What is material participation in a farm rental?

You materially participate if you have an arrangement with your tenant for your participation and you meet one of the following tests:

1. You do at least three of the following:
   • Pay, using cash or credit, at least half the direct costs of producing the crop or livestock.
   • Furnish at least half the tools, equipment and livestock used in the production activities.
   • Advise or consult with your tenant.
   • Inspect the production activities periodically
2. You regularly and frequently make, or take an important part in making, management decisions substantially contributing to or affecting the success of the enterprise.
3. You work 100 hours or more spread over a period of 5 weeks or more in activities connected with agricultural production.
4. You do things that, considered in their totality, show you are materially and significantly involved in the production of the farm commodities.