It was an error to sell that residential house to the corp.......

The purpose of the sale was to satisfy the provisions of Section 119 with respect to the meals and lodging benefits for employees required to reside on business premises.

The same result could have been accomplished using a lease agreement between you and the C corp........thereby giving the C corp the same control over the premises, and thereby allowing it to be the "business premises" of the C corp........

AND........you personally would then have been able to use the provisions of section 121 to shelter up to 500K (joint return) of net profit on sale of that residence as a personal residence...........and " acreages" have notoriously gone for big money.  (Whenever we can, we step in at the front end of a farm sale, and have the sale done in two parcels.........farm, and residential acreage.........as long as the residential acreage fulfills requirements of 121)

Example........ sale of farm 200A for 8000 = 1,600,000 gross.  Allocation of 450K sales price to the acreage.....allocated original cost of 50K....taxable 400K.  Saves 400K x 15% = 60,000 taxes

Big error by your tax people.

In addition.......... the rental of the land should be a separate agreement from the rental of the buildings (and any equipment which might be rented).  Should be two separate checks for the rent payment.

Reason-------- section 1402 ONLY SPECIFIES land under production.......does not say anything about the buildings related to the production activities.  Therefore, one can avoid a pee-ing match with IRS if the potential problem is isolated.

Section 1402(a)(1)....

"....except that the preceding provisions of this paragraph shall not apply to any income derived by the owner or tenant of land if (A) such income is derived under an arrangement, between the owner or tenant and another individual, which provides that such other individual shall produce agricultural or horticultural commodities (including livestock, bees, poultry, and fur-bearing animals and wildlife) on such land, and that there shall be material participation by the owner or tenant (as determined without regard to any activities of an agent of such owner or tenant) in the production or the management of the production of such agricultural or horticultural commodities, and (B) there is material participation by the owner or tenant (as determined without regard to any activities of an agent of such owner or tenant) with respect to any such agricultural or horticultural commodity;......................"