Farmer cash rents to nephew-no QBI?

[NECPA in NEBRASKA]

I have been reading so many opinions on this, that I really feel stupid. My client is a farmer who files Sch F for his farming and Sch E for the farm land that he rents to his nephew. He only pays RE taxes on the land and has nothing else to do with it. I am not planning on taking QBI for the Sch E, because he has no involvement besides writing a check and collecting the money. Am I being too conservative? His farm is absolutely a business, but he does have a loss this year so the QBI will carry forward.

Thanks to all of you that share here and everywhere else. I am still researching on my own, but I don't think that common sense is always involved in these decisions.

Bonnie

 

[Lee B]

At least, it's not a triple net lease. Is the Sch F and the Sch E land contiguous under the same exact ownership?

What is the relative revenue generated on Sch F and Sch E?

Look for other involvement perhaps more long term, soil erosion control, noxious weed eradication, any structures etc.

Look at restructuring the arrangement so that it's QBI in the future.

 

[NECPA in NEBRASKA]

Thank you! I did call and ask him questions trying to see if he had more involvement. The owner is heading toward retirement and said that the buildings on the land are ancient and he is just letting them fall whenever. He generates about 3-5 times more revenue from the Sch F, depending on the year. The loss this year is abnormal.