I.R.C. § 175(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, or for endangered species recovery, as expenses which are not chargeable
to capital account. The expenditures so treated shall be allowed as a deduction.
I.R.C. § 175(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.
I.R.C. § 175(c) Definitions —
For purposes of subsection (a)—
I.R.C. § 175(c)(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, or for endangered species
recovery” 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 shall include expenditures paid or incurred for
the purpose of achieving site-specific management actions recommended in recovery
plans approved pursuant to the Endangered Species Act of 1973. Such term does not
include—
I.R.C. § 175(c)(1)(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
I.R.C. § 175(c)(1)(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).
I.R.C. § 175(c)(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.
I.R.C. § 175(c)(3) Additional limitations.—
I.R.C. § 175(c)(3)(A) Expenditures Must Be Consistent With Soil Conservation Plan Or Endangered Species
Recovery Plan— —
Notwithstanding any other provision of this section, subsection (a) shall not apply to any expenditures unless such expenditures are consistent with—
I.R.C. § 175(c)(3)(A)(i) —
the plan (if any) approved by the Soil Conservation Service of the Department of
Agriculture or the recovery plan approved pursuant to the Endangered Species Act of
1973 for the area in which the land is located, or
I.R.C. § 175(c)(3)(A)(ii) —
if there is no plan described in clause (i), any soil conservation plan of a comparable State agency.
I.R.C. § 175(c)(3)(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.
I.R.C. § 175(d) When Method May Be Adopted
I.R.C. § 175(d)(1) Without Consent —
A taxpayer may, without the consent of the Secretary, adopt the method provided
in this section for the taxpayer's first taxable year for which expenditures described
in subsection (a) are paid or incurred.
I.R.C. § 175(d)(2) With Consent —
A taxpayer may, with the consent of the Secretary, adopt at any time the method
provided in this section.
I.R.C. § 175(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.
I.R.C. § 175(f) Rules Applicable To Assessments For Depreciable Property
I.R.C. § 175(f)(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.
I.R.C. § 175(f)(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).
I.R.C. § 175(f)(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; Oct. 22, 1968,
Pub. L. 90-630, 5(a),
(b), 82 Stat. 1329; Oct. 4, 1976, Pub. L. 94-455, title XIX, 1901(a)(30), 1906(b)(13)(A), 90 Stat. 1769, 1834; Oct. 22, 1986, Pub. L. 99-514, title IV, 401(a), 100 Stat. 2221; June 18, 2008, Pub. L. 110-246, title XV, Sec. 15303, 122 Stat. 1651; Pub. L. 113-295, Div. A, title II, Sec. 221(a)(33), Dec. 19, 2014, 128 Stat. 4010.)
BACKGROUND NOTES
AMENDMENTS
2014 - Subsec. (d)(1). Pub. L. 113-295, Div. A, Sec. 221(a)(33), amended par. (1). Before amendment, it read as follows:
“(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.”
2008 - Sec. 175. Pub. L. 110-246, Sec. 15303(a)(2)(B), amended the heading for Sec. 175 by inserting “; Endangered Species Recovery Expenditures”
before the period.
Subsec. (a), (c). Pub. L. 110-246, Sec. 15303(a)(2)(A), amended subsec. (a) and (c) by inserting “, or for endangered species recovery”
after “prevention of erosion of land used in farming” each place it appeared.
Subsec. (c)(1). Pub. L. 110-246, Sec. 15303(a)(1), amended par. (1) by adding “ Such term shall include expenditures paid or incurred
for the purpose of achieving site-specific management actions recommended in recovery
plans approved pursuant to the Endangered Species Act of 1973” after the first sentence.
Subsec. (c)(3)(A). Pub. L. 110-246, Sec. 15303(b), amended subpar. (A) by inserting “Or Endangered Species Recovery Plan” after “Conservation
Plan” in the heading and by inserting “or the recovery plan approved pursuant to the
Endangered Species Act of 1973” after “Department of Agriculture”
in clause (i).
1986--Subsec. (c)(3). Pub. L. 99-514 added par. (3).
1976--Subsec. (d)(1). Pub. L. 94-455, 1906(b)(13)(A), struck out “or his delegate” after “Secretary”.
Subsec. (d)(1)(A). Pub. L. 94-455, 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, 1906(b)(13)(A), struck out “or his delegate"
after “Secretary”.
1968--Subsec. (c)(1). Pub. L. 90-630, 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, 5(b), added subsec. (f).
EFFECTIVE DATE OF 2014 AMENDMENT
Amendment by Pub. L. 113-295, Div. A, Sec. 221(a)(33), effective on the date of the enactment of this Act [Enacted:
Dec. 19, 2014].
EFFECTIVE DATE OF 2008 AMENDMENTS
Amendments by Sec. 15303 of Pub. L. 110-246 effective for expenditures paid or incurred after December 31, 2008.
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.”
