REFORESTATION COSTS

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REFORESTATION COSTS
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REFORESTATION COSTS

• OLD LAW
• Prior to October 23, 2004, under IRC Section 194,
  up to 10,000 per year of qualifying
  reforestation costs could be amortized over 84
  months.
• In addition, prior to October 23, 2004, IRC
  Section 48 permitted a 10 percent tax credit on
  up to 10,000 per year of qualifying
  reforestation costs.
• All taxpayers except trusts were eligible for
  both provisions.
• Costs exceeding 10,000 per year remained in the
  depletion account until the trees were sold or
  otherwise disposed of.

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REFORESTATION COSTS

• NEW LAW
• Effective October 23, 2004 all taxpayers except
  trusts can deduct outright (expense) up to
  10,000 per year of qualifying reforestation
  costs with respect to each eligible timber
  property. The term "eligible timber property" is
  addressed in the instructions on the current
  edition of IRS Form T.
• Eligible reforestation costs exceeding 10,000
  per year per eligible timber property, without
  limit, can be amortized over 84 months. Trusts
  are eligible for this provision, including
  amortization of the first 10,000.