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1. Effective October 22, 2004, the Tobacco Transition Payment Program (TTPP) eliminated the tobacco quota or allotment system, calculating the value of lost quota and began providing compensation in the form of cash installment payments to both tobacco quota owners and tobacco quota growers. Eligible quota owners and quota growers who applied for the program receive annual installment payments over a 10-year period. Payments are distributed during the first few months of each calendar year.

2. In October 2005, after the first installment payment was made, tobacco quota owners/growers were permitted to enter into an assignment or successor-in- interest contract with an approved financial institution and receive cash payment in exchange for the balance of the annual installment payments.

3. Determine if the balance of the tobacco allotment contract can be sold to an approved financial institution for a lump sum cash payment. The list of approved financial institutions can be found at www.fsa.usda.gov.

a. Once the balance of the allotment contract is verified as salable to an approved financial institution for a lump sum payment, the total allotment contract amount is counted as a resource to the tobacco quota grower. Refer to MA-2230, Financial Resources.

b. When the balance of the allotment contract is verified as non-salable to an approved financial institution for a lump sum payment:

(1) The annual payments received by the tobacco quota grower (those who rent the land) are counted as annual self-employment income in each year of receipt.

(2) The annual payments received by the tobacco quota owner are counted as annual unearned income in each year of receipt. Refer to VIII. below.

c. When the balance of the allotment contract has been sold to an approved financial institution by a tobacco quota grower (those who rent the land), for a lump sum payment, the lump sum payment is counted as self- employment income in the transaction year.

4. The Commodity Credit Corporation, CCC-960, “Tobacco Transaction Payment Notification of Contract Approval and Appeal Rights” does not apply the maximum discount rate to contracts with family members, transfers upon death of a tobacco quota grower or owner, individuals who entered into an assignment or successor-in-interest contract prior to 10/22/2004, and one- year contracts made with “Tobacco Transaction Payment Notification of Approval and Appeal Rights” CCC approved financial institutions.