NAC361A.160. Determination of whether operator is engaged in business venture for profit.

     1. Upon a determination that an activity on the land qualifies as an agricultural pursuit, the assessing authority must then determine whether the operator is engaged in the agricultural pursuit as a business venture for profit. When determining whether an operator is engaged in a business venture for profit, reasonable profit and the expectation of a reasonable profit are not affected by any independent intervening causes of production failure or nonproductive use that are beyond the control of the operator, including, without limitation, land idle under government programs. Property not otherwise fulfilling the requirements to be considered as land on which an agricultural pursuit is conducted may still qualify as such if there are extenuating circumstances, including, without limitation, use of the land for an orchard or other perennial crops with a long maturation period that have not yet matured.

     2. To qualify as a business venture for profit, an agricultural pursuit must raise the expectation of profit consistent with:

     (a) The size of the property used in the operation;

     (b) The capacity of the property, including, without limitation, suitability, terrain, availability of water, soil capabilities, type of vegetation grown, growing season, animal unit months, animal units and animal unit equivalents;

     (c) The viability of the property, including, without limitation, the cost and availability of water, soil capacities, market proximity, fencing and suitability of the property for other uses; and

     (d) Any other factors or criteria that the assessing authority deems appropriate under the circumstances.

     3. In making a determination about whether the operator is engaged in a business venture for profit, especially in cases where the size of the land appears to be too small to sustain a monetary profit from agricultural pursuits, the assessing authority may consider whether a reasonable effort has been made to care for the land sufficiently and adequately, as evaluated in time, labor, equipment, management and capital consistent with accepted agricultural practices for the type of agricultural operation involved.

     4. Gross income derived from nonagricultural uses of the land must not be included in the requirements for the total minimum gross income, including, without limitation:

     (a) Leasing of the land for billboards;

     (b) Leasing of the land for roadside produce stands;

     (c) Leasing of the land for hunting;

     (d) Income derived from the mineral estate, whether severed or not;

     (e) Income from the extraction of sand and gravel or other operations relating to products from the earth;

     (f) Interest income from a loan or investment, royalties or dividends; and

     (g) Transfer or sale of property rights such as conservation easements or severed mineral rights.

     5. As used in this section, “animal unit equivalent” means the equivalent to the animal unit for various kinds and sizes of animals.

     (Added to NAC by Tax Comm’n by R030-03, eff. 12-4-2003)