4835 Error

[L.S.]

Just had the same problem as the rest of you with the third party situation. Now have a new problem. Yesterday, I had prepared a return with a 4835 with a loss and was able to create the e-file. Today, I had to change one small figure in the 4835 and result was still a loss and now when I try to create e-file, I get the message, Error - When there is both Income/Loss on Line 32 and Passive Activity on Line 33c, the return must be paper filed. Anyone else having a problem like this - never had a problems with any of my returns with 4835 until today. This is a cash-rent landlord with some patronage div income and some expenses so in the past we have always put his cash rent income on the Sch E and the exp & patronage div on the 4835 and have always been able to e-file, but now with this new message - this can't be e-filed. Can a person be actively participating but not materially participating? Would you consider this passive or non-passive activity? Really want to e-file because I have a lot of these farm cash rents with the 4835 then showing a loss - HELP, please. KC - suggestions?

[Dan]

Just had the same problem as the rest of you with the third party situation. Now have a new problem. Yesterday, I had prepared a return with a 4835 with a loss and was able to create the e-file. Today, I had to change one small figure in the 4835 and result was still a loss and now when I try to create e-file, I get the message, Error - When there is both Income/Loss on Line 32 and Passive Activity on Line 33c, the return must be paper filed. Anyone else having a problem like this - never had a problems with any of my returns with 4835 until today. This is a cash-rent landlord with some patronage div income and some expenses so in the past we have always put his cash rent income on the Sch E and the exp & patronage div on the 4835 and have always been able to e-file, but now with this new message - this can't be e-filed. Can a person be actively participating but not materially participating? Would you consider this passive or non-passive activity? Really want to e-file because I have a lot of these farm cash rents with the 4835 then showing a loss - HELP, please. KC - suggestions?

On form 4835 there is the question "Did you actively participate in the operation of this farm during 2009" You could answer this question yes even if you live in another State if you for example: make decision regarding the selling of your crop; pay taxes on the land; and pay your share of fertilizer. You can have 100% active personal management if you do those things. This does not answer your question concerning cash-rent.

Material Participation for landlords is on page 74 of Publication 225.