---
kind: "section"
citation: "7 C.F.R. § 1400.205"
title: "7"
number: "1400.205"
heading: "Trusts."
url: "https://uscodex.org/cfr/7/1400.205"
---

# §1400.205. Trusts.


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

- (a) 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;
- (b) 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;
- (c) The trust has a share of the profits or losses from the farming operation commensurate with the legal entity's contributions to the operation;
- (d) 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;
- (e) 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:
  - (1) To meet the requirements of [paragraph (a)](#a) of this section, must be contributed directly by the trust and must not be acquired as a loan made to, guaranteed, co-signed, or secured by any person, legal entity, or qualified pass-through entity that has an interest in the farming operation, as defined in this part; and
  - (2) To meet the requirements of paragraphs [(c)](#c) and [(d)](#d) of this section and if land, capital or equipment is acquired as a result of a loan made to, guaranteed, co-signed, or secured by the persons, legal entities, or qualified pass-through entities as defined, the loan must:
    - (i) Bear the prevailing interest rate; and
    - (ii) **Have a repayment schedule considered reasonable and customary for the area.**
- (f) 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
- (g) The trust has provided a copy of the trust agreement to the county committee unless the trust is a revocable trust.

## 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]