Publication 225 |
2000 Tax Year |
Introduction
If you are in the business of farming, you can choose to currently
deduct your expenses for soil or water conservation or for the
prevention of erosion of land used in farming. Otherwise, these are
capital expenses that must be added to the basis of the land. (See
chapter 7
for information on determining basis.) Conservation expenses
for land in a foreign country do not qualify for this special
treatment.
The deduction cannot be more than 25% of your gross income from
farming. See Limit on Deduction, later.
Ordinary and necessary expenses that are otherwise deductible are
not soil and water conservation expenses. These include interest and
taxes, the cost of periodically clearing brush from productive land,
the annual removal of sediment from a drainage ditch, and expenses
paid or incurred primarily to produce an agricultural crop that may
also conserve soil.
To get the full deduction to which you are entitled, you should
maintain your records in a way that will clearly distinguish between
your ordinary and necessary farm business expenses and your soil and
water conservation expenses.
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