advised me and taken the same deductions as Hardwood for 20 plus years. Keep in mind most of those years were when I was a nrlo. Mortgage interest, mileage to and from the farm, equipment, maintenance, building depreciated over time, etc. Keep in mind crp must be maintained as well. Efforts to do so is deductible. Hardwood is 100% correct, or his accountant is, and mine.
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You said CRP. DIFFERENT. Schedule F is allowed and appropriate
I provided a link above. Not sure what the debate is here. It's very clear.

Screenshot_20250130_173420_Chrome.jpg
 
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