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requirement with respect to the costs incurred to develop and
maintain a citrus or almond grove for the first 4 years after the
trees are planted. We note that growers of plants that produce
other than citrus and almonds may elect out of these
requirements. Respondent also points out that section
263A(d)(3)(C) is similar to former section 278 and reflects that
Congress considered the preproductive period for citrus trees to
be more than 2 years.7
Subsection (d) of section 263A provides for exceptions from
the capitalization requirements for certain farming businesses.
As explained above, section 263A(d)(1)(A)(ii) excepts farmers
growing plants with a preproductive period of 2 years or less
from the section 263A capitalization requirements. Paragraph (3)
of subsection (d) permits certain farming businesses to elect out
of the section 263A capitalization requirements (i.e., the
requirements otherwise applicable to growers of plants with a
preproductive period of more than 2 years). One exception from
the election out provisions is contained in section
263A(d)(3)(C), as follows:
SPECIAL RULE FOR CITRUS AND ALMOND GROWERS.--An
election under this paragraph shall not apply with
respect to any item which is attributable to the
planting, cultivation, maintenance, or development of
any citrus or almond grove (or part thereof) and which
is incurred before the close of the 4th taxable year
7 Sec. 263A(d)(3)(C) and former sec. 278, in effect, contain
a 4-year threshold period of mandatory capitalization.
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