If you're trying to talk a landowner into enrolling in a soil conservation program and using tax benefits as a carrot, you may want to check the tax rules. Whether a landowner can deduct soil conservation expenses now, or whether he has to roll it into the basis of the farm, may depend upon the type of lease you have with him.

Related: Tax implications to a landowner switching to flexible cash lease from fixed cash rent

Ed Farris, Huntington County Extension ag educator, is a member of the Purdue University Land Lease Team. The statewide team provides information to answer these types of questions. Ag Economics specialists assist them in finding answers.

Deductible or not? Expenses for soil conservation expenses generally aren't deductible for a landowner cash renting a farm, or using a flexible lease. They may be deductible for the tenant if he or she pays for them.

The question is germane now because you may be considering switching to a flexible cash lease from a fixed lease with your landowner. In most cases, there won't be an effect.

If the landowner wasn't materially participating in the farm operation under the IRS definition with a fixed cash lease, then he likely isn't materially participating under a flexible cash lease either. In either type of lease as long as he is not materially participating, the landowner can't deduct soil and water conservation expenses on his annual tax return.

However, that doesn't mean he can't recoup credit for tax purposes down the road. If he invests in soil conservation practices and spends money now, these expenses will be added to the basis of the farm land value.

Related: Addressing the 5 Myths of Ag Landlord Rights

Tenants, on the other hand, generally can deduct soil conservation expenses. There are some limitations, so visit with your tax accountant or consultant.

If a landowner is materially participating in the operation, then he or she can deduct soil conservation expenses according to IRS guidelines. Generally, the deduction for soil conservation expenses in any one year is limited to 25% of a person's gross income from farming. Unused deductions can be carried over to later tax years in most cases.