---
kind: "section"
citation: "7 C.F.R. § 1400.203"
title: "7"
number: "1400.203"
heading: "Joint operations and qualified pass-through entities."
url: "https://uscodex.org/cfr/7/1400.203"
---

# §1400.203. Joint operations and qualified pass-through entities.

- (a) 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:
  - (1) **Makes a significant contribution of—**
    - (i) Capital, equipment, or land or a combination of capital, equipment, or land and
    - (ii) Active personal labor or active personal management, or a combination of active personal labor and active personal management, and that are:
      - (A) Performed on a regular basis,
      - (B) Identifiable and documentable, and
      - (C) Separate and distinct from the contributions of any other member of the farming operation;
  - (2) Has a share of the profits or losses from the farming operation commensurate with the member's contributions to the operation; and
  - (3) Makes contributions to the farming operation that are at risk for a loss, with the level of risk being commensurate with the member's claimed share of the farming operation.
- (b)
  - (1) For program year 2025 and prior years, for a farming operation conducted by a joint operation in which the capital, equipment, or land is contributed by the joint operation, the capital, equipment, or land:
    - (i) To meet the requirements of [paragraph (a)(1)(i)](#a-1-i) of this section, and if contributed directly by the joint operation, must not be acquired as a loan made to, guaranteed, co-signed, or secured by any person, legal entity, or other joint operation that has an interest in the farming operation; and
    - (ii) To meet the requirements of paragraphs [(a)(2)](#a-2) and [(3)](#a-3) of this section, and if acquired as a result of a loan made to, guaranteed, co-signed, or secured by the persons, legal entities, or joint operations with an interest in the operation, the loan must:
      - (A) Bear the prevailing interest rate; and
      - (B) **Have a repayment schedule considered reasonable and customary for the area.**
  - (2) For program year 2026 and subsequent years, for a farming operation conducted by a qualified pass-through entity in which the capital, equipment, or land is contributed by the qualified pass-through entity, the capital, equipment, or land:
    - (i) To meet the requirements of [paragraph (a)(1)(i)](#a-1-i) of this section, and if contributed directly by the qualified pass-through entity, must not be acquired as a loan made to, guaranteed, co-signed, or secured by any person, legal entity, or other qualified pass-through entity that has an interest in the farming operation; and
    - (ii) To meet the requirements of paragraphs [(a)(2)](#a-2) and [(3)](#a-3) of this section, and if acquired as a result of a loan made to, guaranteed, co-signed, or secured by the persons, legal entities, or qualified pass-through entities with an interest in the operation, the loan must:
      - (A) Bear the prevailing interest rate; and
      - (B) **Have a repayment schedule considered reasonable and customary for the area.**
- (c) 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)](/cfr/7/1400.201.md?p=b-2) and [(3)](/cfr/7/1400.201.md?p=b-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)](#a-1-ii) of this section will be considered to be actively engaged in farming with respect to the farming operation.
- (d) 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)](/cfr/7/1400.201.md?p=b-2) and [(3)](/cfr/7/1400.201.md?p=b-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)](#a-1-ii) of this section will be considered to be actively engaged in farming with respect to the farming operation.

## Notes

### Amendments

[73 FR 79273, Dec. 29, 2008, as amended at 75 FR 900, Jan. 7, 2010; 85 FR 52039, Aug. 24, 2020; 91 FR 32886, June 2, 2026]

### Authority

Authority: 7 U.S.C. 1308, 1308-1, 1308-2, 1308-3, 1308-3a, 1308-4, and 1308-5; and Title I, Pub. L. 115-123.

### Source

Source: 73 FR 79273, Dec. 29, 2008, unless otherwise noted.

### Amendments

[73 FR 79273, Dec. 29, 2008, as amended at 75 FR 900, Jan. 7, 2010; 85 FR 52039, Aug. 24, 2020; 91 FR 32886, June 2, 2026]