Rev. Rul. 70-255

A taxpayer, engaged in the business of farming, made expenditures for construction of irrigation ditches to bring irrigation water onto his land used in farming from property located outside the farm.

Section 175(a) of the Internal Revenue Code of 1954 provides that a taxpayer engaged in the business of farming may treat as expenses which are not chargeable to capital account, 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. The expenditures so treated are allowable as deductions.

Section 1.175-2(a) of the Income Tax Regulations provides, in part, that a farmer may deduct expenditures made for these purposes which are for (i) the treatment or moving of earth, (ii) the construction, control, and protection of diversion channels, drainage ditches, irrigation ditches, earthen dams, watercourses, outlets, and ponds, (iii) the eradication of brush, and (iv) the planting of wind-breaks.

Held, the taxpayer may deduct the expenses he incurred in bringing irrigation water onto his land used in farming from a source located outside the farm as soil and water conservation expenditures described in section 175 of the Code.