7 C.F.R. §§ 1400.201–1400.206

To be considered eligible to receive payments with respect to a particular farming operation, a person or legal entity must be actively engaged in farming with respect to the operation.

Actively engaged in farming means, except as otherwise provided in this part, that the person or legal entity:

All of the following factors will be taken into consideration in determining if the person or legal entity is independently and separately contributing a significant amount of capital, equipment, or land, or a combination of capital, equipment, or land, to the farming operation:

In determining if the person or legal entity is independently and separately contributing a significant amount of active personal labor or active personal management, all of the following factors will be taken into consideration:

A person will be considered to be actively engaged in farming with respect to a farming operation if:

If one spouse, or an estate of a deceased spouse, is determined to be actively engaged in farming as specified in paragraph (a) of this section, the other spouse is considered to have made a significant contribution, as specified in paragraph (a)(1)(ii) of this section, only to the same farming operation.

If a farming operation is conducted by a person, and the capital, land, or equipment is contributed by the person, the capital, land, or equipment:

For program year 2025 and prior years, a member of a joint operation, and for program year 2026 and subsequent years, a member of a qualified pass-through entity, will be considered to be actively engaged in farming with respect to a farming operation if the member:

For program year 2025 and prior, if a joint operation separately makes a significant contribution of capital, equipment, or land, or a combination of capital, equipment, or land, and the joint operation meets the provisions of § 1400.201(b)(2) and (3), the members of the joint operation who make a significant contribution of active personal labor, active personal management, or a combination of active personal labor and active personal management to the farming operation as specified in paragraph (a)(1)(ii) of this section will be considered to be actively engaged in farming with respect to the farming operation.

For program year 2026 and subsequent years, if a qualified pass-through entity separately makes a significant contribution of capital, equipment, or land, or a combination of capital, equipment, or land, and the qualified pass-through entity meets the provisions of § 1400.201(b)(2) and (3), the members of the qualified pass-through entity who make a significant contribution, whether compensated or not compensated, of active personal labor, active personal management, or a combination of active personal labor and active personal management to the farming operation as specified in paragraph (a)(1)(ii) of this section will be considered to be actively engaged in farming with respect to the farming operation.

For program year 2025 and prior years, a limited partnership, limited liability partnership, limited liability company, corporation, or other similar legal entity; or for program year 2026 and subsequent years, a C corporation, limited liability company that affirmatively elects to be treated as a corporation for federal income tax purposes, or other similar legal entity will be considered to be actively engaged in farming with respect to a farming operation if:

If any partner, stockholder, or member fails to meet the requirements in paragraph (a)(2) of this section, any program payment and benefit subject to this subpart provided to the legal entity will be reduced by an amount commensurate with the ownership share held by that partner, stockholder, or member in the legal entity.

An exception to paragraph (b) of this section will apply if:

For a farming operation conducted by a legal entity in which the capital, land, or equipment is contributed by the legal entity, the capital, land, or equipment:

The trust independently and separately makes a significant contribution to the farming operation of capital, equipment, or land, or a combination of capital, equipment, or land;

The income beneficiaries collectively make a significant contribution of active personal labor or active personal management, or a combination of active personal labor and active personal management to the farming operation. The combined interest of all the income beneficiaries providing active personal labor or active personal management, or a combination of active personal labor and active personal management, must be at least 50 percent;

The trust has a share of the profits or losses from the farming operation commensurate with the legal entity's contributions to the operation;

The trust makes contributions to the farming operation that are at risk for a loss, with the level of risk being commensurate with the legal entity's claimed share of the farming operation;

For a farming operation conducted by a trust in which the capital, land, or equipment is contributed by the trust, the capital, land, or equipment:

The trust has provided a tax identification number of the trust unless the trust is a revocable trust and the grantor is the sole income beneficiary; and

The trust has provided a copy of the trust agreement to the county committee unless the trust is a revocable trust.

For 2 program years after the program year in which a person dies, the person's estate will be considered to be actively engaged in farming if:

For a farming operation conducted by an estate in which the capital, land, or equipment is contributed by the estate, the capital, land, or equipment:

After the period set forth in paragraph (a) of this section, the deceased person's estate will not be considered to be actively engaged in farming unless, on a case by case basis, the Deputy Administrator determines, for the purpose of obtaining program payments, that the estate has not been settled.