[Code of Federal Regulations]
[Title 26, Volume 1]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.182-1]

[Page 234]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.182-1  Expenditures by farmers for clearing land; in general.

    Under section 182, a taxpayer engaged in the business of farming may 
elect, in the manner provided in Sec. 1.182-6, to deduct certain 
expenditures paid or incurred by him in any taxable year beginning after 
December 31, 1962, in the clearing of land. The expenditures to which 
the election applies are all expenditures paid or incurred during the 
taxable year in clearing land for the purpose of making the ``land 
suitable for use in farming'' (as defined in Sec. 1.182-4) which are 
not otherwise deductible (exclusive of expenditures for or in connection 
with depreciable items referred to in paragraph (b)(1) of Sec. 1.182-
3), but only if such expenditures are made in furtherance of the 
taxpayer's business of farming. The term expenditures to which the 
election applies also includes a reasonable allowance for depreciation 
(not otherwise allowable) on equipment used in the clearing of land 
provided such equipment, if used in the carrying on of a trade or 
business, would be subject to the allowance for depreciation under 
section 167. (See paragraph (c) of Sec. 1.182-3.) (See section 175 and 
the regulations thereunder for deductibility of certain expenditures for 
treatment or moving of earth by a farmer where the land already 
qualifies as land used in farming as defined in Sec. 1.175-4.) The 
amount deductible for any taxable year is limited to the lesser of 
$5,000 or 25 percent of the taxable income derived from farming (as 
defined in paragraph (a)(2) of Sec. 1.182-5) during the taxable year. 
Expenditures paid or incurred in a taxable year in excess of the amount 
deductible under section 182 for such taxable year shall be treated as 
capital expenditures and shall constitute an adjustment to the basis of 
the land under section 1016(a).

[T.D. 6794, 30 FR 790, Jan. 26, 1965]