Is the Beginning Farmer Tax Credit good for more than one year? Certification of a beginning farmer or an owner of agricultural assets is valid for the year of certification and the two following years for rental and share rent contracts. After the 1st of the year, the Beginning Farmer will need to complete a short Recertification application and may need to take another farm management course.
When are applications approved and funds set aside for each application? After all parts of the application are complete. The only exception is when the transaction is a purchase. In those instances, the copy of the settlement statement to show the transaction closed can be submitted after the actual close date.
What is considered a “family member”? A family member of an individual includes the spouse, siblings, ancestors (parents or grandparents), and lineal descendants (children or grandchildren). A beginning farmer cannot be a family member to any owner or spouse to the owner of the agricultural asset, including any partner, member, shareholder, or trustee of the owner of the agricultural asset.
Are step-parents/step-children considered family members? Yes, if a legal adoption has taken place.
Can an approved credit be carried forward? The beginning farmer management tax credit can be carried forward up to 3 years. The credit for owners of agricultural assets can be carried forward up to 15 years.
What is an approved financial management program? Any course that has a farm financial management aspect to it that has been approved by the Rural Finance Authority (RFA). A partially inclusive list is posted on the webpage. If a course is not on there, the RFA will need to be contacted by the educational institution or educator for course approval.
Does the beginning farmer need to complete the financial management course before the application is considered complete? No, the beginning farmer must have the course section of the application filled out based upon their plans to take the course within that calendar year.
When may a person qualify for a financial management program waiver? If a person has a 4 year agricultural program degree or is certified as a Farm Business Management Instructor, or has a reasonable agricultural job related experience.
What is a “farm product”? "Farm product" means plants and animals useful to humans and includes, but is not limited to, forage and sod crops, oilseeds, grain and feed crops, dairy and dairy products, poultry and poultry products, livestock, fruits, and vegetables.
What is “farming”? "Farming" means the active use, management, and operation of real and personal property for the production of a farm product.
Can an agricultural asset be sold or rented to a partnership or LLC? No. Any agricultural asset under the Beginning Farmer Tax Credit must be sold or rented to a qualified beginning farmer.
Can I sign a purchase agreement to buy land before the year in which the actual purchase takes place? Yes. As long as the purchase transaction itself takes place in the year in which the tax credit is being applied for.
Can I apply for the tax credit before a sale of assets has actually taken place? Yes, completed applications with purchase agreements will reserve funds. A Final Settlement statement or bill of sale will be required to receive a tax certification.
Does a Contract for Deed purchase count for the tax credit? Yes, but the Contract for Deed must be signed in the year in which the credit is applied for.
I own land with multiple people and rent it to a beginning farmer, do we all have to apply? If the land is owned by multiple individuals, than each individual asset owner must apply separately. If the land is owned by an entity (partnership, S. Corp, LLC, non-grantor trust), only the entity must apply.
Agricultural asset owner A, B, and C rent land to the child of ag asset owner A. Can ag asset owner B and C apply for the Beginning Farmer Tax Credit? No. Since the renter is the child of ag asset owner A, this parcel would not be eligible.
How is the maximum net worth of $851,000 determined? This is determined by the beginning farmer completing a balance sheet to verify that their net worth is under the required threshold. A balance sheet does not need to be submitted to the RFA.
If all of a given years' allocation has been allotted, do applications roll to the following year? No, application for each year must be made in the year in which the funds are being applied for.
If all of a given years' allocation is not fully allocated, will the remaining balance be carried forward to the following year? Yes. Any unused dollars will be allocated to the next taxable year.
How is the "entered farming within the last ten years" figured? Each year a Schedule F is filed counts as a year of Farming. The "Clock Starts" at the first tax year in which the beginning farmer is no longer being claimed as a dependent on anyone else’s taxes.
Do all parties involved with purchasing or renting an asset need to be beginning farmers? Yes, all parties involved with a specific transaction need to be able to independently qualify as beginning farmers.
If a person purchases a farm and it has a home on it does the entire sale count towards the tax credit? No, the value of the residence will be deducted from the sale price to calculate the tax credit. The value of a home can be determined by submitting a property tax statement or by providing a copy of the appraisal.
If a farm financial management course occurs over two calendar years, in what year does the educational credits count towards? The credit applies to the calendar year in which the eligible class has been paid for.
When will I receive my tax credit certificate? The RFA will mail out tax credit certificates in January of the year following the year in which the tax credit was applied for.