1231.1 What are the criteria for Test III?
The criteria for Test III are:
If you work at least 100 hours spread over five or more weeks (not necessarily consecutive) on activities connected with the production of the crop, you are materially participating;
If you work less than 100 hours or conduct the 100 hours of work in fewer than five different weeks, you may still be materially participating if the work done adds up to a significant contribution to the production of the crop; or
If the work alone is not enough to establish material participation, it is considered along with the other things that are done that help establish material participation.
1231.2 Must the work involve physical activity in farming?
No, you do not have to help with the actual plowing, hoeing, etc. The work may be making purchases, keeping the records, caring for the livestock or repairing buildings, fences and farm equipment used in connection with the production of the crop.
1231.3 Does working for the tenant count toward material participation?
No. If you work as the employee of the tenant and if you are paid separately, your work does not count toward material participation.
Note: If you are in doubt, consult your nearest Social Security office or any Internal Revenue Service office.