If your land is used for anything other than farming these costs are not deductible in the current year. You would add the costs to your basis in the land and deduct them when you sell the land.
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
• Endangered species recovery.
You can deduct conservation expenses only for land you or your tenant are using, or have used in the past, for farming. These expenses include, but are not limited to, the following.
1. The treatment or movement of earth, such as: a. Leveling, b. Conditioning, c. Grading, d. Terracing, e. Contour furrowing, and f. Restoration of soil fertility.
2. The construction, control, and protection of: a. Diversion channels; b. Drainage ditches; c. Irrigation ditches; d. Earthen dams; and e. Watercourses, outlets, and ponds.
3. The eradication of brush.
4. The planting of windbreaks.
You can't deduct expenses to drain or fill wetlands, or to prepare land for center pivot irrigation systems, as soil and water conservation expenses. These expenses are added to the basis of the land.
There also is a limit on the current year's deduction of 25% of you gross income from farming.
For more information if you are running a farm you may want to look at Publication 225 from the IRS.
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