IMHO, I'm not sure if the self-rental position would fly. First, self-rental is not a free-for-all concept. All the conditions under §1.199A-4(b) still need to be met.
The OP did not specify (among other requirements) whether the partnership and farm share common control - which I take that to mean that the farm-owning partner must also own 50% or more of the partnership. Let's assume he does, it is still not clear that by virtue of the partner leasing the farm from partnership that it could meet 2 of the 3 facts and circumstances tests under §1.199A-4(b)(1)(v):
(A) The trades or businesses provide products, property, or services that are the same or customarily offered together.
(B) The trades or businesses share facilities or share significant centralized business elements, such as personnel, accounting, legal, manufacturing, purchasing, human resources, or information technology resources.
(C) The trades or businesses are operated in coordination with, or reliance upon, one or more of the businesses in the aggregated group (for example, supply chain interdependencies).
Second, whether the rental activity qualifies as a trade or business and eligible for QBI for purposes of §199A must be determined at the RPE level. For a rental real estate enterprise that does not otherwise rise to the level of §162 trade or business, a decision must be made as to whether it qualifies for QBI under the safe harbor rule laid out in Notice 2019-07 or by aggregation pursuant to §1.199A-4(b). That tax treatment made by the RPE is binding on all partners. The only option accorded to each partner by §1.199A-4(b)(2) is to add to but not subtract from aggregation done at the RPE level and only with respect to trades or businesses.
In other words, this is a catch 22. Unless the RPE elects to treat the self-rental as a trade or business for purposes of §199A, by either aggregation (assuming the conditions stipulated under §1.199A-4(b)(1)(v) could be met, about which I have my doubts) or the safe harbor rule per Notice 2019-07, which causes QBI with respect to the rental activity to pass through to both partners, the self-rental is ***not*** a trade or business. The farm-owning partner cannot, therefore, aggregate the "self-rental" at his level with the partnership for purposes of QBI.
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Still an AllStar
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