Introduction

If you are in the business of farming, you can choose to deduct certain expenses for:

• Soil or water conservation,

• Prevention of erosion of land used in farming, or

• Endangered species recovery.

Otherwise, these are capital expenses that must be added to the basis of the land. (See chapter 6 for information on determining basis.)

Generally, once a farmer has adopted this method of treating soil and water conservation expenditures, the farmer must deduct all such expenditures (up to the 25% limitation) for the current and later tax years. See Change of method , later.

The deduction for conservation expenses cannot be more than 25% of your gross income from farming. See 25% Limit on Deduction , later.