7 CFR 1400.201 – General provisions for determining whether a person or legal entity is actively engaged in farming
(a) 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.
(b) Actively engaged in farming means, except as otherwise provided in this part, that the person or legal entity:
(1) Independently and separately makes a significant contribution to a farming operation 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;
(2) Has a share of the profits or losses from the farming operation commensurate with the person’s or legal entity’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 person’s or legal entity’s claimed share of the farming operation.
(c) 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:
(1) A separate and distinct interest in the land, crop, and livestock involved in the farming operation;
(2) The demonstration of separate and total responsibility for the interest in the land, crop, and livestock in the farming operation; and
(3) All funds and business accounts of the farming operation are separate from that of any other person and legal entity.
(d) 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:
(1) The types of crops and livestock produced by the farming operation;
(2) The normal and customary farming practices of the area;
(3) The total amount of labor and management necessary for the farming operation in the area; and
(4) Whether the person or legal entity receives compensation for the labor and management activities.