A.5. Part IV - Reforestation and Timber Stand Activities

(1) Part IV provides for reporting expenses for reforestation and timber stand

activities during the tax year. The taxpayer should have on file all the detailed information reflecting items that are required to be capitalized, and items elected to be capitalized. Expenses to be reported on this schedule are expenses such as for supplies, labor, overhead, transportation, tools, etc.

(2) Deferred reforestation sub-accounts should reflect capital expenses incurred

in connection with establishing timber stands by planting, seeding, or natural regeneration. Establishment costs include money spent to prepare the site for planting or seeding, costs of seedlings or seed, costs of mechanical or chemical conditioning of the site, cost of small tools, and costs of labor associated with those treatments.

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(3) Section VII contains a discussion of how establishment of reforestation costs

can be treated under certain circumstances.