26 U.S.C. § 175 : US Code - Section 175: Soil and water conservation expenditures

Search 26 U.S.C. § 175 : US Code - Section 175: Soil and water conservation expenditures

(a) In general
A taxpayer engaged in the business of farming may treat
expenditures which are paid or incurred by him during the taxable
year for the purpose of soil or water conservation in respect of
land used in farming, or for the prevention of erosion of land used
in farming, as expenses which are not chargeable to capital
account. The expenditures so treated shall be allowed as a
deduction.
(b) Limitation
The amount deductible under subsection (a) for any taxable year
shall not exceed 25 percent of the gross income derived from
farming during the taxable year. If for any taxable year the total
of the expenditures treated as expenses which are not chargeable to
capital account exceeds 25 percent of the gross income derived from
farming during the taxable year, such excess shall be deductible
for succeeding taxable years in order of time; but the amount
deductible under this section for any one such succeeding taxable
year (including the expenditures actually paid or incurred during
the taxable year) shall not exceed 25 percent of the gross income
derived from farming during the taxable year.
(c) Definitions
For purposes of subsection (a) -
(1) The term "expenditures which are paid or incurred by him
during the taxable year for the purpose of soil or water
conservation in respect of land used in farming, or for the
prevention of erosion of land used in farming" means expenditures
paid or incurred for the treatment or moving of earth, including
(but not limited to) leveling, grading and terracing, contour
furrowing, the construction, control, and protection of diversion
channels, drainage ditches, earthen dams, watercourses, outlets,
and ponds, the eradication of brush, and the planting of
windbreaks. Such term does not include -
(A) the purchase, construction, installation, or improvement
of structures, appliances, or facilities which are of a
character which is subject to the allowance for depreciation
provided in section 167, or
(B) any amount paid or incurred which is allowable as a
deduction without regard to this section.
Notwithstanding the preceding sentences, such term also includes
any amount, not otherwise allowable as a deduction, paid or
incurred to satisfy any part of an assessment levied by a soil or
water conservation or drainage district to defray expenditures
made by such district (i) which, if paid or incurred by the
taxpayer, would without regard to this sentence constitute
expenditures deductible under this section, or (ii) for property
of a character subject to the allowance for depreciation provided
in section 167 and used in the soil or water conservation or
drainage district's business as such (to the extent that the
taxpayer's share of the assessment levied on the members of the
district for such property does not exceed 10 percent of such
assessment).
(2) The term "land used in farming" means land used (before or
simultaneously with the expenditures described in paragraph (1))
by the taxpayer or his tenant for the production of crops,
fruits, or other agricultural products or for the sustenance of
livestock.
(3) Additional limitations. -
(A) Expenditures must be consistent with soil conservation
plan. - Notwithstanding any other provision of this section,
subsection (a) shall not apply to any expenditures unless such
expenditures are consistent with -
(i) the plan (if any) approved by the Soil Conservation
Service of the Department of Agriculture for the area in
which the land is located, or
(ii) if there is no plan described in clause (i), any soil
conservation plan of a comparable State agency.
(B) Certain wetland, etc., activities not qualified. -
Subsection (a) shall not apply to any expenditures in
connection with the draining or filling of wetlands or land
preparation for center pivot irrigation systems.
(d) When method may be adopted
(1) Without consent
A taxpayer may, without the consent of the Secretary, adopt the
method provided in this section for his first taxable year -
(A) which begins after December 31, 1953, and ends after
August 16, 1954, and
(B) for which expenditures described in subsection (a) are
paid or incurred.
(2) With consent
A taxpayer may, with the consent of the Secretary, adopt at any
time the method provided in this section.
(e) Scope
The method adopted under this section shall apply to all
expenditures described in subsection (a). The method adopted shall
be adhered to in computing taxable income for the taxable year and
for all subsequent taxable years unless, with the approval of the
Secretary, a change to a different method is authorized with
respect to part or all of such expenditures.
(f) Rules applicable to assessments for depreciable property
(1) Amounts treated as paid or incurred over 9-year period
In the case of an assessment levied to defray expenditures for
property described in clause (ii) of the last sentence of
subsection (c)(1), if the amount of such assessment paid or
incurred by the taxpayer during the taxable year (determined
without the application of this paragraph) is in excess of an
amount equal to 10 percent of the aggregate amounts which have
been and will be assessed as the taxpayer's share of the
expenditures by the district for such property, and if such
excess is more than $500, the entire excess shall be treated as
paid or incurred ratably over each of the 9 succeeding taxable
years.
(2) Disposition of land during 9-year period
If paragraph (1) applies to an assessment and the land with
respect to which such assessment was made is sold or otherwise
disposed of by the taxpayer (other than by the reason of his
death) during the 9 succeeding taxable years, any amount of the
excess described in paragraph (1) which has not been treated as
paid or incurred for a taxable year ending on or before the sale
or other disposition shall be added to the adjusted basis of such
land immediately prior to its sale or other disposition and shall
not thereafter be treated as paid or incurred ratably under
paragraph (1).
(3) Disposition by reason of death
If paragraph (1) applies to an assessment and the taxpayer dies
during the 9 succeeding taxable years, any amount of the excess
described in paragraph (1) which has not been treated as paid or
incurred for a taxable year ending before his death shall be
treated as paid or incurred in the taxable year in which he dies.