(a) General rule Gross income does not include the excludable portion of payments received under—
Amended 1980, 2014, 2018
- 2018 Pub. L. 115-141 Pub. L. 115–141 redesignated pars. (8) and (9) as (7) and (8), respectively, and struck out former par. (7) which read as follows: “The forestry incentives program authorized by section 4 of the Cooperative Forestry Assistance Act of 1978 (16 U.S.C. 2103).”
- 2014 Pub. L. 113-295 Pub. L. 113–295 redesignated pars. (7) to (10) as (6) to (9), respectively, and struck out former par. (6) which read as follows: “The great plains conservation program authorized by section 16 of the Soil Conservation and Domestic Policy Act (16 U.S.C. 590p(b)).”
- 1980 Pub. L. 96-222 Pub. L. 96–222, § 105(a)(7)(C), (E), inserted in par. (9) “or his delegate” after “Secretary of the Treasury” and substituted in par. (10) “Any program of a State, possession of the United States, a political subdivision of any of the foregoing, or the District of Columbia” for “Any State program”.
Cited by 10
(1) The rural clean water program authorized by section 208(j) of the Federal Water Pollution Control Act (33 U.S.C. 1288(j)).
Cited by 1
(2) The rural abandoned mine program authorized by section 406 of the Surface Mining Control and Reclamation Act of 1977 (30 U.S.C. 1236).
(3) The water bank program authorized by the Water Bank Act (16 U.S.C. 1301 et seq.).
(4) The emergency conservation measures program authorized by title IV of the Agricultural Credit Act of 1978.
(5) The agricultural conservation program authorized by the Soil Conservation and Domestic Allotment Act (16 U.S.C. 590a).
(6) The resource conservation and development program authorized by the Bankhead-Jones Farm Tenant Act and by the Soil Conservation and Domestic Allotment Act (7 U.S.C. 1010; 16 U.S.C. 590a et seq.).
Amended 2014
- 2014 Pub. L. 113-295 Pub. L. 113–295 redesignated pars. (7) to (10) as (6) to (9), respectively, and struck out former par. (6) which read as follows: “The great plains conservation program authorized by section 16 of the Soil Conservation and Domestic Policy Act (16 U.S.C. 590p(b)).”
(7) Any small watershed program administered by the Secretary of Agriculture which is determined by the Secretary of the Treasury or his delegate to be substantially similar to the type of programs described in paragraphs (1) through (8).
Amended 2014, 2018
- 2018 Pub. L. 115-141 Pub. L. 115–141 redesignated pars. (8) and (9) as (7) and (8), respectively, and struck out former par. (7) which read as follows: “The forestry incentives program authorized by section 4 of the Cooperative Forestry Assistance Act of 1978 (16 U.S.C. 2103).”
- 2014 Pub. L. 113-295 Pub. L. 113–295 redesignated pars. (7) to (10) as (6) to (9), respectively, and struck out former par. (6) which read as follows: “The great plains conservation program authorized by section 16 of the Soil Conservation and Domestic Policy Act (16 U.S.C. 590p(b)).”
(8) Any program of a State, possession of the United States, a political subdivision of any of the foregoing, or the District of Columbia under which payments are made to individuals primarily for the purpose of conserving soil, protecting or restoring the environment, improving forests, or providing a habitat for wildlife.
Amended 2014, 2018
- 2018 Pub. L. 115-141 Pub. L. 115–141 redesignated pars. (8) and (9) as (7) and (8), respectively, and struck out former par. (7) which read as follows: “The forestry incentives program authorized by section 4 of the Cooperative Forestry Assistance Act of 1978 (16 U.S.C. 2103).”
- 2014 Pub. L. 113-295 Pub. L. 113–295 redesignated pars. (7) to (10) as (6) to (9), respectively, and struck out former par. (6) which read as follows: “The great plains conservation program authorized by section 16 of the Soil Conservation and Domestic Policy Act (16 U.S.C. 590p(b)).”
Cited by 1
(b) Excludable portion For purposes of this section—
Amended 1980
- 1980 Pub. L. 96-222 Pub. L. 96–222, § 105(a)(7)(A), inserted provisions relating to payments not chargeable to capital account.
(1) In general The term “excludable portion” means that portion (or all) of a payment made to any person under any program described in subsection (a) which—
(A) is determined by the Secretary of Agriculture to be made primarily for the purpose of conserving soil and water resources, protecting or restoring the environment, improving forests, or providing a habitat for wildlife, and
(B) is determined by the Secretary of the Treasury or his delegate as not increasing substantially the annual income derived from the property.
“Substantially” implies facts and circumstances. No regulation cites this provision (eCFR, Oct 19, 2026)
(2) Payments not chargeable to capital account The term “excludable portion” does not include that portion of any payment which is properly associated with an amount which is allowable as a deduction for the taxable year in which such amount is paid or incurred.
(c) Election for section not to apply
Amended 1980
- 1980 Pub. L. 96-222 Pub. L. 96–222, § 105(a)(7)(A), substituted provisions allowing the taxpayer to elect not to have this section apply to any excludable portion for provisions relating to the application of subsec. (a) of this section with other sections.
Cited by 2
(1) In general The taxpayer may elect not to have this section (and section 1255) apply to any excludable portion (or portion thereof).
Cited by 1
(2) Manner and time for making election Any election under paragraph (1) shall be made in the manner prescribed by the Secretary by regulations and shall be made not later than the due date prescribed by law (including extensions) for filing the return of tax under this chapter for the taxable year in which the payment was received or accrued.
(d) Denial of double benefits No deduction or credit shall be allowed with respect to any expenditure which is properly associated with any amount excluded from gross income under subsection (a).
Amended 1980
- 1980 Pub. L. 96-222 Pub. L. 96–222, § 105(a)(7)(A), added subsecs. (d) and (e).
(e) Basis of property not increased by reason of excludable payments Notwithstanding any provision of section 1016 to the contrary, no adjustment to basis shall be made with respect to property acquired or improved through the use of any payment, to the extent that such adjustment would reflect any amount which is excluded from gross income under subsection (a).
Amended 1980
- 1980 Pub. L. 96-222 Pub. L. 96–222, § 105(a)(7)(A), added subsecs. (d) and (e).