The 2006 Legislature made some changes to the Beginning Farmer Tax Credit Act that will go into effect in 2007. The following are answers to some of the most commonly asked questions.

How does this program work?

Qualified owners of agricultural assets who agree to rent to a qualified beginning farmer for three years are eligible to receive a 10% state income tax credit on the amount of cash rent received or 15% on the cash equivalent of the share rent received each year for three years.

How would a tax credit be figured on a share rent agreement?

The tax credit would be based on the cash equivalent of a share crop, cow/calf lease, or other similar types of arrangements.

I'm 45 years old and have just started farming in the last couple of years. Am I too old to qualify as a beginning farmer?

Actually, age is not a factor in determining eligibility. If you can answer "yes" to the following questions, you may qualify as a beginning farmer.

• Are you a resident of Nebraska?
• Do you have a net worth of not more than $200,000?
• Do you have livestock/farming experience or education, plan to seek livelihood in production agriculture, and provide the majority of the day-to-day physical labor and management of a livestock/farming operation?
• Are you not closely related to the owner of the rented assets?
• Have you farmed for less than 10 out of the past 15 years?

I farmed for 30 years and retired 10 years ago. Since I've been out of farming for so long, can I still qualify for the tax credit as an asset owner?

If in the past, you were providing the majority of the day-to-day physical labor and management of your operation and receiving 50 percent of your gross annual income from farming for 10 years or more as a producer, you may qualify.

Owners of agricultural assets, who can answer "yes" to these questions, may be eligible.

• Are you a resident of Nebraska?
• Did you derive at least 50 percent of your gross annual income for income tax purposes from farming or livestock production?
• Did you provide the majority of the day-to-day physical labor of a farm or livestock operation for at least 10 years?
• Are you eligible to receive a state income tax credit?
• Are you not related to the beginning farmer?
• Are you a spouse, child, or sibling who acquired an ownership interest in the agricultural assets a joint tenant, heir, or devisee of an individual or trustee who would meet the qualifications listed above?

The asset owner receives the tax credit; how does this program benefit the beginning farmer?

This program was developed to provide an incentive for a farmer who is retiring or who wants to cut back on his or her operation to rent to a beginning farmer for a period of at least three years. The beginning farmer receives a chance to rent and a three-year lease rather than a one-year lease. In addition, the beginning farmer will receive a tax credit to reimburse the cost of a financial management class up to $500. The hope is that the experienced asset owner will be a mentor to the beginning farmer so his or her chances of success will increase.

Does the tax credit apply only to land leases or would rent on other types of agricultural assets qualify?

In addition to land, other types of agricultural assets such as livestock, crop storage or livestock facilities, equipment and machinery qualify, as well.

What if the amount of the tax credit due the asset owner is more than he or she owes in state income tax?

The Act states that this is a refundable tax credit. This means that the asset owner would receive a check for any amount in excess of that owned to the state for income taxes.

I think I may be qualified. How can I find out more about the program and apply?

The State statue, regulations, and application forms for both the beginning farmer and asset owner can be found on the Nebraska Department of Agriculture's web site at www.agr.ne.gov. If you don't have access to the web, or even if you do, you are encouraged to call the Beginning Farmer staff that can answer questions and provide additional information. Call 800-446-4071 or (402) 471-6890.

Who makes the final determination of eligibility?

A Governor appointed Beginning Farmer Tax Credit Act Board of Directors which meets to review all applications and certifies eligibility.