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availability of conservation expenditure deductions to amounts
incurred that are consistent with a conservation plan approved by
the Soil Conservation Service (SCS) of the Department of
Agriculture, and if there is no SCS conservation plan for the
area in which the property is located, amounts incurred for
improvements that are consistent with a plan of a State
conservation agency. S. Rept. 99-313, supra, 1986-3 C.B. (Vol.
3) at 265.
Respondent argues that the consequence of the form in which
Congress chose to cast section 175(c)(3)(A) requires the
disallowance of deductions for conservation expenditures outside
the United States. The partnerships, of course, dispute this.
The partnerships agree with respondent that their
conservation expenditures obviously cannot qualify under section
175(c)(3)(A)(i) because in that provision it is expressly
provided that the conservation expenditures must be consistent
with an SCS-approved plan for the area in which the land is
located. The Department of Agriculture through the SCS would be
unlikely, to say the least, to deal with land located outside the
United States. The partnerships argue that their conservation
expenditures can, however, qualify under section
175(c)(3)(A)(ii).
They first maintain that the term "State", as used in clause
(ii), should be read expansively so as to embrace governmental
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