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Revenue Ruling 94-27, 1994-1 CB 26, April 11, 1994.

REV-RUL, 94FED ¶46,243, Exclusions from gross income: Cost-sharing payments: Stewardship Incentive Program.--,

[Code Sec. 126 ]

Exclusions from gross income: Cost-sharing payments: Stewardship Incentive Program.--Improvements made in connection with small watersheds under the Stewardship Incentive Program are within the scope of Code Sec. 126(a)(9) and, thus, are excluded from gross income. BACK REFERENCE: 94FED ¶7334.12.

ISSUE

Is the Stewardship Incentive Program, established by Title XII of the Food, Agriculture, Conservation and Trade Act of 1990, Pub. L. No. 101-624, 104 Stat. 3359, 3521, substantially similar to the type of program described in §126(a)(1) through (8) of the Internal Revenue Code so that §126 improvements made in connection with small watersheds and under the Stewardship Incentive Program are within the scope of §126(a)(9)?

LAW

Section 126(a)(9) covers certain programs affecting small watersheds. Section 16A.126-1(d)(3) of the temporary Income Tax Regulations defines a small watershed as a watershed or subwatershed that does not exceed 250,000 acres and does not include any single structure providing more than 12,500 acre-feet of floodwater detention capacity, nor more than 25,000 acre-feet of total capacity. These programs must be administered by the Secretary of Agriculture and be determined by the Commissioner of Internal Revenue to be substantially similar to the type of program described in §126(a)(1) through (8).

HOLDING

The Commissioner has determined that the Stewardship Incentive Program is substantially similar to the type of program described in §126(a)(1) through (8) so that §126 improvements made in connection with small watersheds and under the Stewardship Incentive Program are within the scope of §126(a)(9).

DRAFTING INFORMATION

The principal author of this revenue ruling is Mike Santoro of the Office of Assistant Chief Counsel (Passthroughs and Special Industries). For further information regarding this revenue ruling contact Mike Santoro on (202) 622-3120 (not a toll-free call).