Hardwood Timber Industry Guide Name Audit Technique Guide›Audit Technique Guide Subtitle›Table of Contents
A.2. Part II - Timber Depletion
0725 Publ 6116 (PDF) · 2026-10-03 edition · updated 2026-10-04 · United States
(1) Part II is used for recording changes in a timber account during a tax year
and determining the basis recoverable for timber sold or lost or the depletion for timber cut during the tax year. In general, this schedule is used to reflect growth of timber, harvest activities or other disposals, acquisitions, losses, transfers of timber from other accounts, changes in standards of use, and anything else that will affect the volume or basis of timber (wood available and suitable for exploitation and use by the forest industries) in the account. It is a record of activities involving the timber account. The unit rate used for the allowance for depletion, or basis of sales or losses, is computed based
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on the volume and basis of timber that was available during the year, not just that available at the beginning of the year.
(2) The IRC § 631(a) election is made on Part II. This election treats the cutting
of timber as a sale or exchange of the timber cut. Under this election, the taxpayer must determine the adjusted basis for depletion, and the fair market value (FMV) of timber cut during the tax year as of the first day of that year. This schedule details information the taxpayer must provide in connection with the FMV determination.
(3) Depending on the size and complexity of the taxpayer's holdings, there may
be multiple Part II's to account for different depletion blocks, species, etc. Taxpayers may need to keep much more detailed depletion records than those shown in Part II.
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