How to Report CRP Income on a Tax Return
Although they are called rental payments they aren't treated as rent for federal tax purposes and thus aren't reported as rental income on Form 4835 or Schedule E. Rather they are reported on Schedule F as Agricultural Program Payments. They are generally fully taxable, however see IRS Publication 225 to determine if the taxpayer qualifies under the Cost Sharing Exclusion to elect to exclude some or all of the payments from income.
Are CRP Payments Subject to Self-Employment Tax?
The annual rental payment is also included in net income from self-employment subject to self-employment tax except if the taxpayer is receiving Social Security retirement or disability benefits, in which case the payments aren't subject to self-employment tax and will need to be specifically excluded on Schedule SE.
Additional Information:
IRS: Conservation Reserve Program “Annual Rental Payments” and Self-Employment Tax