§ 126.
(a)
General rule
Gross income does not include the excludable portion of payments received under—
(1)
The rural clean water program authorized by section 208(j) of the Federal Water Pollution Control Act (
33 U.S.C. 1288(j)).
(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.).
(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).
(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.
(b)
Excludable portion
For purposes of this section—
(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.
(2)
Payments not chargeable to capital account
(Added [Pub. L. 95–600, title V, § 543(a)], Nov. 6, 1978, [92 Stat. 2888]; amended [Pub. L. 96–222, title I, § 105(a)(7)(A)], (C), (E), Apr. 1, 1980, [94 Stat. 220], 221; [Pub. L. 113–295, div. A, title II, § 221(a)(22)], Dec. 19, 2014, [128 Stat. 4040]; [Pub. L. 115–141, div. U, title IV, § 401(b)(9)], Mar. 23, 2018, [132 Stat. 1202].)