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Home > Licensing, Inspections, Certifications & Testing > Licensing > Corporate Farm Report > Explanation of Exemptions

Explanation of Exemptions


A. Family Farm Corporations, Limited Partnerships, Limited Liability Companies, and Trusts:

If a 'Corporation':

  1. Majority of voting stock is held by, and a majority of stockholder are related within three generations; and
  2. One of the related stockholders either resides on the farm, or actively operates the farm.
  3. None of stockholders are corporations. Stockholders can be natural persons, beneficiaries of a family farm trust, limited partnerships, general partnerships, or limited liability companies.

If a 'Limited Partnership':

  1. Majority of interest is held by, and a majority of partners are related within three generations; and
  2. One of the related partners either resides on the farm, or actively operates the farm; or
  3. One of the related partners owned the land for a period of five years before the land was transferred to the limited partnership.
  4. None of the partners are corporations. Partners can be natural persons, beneficiaries of a family farm trust, limited partnerships, general partners, or limited liability companies.

If a 'Limited Liability Company':

  1. Majority of the membership interests is held by and a majority of the members are persons related to each other within three generations; and
  2. One of the related members resides on the farm, or actively operates the farm; or
  3. One of the related members owned the land for a period of five years before the land was transferred to the limited liability company
  4. None of the members are corporations or limited liability companies. Members can be beneficiaries of a family farm trust, limited partnerships, general partners, or natural persons.

If a 'Trust':

Two types of family farm trusts:

  1. Majority of the current beneficiaries are persons related to each other within three generations, all of the current beneficiaries are natural persons, nonprofit corporations, or trusts described in I.R.C. Section 170 (c), and one of the related current beneficiaries is residing on the farm, actively operating the farm, or the trust leases the agricultural land to a qualifying entity; or
  2. A charitable remainder trust as defined in I.R.C. Section 664, or charitable lead trust as described in I.R.C. Section 170(f). The lead time cannot exceed 10 years. Also a majority of the remainder beneficiaries must be related within three generations.

B. Authorized Farm Corporations, Limited Partnerships, Limited Liability Companies

If a 'Corporation';

  1. The corporation can have no more than 5 shareholders. A husband and wife are considered one shareholder.
  2. All of the shareholders are natural persons.
  3. The corporation only has one class of shares.
  4. The corporation's revenue from rent, royalties, dividends, interest, and annuities does not exceed 20% of its gross receipts.
  5. Shareholders holding 51 % or more of the interest in the corporation reside on the farm or are actively engaging in farming.
  6. The corporation does not have an interest in more than 1,500 acres of land.
  7. None of the shareholders are shareholders in any other authorized farm corporations that, together, have an interest in more then 1,500 acres of land.

If a 'Limited Partnership':

  1. Limited partnership has been issued a certificate from the Secretary of State or is registered with the county recorder.
  2. The limited partnership has no more than 5 partners.
  3. All of the partners are natural persons.
  4. The partnership's revenue from rent, royalties, dividends, interest, and annuities does not exceed 20% of its gross receipts.
  5. The general partners holding 51 % or more of the interest in the partnership reside on the farm or are actively engaging in farming no more than 1,500 acres of land.
  6. The limited partners do not participate in the business of the limited partnership including operating, managing, or directing management of farming operations.
  7. The partnership does not have an interest in more than 1,500 acres of land.
  8. None of limited partners are partners in any other authorized farm partnership that, together, have an interest in more then 1,500 acres of land.

If a 'Limited Liability Company':

  1. The limited liability company has no more than 5 members.
  2. All of the members are natural persons.
  3. The limited liability company only has one class of membership interest.
  4. The limited liability company's revenue from rent, royalties, dividends, interest, and annuities does not exceed 20% of its gross receipts.
  5. Members holding 51 % or more of both the governance rights and financial rights in the limited liability company reside on the farm or are actively engaging in farming.
  6. The limited liability company does not have an interest in more than 1,500 acres of land.
  7. None of the members are members in any authorized farm limited liability company that, together, have an interest in more then 1,500 acres of land.

C. Authorized Livestock Farm

  1. It is a corporation engaged in the production of livestock, other than dairy cattle.
  2. All the shareholders are natural persons or family farm corporations. All shareholders must fill out the shareholder affidavit form, which is attached to the application form.
  3. The corporation does not have more than one class of shares.
  4. The corporation's revenue from rent, royalties, dividends, interest, and annuities does not exceed 20% of its gross receipts.
  5. Shareholders holding 75% or more of the control, financial, and capital investment in the corporation are farmers residing in Minnesota.
  6. 51% of those shareholders who reside on the farm must actively engage in livestock production
  7. The corporation does not have an interest in more than 1,500 acres of land.
  8. None of the shareholders are shareholders in any other authorized farm corporations that, together, have an interest in more than 1,500 acres of land.

D. Aquatic Farm

  1. Can be a corporation, limited partnership, or limited liability company.
  2. Owns or leases agricultural land as a necessary part of an aquatic farm.

E. Religious Farm

  1. A corporation formed primarily for religious purposes whose sole income is derived from agriculture.

F. Public Utility

  1. A corporation regulated under Minn. Chapter 2168, and owns land for purposes described in that chapter, or
  2. An electric generation or transmission cooperative that owns land for use in its business if the land is not used for farming except to an entity that qualifies under the corporate farm law.

G. Grandfathered In

  1. A corporation who had an interest in agricultural land prior to May 20, 1973, or;
  2. A pension/investment fund who had an interest in agricultural land prior to May 12, 1981, or;
  3. A limited partnership who had an interest in agricultural land prior to May 1, 1988, or;
  4. A trust that had an interest in agricultural land prior to May 16, 2000, AND
  5. Entity can acquire no more than 20% of what the entity owned as of the grandfather date in any 5 year period, not including any acreage owned to meet pollution control requirements.

H. Commissioner

  1. If an entity cannot satisfy the requirements of any of the exemptions under the corporate farm law, the entity may petition the Commissioner of Agriculture for a "Commissioner's Exemption."
  2. The Commissioner may grant the exemption if the entity does not violate the purpose behind the corporate farm law as stated in Minn. Stat. Section 500.24, subd. 1, and the entity would not have a significant impact upon the agricultural industry and the economy;
  3. Please fill out the application as best you can, and include a memorandum as to why you should receive a commissioner's exemption.

I. Non-Profit

  1. Organized under state nonprofit corporation law or qualified for tax-exempt status under federal tax law; and either
  2. Must use the land for a specific nonfarming purpose, lease the land to an entity that qualifies under the corporate farm law; or
  3. Actively farms less than 160 acres that was acquired prior to August 1, 2010, and all profits from the ag land is used for educational purposes.
  4. Actively farms less than 40 acres that was acquired after August 1, 2010, and all profits from the ag land is used for educational purposes.

J. Research Farm

  1. Can be a corporation, limited partnership, pension, investment fund, or limited liability company:
  2. Owns or operates land for research or experimental purposes, provided that any commercial sales from the operation are incidental to the research or experimental objectives.
  3. Must submit a prospectus or proposal of the intended method of operation, including any operational contracts with individual participants.

K. Development

  1. Can be a corporation, limited partnership, pension, investment fund, or limited liability company.
  2. Has documented plans to use the land within 6 years from the date of purchase for a specific nonfarming purpose, or
  3. The land is zoned nonagricultural, or
  4. The land is located within an incorporated area.
  5. May hold land in the amount necessary for its nonfarm business, as long as the land is leased to a qualified entity under the corporate farm law during the development period.

L. Breeding Stock

  1. Can be a corporation, limited partnership, or limited liability company.
  2. Owns or operates land for purpose of raising breeding stock, including embryos, for resale to farmers; or
  3. For the purpose of growing seed, wild rice, nursery plants, or sod.
  4. If raising livestock, other than dairy cattle, must sell all castrated animals to be fed out or finished to farming operations that are neither directly or indirectly owned by the business operating the breeding operation; and
  5. Report its total production and sales annually to the commissioner.

M. Repossessed Land

  1. Land acquired by a corporation, limited partnership, limited liability company, pension, or investment fund in the process of law in the collection of debts or enforcement of a lien or claim on land.
  2. Must dispose of land within 5 years of acquiring title. If land is leased to immediately preceding owner, can keep the land for 10 years.
  3. If farmed during the 5-year period, it must lease it to an entity that qualifies under the corporate farm law.
  4. Livestock acquired must be disposed of within one full production cycle or 18 months, whichever is earlier.

N. Gifted Land

  1. Acquired as a gift, by grant or devise, by an educational, religious, or charitable nonprofit corporation, limited partnership, Limited Liability Company, pension, or investment fund.
  2. Land must be disposed of within 10 years after acquiring title.

O. De Minimis

  1. Can be a corporation, limited partnership, limited liability company, pension, or investment fund.
  2. Has an interest in 40 acres or less of agricultural land, and
  3. Annually receives less than $150 per acre in gross revenue from rental or agricultural production.