I

103D CONGRESS

1ST SESSION H. R. 498

To amend the Internal Revenue Code of 1986 to allow a credit against

income tax for the purchase and installation of water conservation systems on farm land.

IN THE HOUSE OF REPRESENTATIVES

JANUARY 21, 1993

Mr. CONDIT (for himself and Mr. DOOLEY) introduced the following bill;

which was referred to the Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to allow a

credit against income tax for the purchase and installation of water conservation systems on farm land.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Agricultural Water

5 Conservation Act of 1993’’.

6 SEC. 2. CONGRESSIONAL FINDINGS.

7 The Congress finds that—
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1 (1) the Federal Government has an historic

2 commitment to assisting areas of the Nation in need

3 of developing adequate water supplies,

4 (2) water is becoming increasingly scarce and

5 expensive in many parts of the United States, which

6 is compounded when multiple years of drought

7 occur,

8 (3) in most areas of the United States, farms

9 are overwhelmingly the largest water consumers, and

10 (4) it is in the national interest for farmers to

11 implement water conservation measures which are a

12 least-cost approach to addressing critical water

13 needs and for the Federal Government to promote

14 such conservation measures.

15 SEC. 3. CREDIT FOR PURCHASE AND INSTALLATION OF

16 WATER CONSERVATION SYSTEMS ON FARM

17 LAND.

18 (a) IN GENERAL.—Subpart B of part IV of sub19 chapter A of chapter 1 of the Internal Revenue Code of

20 1986 (relating to foreign tax credit, etc.) is amended by

21 adding at the end the following new section:

22 ‘‘SEC. 30A. PURCHASE AND INSTALLATION OF WATER CON23 SERVATION SYSTEMS ON FARM LAND.

24 ‘‘(a) ALLOWANCE OF CREDIT.—There shall be al25 lowed as a credit against the tax imposed by this chapter
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1 for the taxable year an amount equal to 75 percent of the

2 water conservation system expenses paid or incurred by

3 the taxpayer during such year.

4 ‘‘(b) WATER CONSERVATION SYSTEM EXPENSES.—

5 For purposes of this section—

6 ‘‘(1) IN GENERAL.—The term ‘water conserva7 tion system expenses’ means expenses for the pur8 chase and installation of materials or equipment

9 which are primarily designed to substantially con10 serve water on farm land.

11 ‘‘(2) FARM LAND.—The term ‘farm land’

12 means land used in a trade or business by the tax13 payer or a tenant of the taxpayer for—

14 ‘‘(A) the production of crops, fruits, or

15 other agricultural products,

16 ‘‘(B) the raising, harvesting, or growing of

17 trees, or

18 ‘‘(C) the sustenance of livestock.

19 ‘‘(c) LIMITATION BASED ON AMOUNT OF TAX.—

20 ‘‘(1) LIABILITY FOR TAX.—The credit allowable

21 under subsection (a) for any taxable year shall not

22 exceed the excess (if any) of—

23 ‘‘(A) the regular tax for the taxable year,

24 reduced by the sum of the credits allowable
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1 under subpart A and the preceding sections of

2 this subpart, over

3 ‘‘(B) the tentative minimum tax for the

4 taxable year.

5 ‘‘(2) CARRYFORWARD OF UNUSED CREDIT.—If

6 the amount of the credit allowable under subsection

7 (a) for any taxable year exceeds the limitation under

8 paragraph (1) for the taxable year, the excess shall

9 be carried to the succeeding taxable year and added

10 to the amount allowable as a credit under subsection

11 (a) for such succeeding taxable year.

12 ‘‘(d) ADDITIONAL LIMITATIONS.—

13 ‘‘(1) APPROVED WATER CONSERVATION

14 PLAN.—Subsection (a) shall not apply to any ex15 pense unless—

16 ‘‘(A) the taxpayer has in effect a water

17 conservation plan which has been reviewed and

18 approved by the Soil Conservation Service of

19 the Department of Agriculture, and

20 ‘‘(B) such expense is consistent with such

21 plan.

22 ‘‘(2) DROUGHT AREA.—Subsection (a) shall not

23 apply to any expense unless the land on which the

24 water conservation system is installed is entirely in

25 an area which has been identified, in the taxable
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1 year or in any of the 3 preceding taxable years, as

2 an area of extreme drought severity on the Palmer

3 Drought Severity Index published by the National

4 Oceanic and Atmospheric Administration.

5 ‘‘(e) DENIAL OF DOUBLE BENEFIT.—No deduction

6 shall be allowed under this chapter with respect to any

7 expense which is taken into account in determining the

8 credit under this section, and any increase in the basis

9 of any property which would (but for this subsection) re10 sult from such expense shall be reduced by the amount

11 of credit allowed under this section for such expense.’’

12 (b) TECHNICAL AMENDMENT.—Subsection (a) of

13 section 1016 of such Code is amended by striking ‘‘and’’

14 at the end of paragraph (25), by striking the period at

15 the end of paragraph (26) and inserting ‘‘; and’’, and by

16 adding at the end thereof the following new paragraph:

17 ‘‘(27) to the extent provided in section 30A(e),

18 in the case of amounts with respect to which a credit

19 has been allowed under section 30A.’’

20 (c) CLERICAL AMENDMENT.—The table of sections

21 for subpart B of part IV of subchapter A of chapter 1

22 of such Code is amended by adding at the end the follow23 ing new item:

‘‘Sec. 30A. Purchase and installation of water conservation systems on farm land.’’
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1 (d) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to amounts paid or incurred after

3 the date of the enactment of this Act, in taxable years

4 ending after such date.

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