for the taxable year an amount equal to 75 percent of the
water conservation system expenses paid or incurred by
the taxpayer during such year.
‘‘(b) WATER CONSERVATION SYSTEM EXPENSES.—
For purposes of this section—
‘‘(1) IN GENERAL.—The term ‘water conserva-
tion system expenses’ means expenses for the pur-
chase and installation of materials or equipment
which are primarily designed to substantially con-
serve water on farm land.
‘‘(2) FARM
LAND.—The term ‘farm land’
means land used in a trade or business by the tax-
payer or a tenant of the taxpayer for—
‘‘(A) the production of crops, fruits, or
other agricultural products,
‘‘(B) the raising, harvesting, or growing of
trees, or
‘‘(C) the sustenance of livestock.
‘‘(c) LIMITATION BASED ON AMOUNT OF TAX.—
‘‘(1) LIABILITY FOR TAX.—The credit allowable
under subsection (a) for any taxable year shall not
exceed the excess (if any) of—
‘‘(A) the regular tax for the taxable year,
reduced by the sum of the credits allowable
under subpart A and the preceding sections of
this subpart, over
‘‘(B) the tentative minimum tax for the
taxable year.
‘‘(2) CARRYFORWARD OF UNUSED CREDIT.—If
the amount of the credit allowable under subsection
(a) for any taxable year exceeds the limitation under
paragraph (1) for the taxable year, the excess shall
be carried to the succeeding taxable year and added
to the amount allowable as a credit under subsection
(a) for such succeeding taxable year.
‘‘(d) ADDITIONAL LIMITATIONS.—
‘‘(1) 
APPROVED
WATER
CONSERVATION
PLAN.—Subsection (a) shall not apply to any ex-
pense unless—
‘‘(A) the taxpayer has in effect a water
conservation plan which has been reviewed and
approved by the Soil Conservation Service of
the Department of Agriculture, and
‘‘(B) such expense is consistent with such
plan.
‘‘(2) DROUGHT AREA.—Subsection (a) shall not
apply to any expense unless the land on which the
water conservation system is installed is entirely in
an area which has been identified, in the taxable
year or in any of the 3 preceding taxable years, as
an area of extreme drought severity on the Palmer
Drought Severity Index published by the National
Oceanic and Atmospheric Administration.
‘‘(e) DENIAL OF DOUBLE BENEFIT.—No deduction
shall be allowed under this chapter with respect to any
expense which is taken into account in determining the
credit under this section, and any increase in the basis
of any property which would (but for this subsection) re-
sult from such expense shall be reduced by the amount
of credit allowed under this section for such expense.’’
(b) TECHNICAL AMENDMENT.—Subsection (a) of
section 1016 of such Code is amended by striking ‘‘and’’
at the end of paragraph (25), by striking the period at
the end of paragraph (26) and inserting ‘‘; and’’, and by
adding at the end thereof the following new paragraph:
‘‘(27) to the extent provided in section 30A(e),
in the case of amounts with respect to which a credit
has been allowed under section 30A.’’
(c) CLERICAL AMENDMENT.—The table of sections
for subpart B of part IV of subchapter A of chapter 1
of such Code is amended by adding at the end the follow-
ing new item:
‘‘Sec. 30A. Purchase and installation of water conservation sys-
tems on farm land.’’
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to amounts paid or incurred after
the date of the enactment of this Act, in taxable years
ending after such date.
Æ