It’s a grey area in tax law. Passive has a complex definition with lots of subitem descriptions.
People that own arable land for the sole purpose of collecting a tax grant for NOT GROWING should be thought of as passive non-working.
In my view, a farmer or rancher who employs or contracts with others for farm labor is active and working as long as he or she are directly involved in taking the product to market.
Owners of farms with managers that call up or arrange for the transportation of products to markets should not be considered active-working.
This is the nature of the Income Tax, that all manner of definitions and conditions have to be codified and enforced in order to be ‘fair’ and it’s never fair.
The consumption tax after essential spending aka “FairTax” (no space for the brand name) which is introduced in the House every year as HR 25 would solve the problem hands down.
I am sensing that Trump is receptive to it.
Another item that seems natural in considering how to differentiate active-working from passive-non-working would be to own the land, seed and livestock, to declare it as the primary residence and to live on it more than 6 months out of the year.
For those that own other lands outside the primary farm or ranch, too bad. Those lands get taxed maximally. This encourages smaller farms and ranches.
Absolutely no loopholes for setting up tenant farms/ranches other than tenant farmers/ranchers get the tax benefits, not the landlords.
Many of the large food service conglomerates own their corporate farms/ranches and have professional managers to handles everything. They will scream bloody murder and proclaim that food prices will go through the roof. Screw ‘em. They can be given 5 years to disassemble their local market monopolies to sell and train smaller private farmers to get in the door. If they don’t, they can be taxed to hell and back until they do.
I personally think that a young couple given an opportunity to farm and ranch, and to market their products in free markets, will be healthy for America.
I have personally witnessed the rescue of an entire generation from drugs on the islands because the elders figured out that the youth could be certified in farming and be assisted in winning contracts to sell products into the markets. The youth that worked and succeeded were healthy and strong. The previous generation that fell victim to boredom, sex, drugs and rock and roll were unhealthy, devoid of ambition other than to scrounge for funds to buy weed and were left to become totally worthless human beings who contributed not one iota of value to the American civilization.