Persons.

(a) A person will be considered to be actively engaged in farming with respect to a farming operation if: (1) The person 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. (b) If one spouse, or an estate of a deceased spouse, is determined to be actively engaged in farming as specified in paragraph (a) of this section, the other spouse is considered to have made a significant contribution, as specified in paragraph (a)(1)(ii) of this section, only to the same farming operation. (c) If a farming operation is conducted by a person, and the capital, land, or equipment is contributed by the person, the capital, land, or equipment: (1) To meet the requirements of paragraph (a)(1)(i) of this section, must be contributed directly by the person and must not be acquired as a result of a loan made to, guaranteed, co-signed, or secured by any other person, qualified pass-through entity, or other legal entity, or legal entity that has an interest in the farming operation; and (2) To meet the requirements of paragraphs (a)(2) and (a)(3) of this section, and if acquired as a loan made to, guaranteed, co-signed, or secured by the persons, qualified pass-through entities, or other legal entities, the loan must: (i) Bear the prevailing interest rate and (ii) Have a repayment schedule considered reasonable and customary for the area. [73 FR 79273, Dec. 29, 2008, as amended at 75 FR 900, Jan. 7, 2010; 85 FR 52039, Aug. 24, 2020; 91 FR 32885, June 2, 2026]