A landowner who exclusively grants to another the right to hunt or fish on the landowner's property for an annual or seasonal fee is not subject to tax on that amount. A written agreement, filed with the register of deeds, containing the terms of the contract, including the price for the grant and a legal description of the property, is evidence of a grant of property rights which is not taxable. Any services provided by the landowner are subject to tax.

1. (1) Farmer Brown agrees to lease land for hunting purposes to the ABC corporation. A written agreement is entered into stating the fee charged, the description of the land to be hunted on, and the time hunting may occur. Farmer Brown also agrees to release a certain number of birds during the hunt and to plant cover crops on the land to be hunted. Additionally, Farmer Brown will provide a new access road and a campground area for the hunters to stay at. The agreement is filed with the Register of Deeds.

   Although an agreement is entered into which suggests a nontaxable lease of real property, services are furnished which are taxable. Because the services are not separately stated, the entire amount of the fee is subject to tax.

   If separate fees are listed for the leasehold interest and the services provided, tax is due only on the services provided.

2. (2) Each year Farmer Smith allows hunters to come onto Farmer Smith's land to hunt and fish. Farmer Smith charges $50 a person to hunt and $15 a person to fish. Farmer Smith limits the number of hunters to five and fishers to seven and only allows them on the property from 8 o'clock a.m. until 5 o'clock p.m. All of Farmer Smith's gross receipts from allowing hunting and fishing on the property are taxable.

A landowner who allows hunting or fishing on the landowner's property, not under an exclusive grant in writing, is subject to tax on the gross receipts.

Examples:

Source: 17 SDR 4, effective July 18, 1990; 21 SDR 219, effective July 1, 1995; 28 SDR 178, effective July 1, 2002.

General Authority: SDCL 10-45-47.1(3) , 10-45D-13(3).

Law Implemented: SDCL 10-45-4.1 , 10-45-5.2 , 10-45-7 , 10-45-8 , 10-45D-2.