(a) The terms defined in part 718 of this title are applicable to this part and all documents issued in accordance with this part, except as otherwise provided in this section.
Terms Used In 7 CFR 1400.3
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. Source: OCC
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Fair market value: The price at which an asset would change hands in a transaction between a willing, informed buyer and a willing, informed seller.
- Grantor: The person who establishes a trust and places property into it.
- Irrevocable trust: A trust arrangement that cannot be revoked, rescinded, or repealed by the grantor.
- Lineal descendant: Direct descendant of the same ancestors.
- Outlays: Outlays are payments made (generally through the issuance of checks or disbursement of cash) to liquidate obligations. Outlays during a fiscal year may be for payment of obligations incurred in prior years or in the same year.
- Partnership: A voluntary contract between two or more persons to pool some or all of their assets into a business, with the agreement that there will be a proportional sharing of profits and losses.
- Remainder: An interest in property that takes effect in the future at a specified time or after the occurrence of some event, such as the death of a life tenant.
- Revocable trust: A trust agreement that can be canceled, rescinded, revoked, or repealed by the grantor (person who establishes the trust).
- Settlement: Parties to a lawsuit resolve their difference without having a trial. Settlements often involve the payment of compensation by one party in satisfaction of the other party's claims.
(b) The following definitions are also applicable to this part:
Active personal management means personally providing and participating in activities considered critical to the profitability of the farming operation and performed under one or more of the following categories:
(1) Capital, which includes:
(i) Arranging financing and managing capital;
(ii) Acquiring equipment;
(iii) Acquiring land or negotiating leases;
(iv) Managing insurance; and
(v) Managing participation in USDA programs;
(2) Labor, which includes hiring and managing of hired labor; and
(3) Agronomics and marketing, which includes:
(i) Selecting crops and making planting decisions;
(ii) Acquiring and purchasing crop inputs;
(iii) Managing crops (that is, whatever managerial decisions are needed with respect to keeping the growing crops living and healthy–soil fertility and fertilization, weed control, insect control, irrigation if applicable) and making harvest decisions; and
(iv) Pricing and marketing of crop production.
Active personal management means personally providing and participating in:
(1) The general supervision and direction of activities and labor involved in the farming operation; or
(2) Services (whether performed on-site or off-site) reasonably related and necessary to the farming operation, including:
(i) Supervision of activities necessary in the farming operation, including activities involved in land preparation, planting, cultivating, harvesting, and marketing of agricultural commodities, as well as activities required to establish and maintain conserving cover crops on CRP acreage and activities required in livestock operations;
(ii) Business-related actions, which include discretionary decision making;
(iii) Evaluation of the financial condition and needs of the farming operation;
(iv) Assistance in the structuring or preparation of financial reports or analyses for the farming operation;
(v) Consultations in or structuring of business-related financing arrangements for the farming operation;
(vi) Marketing and promotion of agricultural commodities produced by the farming operation;
(vii) Acquiring technical information used in the farming operation; and
(viii) Any other management function reasonably necessary to conduct the farming operation and for which service the farming operation would ordinarily be charged a fee.
Administrator means the Administrator of the Farm Service Agency including any designee of the Administrator.
Alien means any person not a citizen or national of the United States.
Attribution means the combination of any payment made directly to a person or legal entity with the person’s or legal entity’s pro rata direct and indirect interest in payments received by a legal entity, joint venture, or general partnership.
Average Adjusted Gross Income means the average of the adjusted gross income as defined under 26 U.S.C. 62 or comparable measure of the person or legal entity over the 3 taxable years preceding the most immediately preceding complete taxable year.
Capital means the funding provided by a person or legal entity to the farming operation for the operation to conduct farming activities. In determining whether a person or legal entity has independently contributed capital, in the form of funding, to the farming operation, the capital must have been derived from a fund or account separate and distinct from that of any other person or legal entity with an interest in the farming operation. Capital does not include the value of any labor or management that is contributed to the farming operation or any outlays for land or equipment. A capital contribution must be a direct out-of-pocket input of a specified sum or an amount borrowed by the person or legal entity and does not include advance program payments.
Chief means the Chief of the Natural Resources Conservation Service including any designee of the Chief (also referred to in this part as NRCS Chief).
Contribution means providing land, capital, or equipment assets, and the actions of providing active personal labor or active personal management to a farming operation in exchange for, or with the expectation of, deriving benefit based solely on the success of the farming operation.
Deputy Administrator means the Deputy Administrator for Farm Programs, Farm Service Agency including any designee.
Environmentally sensitive land of special significance means land offered for enrollment or adjacent to the land offered for enrollment that contains, or through enrollment will address, critical resources including, but not limited to:
(1) Habitat for threatened, endangered, or at-risk species;
(2) Historical or cultural resources;
(3) Native grasslands;
(4) Unique wetlands;
(5) Rare, unique, or related soils; and
(6) Critical groundwater recharge areas.
Equipment means the machinery and implements needed by the farming operation to conduct activities of the farming operation, including machinery and implements involved in land preparation, planting, cultivating, harvesting, or marketing of the crops involved. Equipment also includes machinery and implements needed to establish and maintain conserving cover crops on CRP acreages and those needed to conduct livestock operations. The equipment may be leased from any source. If the equipment is leased from another person or legal entity with an interest in the farming operation, the equipment must be leased at a fair market value.
Family member means a person to whom another member in the farming operation is related as a lineal ancestor, lineal descendant, sibling, first cousin, niece, nephew, spouse, or otherwise by marriage.
Farming operation means a business enterprise engaged in the production of agricultural products, commodities, or livestock, operated by a person, legal entity, or joint operation that is eligible to receive payments, directly or indirectly, under one or more of the programs specified in §1400.1. A person or legal entity may have more than one farming operation if the person or legal entity is a member of one or more joint operations.
Indian tribe means any Indian tribe, band, nation, pueblo, or other organized group or community, including any Alaska Native village or regional or village corporation as defined in or established pursuant to the Alaska Native Claims Settlement Act (43 U.S.C. 1601-1629h), which is recognized as eligible for special programs and services provided by the United States to Indians because of their status as Indians.
Interest in the farming operation means any of the following:
(1) Owner, lessor, or lessee of the land in the farming operation;
(2) An interest in the agricultural products, commodities, or livestock produced by the farming operation; or
(3) A member of a joint operation that is an owner, lessor, or lessee of the land in the farming operation or has an interest in the agricultural products, commodities, or livestock produced by the farming operation.
Irrevocable trust means a trust as specified in this definition. Any trust not meeting this definition will be considered a revocable trust. A trust may be considered to be an irrevocable trust only if:
(1) The trust cannot be modified or terminated by the grantor;
(2) The grantor has no future, contingent, or remainder interest in the corpus of the trust; and
(3) The trust agreement does not provide for the transfer of the corpus of the trust to the remainder beneficiary in less than 20 years from the date the trust is established except in cases where the transfer is contingent upon either the remainder beneficiary achieving at least the age of majority or the death of the grantor or income beneficiary.
Joint operation means a general partnership, joint venture, or other similar business organization in which the members are jointly and severally liable for the obligations of the organization.
Land means farmland that meets the specific requirements of the applicable program. The land may be leased from any source. If the land is leased from another person or legal entity with an interest in the farming operation, the land must be leased at a fair market value.
Lawful alien means any person who is not a citizen or national of the United States but who is admitted into the United States for permanent residence under the Immigration and Nationality Act and possesses appropriate valid credentials issued by the United States Citizenship and Immigration Services, Department of Homeland Security.
Legal entity means an entity created under Federal or State law and that:
(1) Owns land or an agricultural commodity, product, or livestock; or
(2) Produces an agricultural commodity, product, or livestock.
Livestock means those animals included in §1416.304(a) of this chapter.
(1) Payments made in accordance with part 1412 of this chapter or successor regulation of this chapter;
(2) CRP annual rental payments made in accordance with part 1410 of this chapter or successor regulation of this chapter;
(3) NAP payments made in accordance with part 1437 of this chapter or successor regulation of this chapter;
(4) ELAP, LIP, LFP, and TAP payments made in accordance with part 1416 of this chapter or successor regulations of this chapter:
(5) Price support payments made in accordance with parts 1421 and 1434 of this chapter; and
(6) For other programs, any payments designated in individual program regulations in this chapter.
Person means an individual, natural person and does not include a legal entity.
Public school means a primary, elementary, secondary school, college, or university that is directly administered under the authority of a governmental body or that receives a predominant amount of its financing from public funds.
Secretary means the Secretary of the United States Department of Agriculture.
Sharecropper means a person who performs work in connection with the production of the crop under the supervision of the operator and who receives a share of the crop in return for.work
Significant contribution means the provision of the following to a farming operation:
(1) Land, capital, or equipment:
(i) For land, capital, or equipment contributed independently by a person or legal entity, a contribution that has a value at least equal to 50 percent of the person’s or legal entity’s commensurate share of the total:
(A) Value of the capital necessary to conduct the farming operation;
(B) Rental value of the land necessary to conduct the farming operation; or
(C) Rental value of the equipment necessary to conduct the farming operation; or
(ii) If the contribution by a person or legal entity consists of any combination of land, capital, and equipment, the combined contribution must have a value at least equal to 30 percent of the person’s or legal entity’s commensurate share of the total value of the farming operation.
(2) For active personal labor, an amount contributed by a person or members, stockholders, or partners of a legal entity to the farming operation that is described by the smaller of the following:
(i) 1,000 hours per calendar year; or
(ii) 50 percent of the total hours that would be necessary to conduct a farming operation that is comparable in size to the person’s or legal entity’s commensurate share in the farming operation.
(3) For active personal management, includes activities performed by a person, with a direct or indirect ownership interest in the farming operation or a legal entity, on a regular, continuous, and substantial basis to the farming operation and meets at least one of the following to be considered significant:
(i) Performs at least 25 percent of the total management hours required for the farming operation on an annual basis; or
(ii) Performs at least 500 hours of management annually for the farming operation.
(4) With respect to a combination of active personal labor and active personal management, when neither contribution by itself meets the requirement of paragraphs (2) and (3) of this definition, a combination of active personal labor and active personal management that, when made together:
(i) Is critical to the profitability of the farming operation;
(ii) Is performed on a regular, continuous, and substantial basis; and
(iii) Meets the following required number of hours:
Table 1 to Paragraph (4)(iii) of the Definition of Significant Contribution
|Combination of active personal labor and active personal management minimum requirement for a significant contribution|
|Management contribution in hours||Labor contribution in hours||Meets the minimum threshold for significant contribution, in hours|
Substantial amount of active personal labor means the provision of active personal labor to a farming operation in an amount described by the smaller of the following:
(1) 1,000 hours per calendar year; or
(2) 50 percent of the total hours that would be necessary to conduct a farming operation that is comparable in size to the person’s or legal entity’s commensurate share in the farming operation.
Total value of the farming operation means the total of the costs, excluding the value of active personal labor and active personal management contributed by a person who is a member of the farming operation, needed to carry out the farming operation for the year for which the determination is made.
[73 FR 79273, Dec. 29, 2008, as amended at 79 FR 21097, Apr. 14, 2014; 85 FR 52037, Aug. 24, 2020]