
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 26USC175]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                        Subtitle A--Income Taxes
 
                  CHAPTER 1--NORMAL TAXES AND SURTAXES
 
               Subchapter B--Computation of Taxable Income
 
      PART VI--ITEMIZED DEDUCTIONS FOR INDIVIDUALS AND CORPORATIONS
 
Sec. 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.

(Aug. 16, 1954, ch. 736, 68A Stat. 67; Pub. L. 90-630, Sec. 5(a), (b), 
Oct. 22, 1968, 82 Stat. 1329; Pub. L. 94-455, title XIX, 
Secs. 1901(a)(30), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1769, 1834; 
Pub. L. 99-514, title IV, Sec. 401(a), Oct. 22, 1986, 100 Stat. 2221.)


                               Amendments

    1986--Subsec. (c)(3). Pub. L. 99-514 added par. (3).
    1976--Subsec. (d)(1). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck 
out ``or his delegate'' after ``Secretary''.
    Subsec. (d)(1)(A). Pub. L. 94-455, Sec. 1901(a)(30), substituted 
``August 16, 1954'' for ``the date on which this title is enacted'' 
after ``and ends after''.
    Subsecs. (d)(2), (e). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck 
out ``or his delegate'' after ``Secretary''.
    1968--Subsec. (c)(1). Pub. L. 90-630, Sec. 5(a), in text following 
subpar. (B), designated as cl. (i) existing provisions covering amounts 
which, if paid or incurred by the taxpayer, would without regard to the 
exception constitute deductible expenditures, and added cl. (ii).
    Subsec. (f). Pub. L. 90-630, Sec. 5(b), added subsec. (f).


                    Effective Date of 1986 Amendment

    Section 401(b) of Pub. L. 99-514 provided that: ``The amendment made 
by this section [amending this section] shall apply to amounts paid or 
incurred after December 31, 1986, in taxable years ending after such 
date.''


                    Effective Date of 1976 Amendment

    Amendment by section 1901(a)(30) of Pub. L. 94-455 applicable with 
respect to taxable years beginning after Dec. 31, 1976, see section 
1901(d) of Pub. L. 94-455, set out as a note under section 2 of this 
title.


                    Effective Date of 1968 Amendment

    Section 5(c) of Pub. L. 90-630 provided that: ``The amendments made 
by subsections (a) and (b) [amending this section] shall apply to 
assessments levied after the date of the enactment of this Act [Oct. 22, 
1968] in taxable years ending after such date.''

                  Section Referred to in Other Sections

    This section is referred to in sections 263, 1252 of this title.
