- 21 -
of highly erodible cropland may enter into a long-
term contract with the Secretary of Agriculture
providing for conversion to a less intensive use
of that cropland. By contracting with the U.S.
Department of Agriculture, Agriculture
Stabilization Conservation Service (“ASCS”) not to
place farm land into production, the farmer
foregoes the possibility of generating farm income
by growing crop and selling. In re Welch, 74 B.R.
401, 403 (Bankr.S.D.Ohio 1987); In re Shepard, 75
B.R. 501, 504 (Bankr.N.D.Ohio 1987).”
Title 16 of the U.S. Code specifically designates
these payments as rental payments. Once the CRP
Contract is in place, the regulations require that
if the property is sold or transferred, the new
owner of the property has the right to terminate
the CRP Contract. See 7 C.F.R. section 704.21; In
re Waters, 90 B.R. 946 (Bankr.N.D.Iowa 1988).
The next question, however is whether an
individual is in a trade or business. In a
similar situation, an individual owned 160 acres
of farm land of which approximately 120 acres was
tillable. The farmer then placed 116.9 acres in
the CRP Program. In this case, the Service
determined that the individual had retired from
farming. Private Letter Ruling 8822064. Thus,
absent any other facts, should an individual
purchase farm land already in the CRP Program and
owns no other operating farm land, the Service
will more than likely determine that the
individual is not in the trade or business of
farming since there is not material participation
occurring with respect to such commodity.
* * * * * * *
There is nothing further I can do for you. As I
explained in my April 5, 1996, letter to you, the IRS
problem resolution program cannot take the place of
normal appeals channels. Since you chose not to
resolve this matter with IRS Appeals Officer Anita
Teichrow, you must decide if you wish to petition the
U.S. Tax Court. You must do so within the 90-day
statutory period. If you petition the U.S. Tax Court,
IRS District Counsel will again attempt to resolve this
Page: Previous 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 NextLast modified: May 25, 2011