What is a “Cousin”

In our previous post, we discussed the new rules for non-family farm operations that limit their program payments.  Many typical farm operations that most farmers would consider to be family may no longer be family for FSA purposes.  We got several emails on this topic and I thought we would share some typical examples of what is a family and what is not a family farm for FSA purposes.

Example # 1 – ABC partnership is comprised of Grandpa, Two Brothers and Three grandsons.  This partnership is considered family since everyone is either a lineal ascendant or descendent.

Example # 2 – ABC partnership is comprised of two brothers and each brother has two sons in the partnership.  Since the top layer of ownership is brothers and each of the sons are descendants of brothers, this is a family partnership.

Example # 3 – ABC partnership is like Example #2, but now one of the brothers passes away.  At this point, it is no longer a family partnership since his two sons are not lineal descendants of the other brother.  It will be subject to the new manager rules.

Example # 4 – ABC partnership is comprised of four cousins and their spouses.  This will not be a family farm operation and will be subject to the new manager rules.

Example # 5 – ABC partnership is comprised of three brothers.  During the year, they bring in their hired hand as a new partner.  It is now no longer a family farm.

Example # 6 – Same as number 5, but now instead of bringing the hired hand, they bring on a nephew of their sister.  Since the sister is not part of the partnership, the nephew changes the partnership to a non-family farm operation and it will be subject to the new manager rules.

The key is that all partners in the partnership have to be directly related either up (parent or grandparents)  or down (sons, daughters, grandsons, granddaughters) or across (brother/sister).

As you can see, it can get a little tricky on just who is a “cousin” for FSA purposes.

 

 

  • Principal
  • CliftonLarsonAllen
  • Yakima, Washington
  • 509-823-2920

Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a partner with CliftonLarsonAllen in Yakima, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. In fact, Paul drives combine each summer for his cousins and that is what he considers a vacation.

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