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TITLE 26-INTERNAL REVENUE CODE or section 611 (relating to allowance for deple- tion); but for purposes of this section allowances under section 167, and allowances under section 611, shall be considered as expen- ditures. (d) Exploration expenditures This secion shall not apply to any expendi- ture paid or incurred for the purpose of ascer- taining the existence, location, extent, or qual- ity of any deposit of ore or other mineral (in- cluding oil and gas). (e) Cross reference For adjustments to basis of property for amounts al. lowed as deductions as deferred expenses under subsec- tion (b), see section 1016(a)(14). (Aug. 16, 1954, ch. 736, 68A Stat. 66; Oct. 4, 1976, Pub. L. 94-455, title XIX, §§ 1901(a)(30), 1906(b)(13)(A), 90 Stat. 1769, 1834.) AMENDMENTS 1976-Subsec. (a)(2)(A). Pub. L. 94-455, § 1906(b)(13)(A), struck out "or his delegate" following "Secretary". Subsec. (a)(2)(A)(i). Pub. L. 94-455, § 1901(a)(30), substituted "August 16, 1954" for "the date on which this title is enacted" following "ends after". Subsec. (a)(3). Pub. L. 94-455, § 1906(b)(13)(A), struck out "or his delegate" following "Secretary". Subsecs. (b)(1), (2). Pub. L. 94-455, § 1906(b)(13)(A), struck out "or his delegate" following "Secretary". CROSS REFERENCES Exception from denial of deduction for capital ex- penditures, see section 263 of this title. Trade or business expenses deductible, see section 162 of this title. SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in sections 263, 993, 1016 of this title. § 175. Soil and water conservation expenditures (a) In general A taxpayer engaged in the business of farm- ing 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 per- cent of the gross income derived from farming during the taxable year. If for any taxable year the total of the expenditures treated as ex- penses which are not chargeable to capital ac- count 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 expendi- tures actually paid or incurred during the tax- able 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 farm- ing" means expenditures paid or incurred for the treatment or moving of earth, including (but not limited to) leveling, grading and ter- racing, 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 doew not include- (A) the purchase, construction, installa- tion, or improvement of structures, appli- ances, or facilities which are of a character which is subject to the allowance for depre- ciation 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. oth- erwise allowable as a deduction, paid or in- curred 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, wculd without regard to this sentence constitute expenditures deductible under this section, or (ii) for property of a character subject to the allowance for depre- ciation provided in section 167 and used in the soil or water conservation or drainage dis- trict'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 assess- ment). (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. (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 pro- vided in this section. (e) Scope The method adopted under this section shall apply to all expenditures described in subsec- tion (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. Page 179