[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: 26CFR1.182-4]

[Page 236]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.182-4  Definition of ``land suitable for use in farming'', etc.

    For purposes of section 182, the term land suitable for use in 
farming means land which, as a result of the land clearing activities 
described in paragraph (a) of Sec. 1.182-3, could be used by the 
taxpayer or his tenant for the production of crops, fruits, or other 
agricultural products, including fish, or for the sustenance of 
livestock. The term livestock includes cattle, hogs, horses, mules, 
donkeys, sheep, goats, captive fur-bearing animals, chickens, turkeys, 
pigeons, and other poultry. Land used for the sustenance of livestock 
includes land used for grazing such livestock. Expenditures are 
considered to be for the purpose of making land suitable for use in 
farming by the taxpayer or his tenant only if made to prepare the land 
which is cleared for use by the taxpayer or his tenant in farming. Thus, 
if the taxpayer pays or incurs expenditures to clear land for the 
purpose of sale (whether or not for use in farming by the purchaser) or 
to be held by the taxpayer or his tenant other than for use in farming, 
section 182 does not apply to such expenditures. Whether the land is 
cleared for the purpose of making it suitable for use in farming by the 
taxpayer or his tenant, is a question of fact which must be resolved on 
the basis of all the relevant facts and circumstances. For purposes of 
section 182, it is not necessary that the land cleared actually be used 
in farming following the clearing activities. However, the fact that 
following the clearing operation, the land is used by the taxpayer or 
his tenant in the business of farming will, in most cases, constitute 
evidence that the purpose of the clearing was to make land suitable for 
use in farming by the taxpayer or his tenant. On the other hand, if the 
land cleared is sold or converted to nonfarming use soon after the 
taxpayer has completed his clearing activities, there will be a 
presumption that the expenditures were not made for the purpose of 
making the land suitable for use in farming by the taxpayer or his 
tenant. Other factors which will be considered in determining the 
taxpayer's purpose for clearing the land are, for example, the acreage, 
location, and character of the land cleared, the nature of the 
taxpayer's farming operation, and the use to which adjoining or nearby 
land is put.

[T.D. 6794, 30 FR 791, Jan. 26, 1965]