Page:United States Statutes at Large Volume 68A.djvu/107

 CH. 1—NORMAL TAXES AND SURTAXES

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are expenditures properly chargeable to capital account for purposes of section 1016(a)(1) (relating to adjustments to basis of property). (2) T I M E FOE AND SCOPE OF ELECTION.-—The election provided

by paragraph (1) may be made for any taxable year beginning after December 31, 1953, b u t only if made not later than the time prescribed by law for filing the return for such taxable year (including extensions thereof). The method so elected, and the period selected by the taxpayer, shall be adhered to in computing taxable income for the taxable year for which the election is made and for all subsequent taxable years unless, with the approval of the Secretary or his delegate, a change to a different method (or to a different period) is authorized with respect to part or all of such expenditures. The election shall not apply to any expenditure paid or incurred during any taxable year before the taxable year for which the taxpayer makes the election. (c) LAND AND OTHER PROPERTY.—This section shall not apply to

any expenditure for the acquisition or improvement of land, or for the acquisition or improvement of property to be used in connection with the research or experimentation and of a character which is subject to the allowance under section 167 (relating to allowance for depreciation, etc.) or section 611 (relating to allowance for depletion); b u t for purposes of this section allowances under section 167, and allowances under section 611, shall be considered as expenditures. (d) EXPLORATION EXPENDITURES.—This section shall not apply to any expenditure paid or incurred for the purpose of ascertaining the existence, location, extent, or quality of any deposit of ore or other mineral (including oil and gas). (e) CROSS R E F E R E N C E. — For adjustments to basis of property for amounts allowed as deductions as deferred expenses under subsection (b), see section 1016(a) (14). 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; b u t 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 conserva§ 175(c)(1)

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