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4. Verification

a. Verify that payments received meet the definition of royalty by examining the agreement between the parties involved or documents in the a/b or financially responsible person’s possession. Some documents concerning royalty payments will provide both a gross and a net payment amount. When the difference between the gross and the net figures is due to income taxes withheld or windfall profit tax deductions, use the gross figure when determining amount of income to budget. When the difference between the gross and net figures represents a production or severance tax, use the net figure when determining the amount of income to budget. If the agreement or documents are unclear, unavailable, or informal, contact the company or source of the payment.

b. Include in the case record copies of documents and/or information provided by the payment source including the reason the royalty is being received, amount(s) (including the type of tax(es) if any, which are being deducted, and the frequency of receipt of payments.

GG. Tobacco Transition Payment Program, (Tobacco Buyout)

1. Eligible tobacco quota owners and tobacco 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. If a/b or financially responsible person is receiving yearly allotment payments, 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.

4. When the balance of the allotment contract owned by the tobacco quota owner is verified as non-salable to an approved financial institution for a lump sum payment, the annual payments will be counted as unearned income in the year of receipt. Refer to VII. above, and VIII. below for further information regarding Tobacco Transition Payment Program allotment payments.

5. 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