The Forest Landowners Guide to the Federal Income Tax

Index

Index

A

Accounting methods 101
Accounts-also see specific account 12, 104
Accrual Accounting 79, 101
Active income or loss - Also see Material participation 87
Adjusted basis 9, 18, 23, 31, 126, 130, 143
Administrative law 89
Afforestation expenses See Establishment costs
Agricultural conservation program (ACP) 44
Allocation of original basis 10, 12, 140
Allowable basis 32, 60, 62, 72, 73, 139, 143
Alternate valuation date 9
Alternative minimum tax 21, 73
Alternative minimum taxable income 73
Appeals 93
Appraisal 9, 42, 56, 68, 140, 144
Audits 86, 92, 101
Average depletion 104, 141, 142

B

Bargain sales, basis of 10, 140
Basis 9, 17, 18, 21, 23, 26, 28, 31, 32, 53, 57, 59, 60, 62, 69, 72, 86, 125, 139
Block 12, 57, 59, 60, 62, 130, 139, 141, 144, 145, 146
Brush control 13, 125, 126
Business expenses, recovering 13, 25, 27, 28, 62, 73, 79, 125, 126
Business use, property held for See Trade or business, property held for use in

By-products - Also see Nontimber forest products 49, 83

C

Capital accounts - Also see Accounts 9, 104, 145
Capital asset 9, 12, 36, 37, 80, 126, 127
Capital costs 9, 26, 67
Capital gains and losses 25, 29, 32, 36, 37, 38, 41, 67, 71, 72, 73, 75, 80, 83, 126
Capital income accounts 106
Capitalization 9, 13, 26, 125, 128, 130
Capitalize versus deduct 13, 15, 26, 29, 142
Carrying charges-also see specific item 25, 26, 27, 28, 79
Case law 90, 91
Cash accounting 79, 101
Casualty losses 12, 13, 28, 56, 62, 63, 64, 67, 129, 143
C corporations 26, 28, 87, 129
Chips 49, 83
Christmas trees, as timber 41, 75, 79
Christmas trees, expenses of producing 79, 125
Christmas trees, income from 75, 80, 126
Commercial tax services 89, 98
Community property 85
Condemnations 60, 62, 63, 64
Conservation easements 68, 69
Conservation Reserve Program (CRP) 13, 15, 44, 75, 128
Conservation Security Program (CSP) 44, 47, 128
Consulting forester 12, 25, 31, 42, 57, 143, 145
Contract right to cut timber 42, 81, 126, 127, 128, 142
Conversion cost See Cost of conversion
Co-ownership 85, 86
Corporations - Also see C corporations and Subchapter S corporations 26, 28, 29, 32, 86, 129
Cost of conversion 42
Costs – also see specific cost 9, 25, 28, 31, 62, 67, 73, 79
Cost-sharing payments 15, 44, 47, 49, 50, 75, 98, 101, 128
Costs of acquisition 9, 17, 140, 146
Costs of sale 31, 145
Courts 57, 89, 91, 93, 130
Cruising expense See Timber cruise expenses
Cutting as a sale or exchange 41, 75, 76, 80, 81, 127, 139, 143
Cutting contracts 41, 42, 53, 126
Cutting rights See Cutting contracts

D

Date of disposal 38, 41, 42
Deduct versus capitalize 13, 15, 26, 29, 142
Deferred reforestation subaccount 105, 142, 145
Depletion deduction 13, 32, 49, 73
Depletion unit 32, 60, 142
Depreciable land improvement account 12, 106, 125
Depreciation accounts 106, 125
Depreciation deductions 12, 16, 20, 21, 22, 25, 67
Disease control expenses 25, 126
Disease, losses due to 56
Disposal with economic interest retained 38, 49, 71, 126, 127
Disposition of depreciated property 25
Drought, damage due to 13, 56, 61, 62, 129

E

Economic decision criteria 6, 7
Economic interest, defined 53
Elections by taxpayer 21,28,29,30,31,32,35,39, 42, 43, 55, 56, 73, 74, 84, 87, 88, 91, 92
Employee 89-90
Environmental Quality Incentives Program (EQIP) cost-share payments 58, 88, 140
Equipment 21, 25, 26, 30, 31, 70
Equipment accounts 26, 113
Escrow Accounts 84
Estates 14,18,21,26,35,40,50,79,80,81,97
Evergreen trees, defined 55, 91
Exchanges 22, 28, 63-66, 72, 143
Expense accounts 113

F

Fair market value 21, 22, 55, 56, 59, 63, 65, 70, 72, 73, 83, 84, 92
Farming 25, 29, 41, 83, 91
Fire protection expenses 17, 38
Fire, losses due to 67, 68, 72
For profit, defined 39
Forest products 3, 61, 87
Forester 13, 14, 16, 22, 38, 45
Forestry Incentives Program (FIP) cost-share payments 55, 88, 140
Form 1040 18, 28, 60, 95, 104
Form 1040 A 104
Form 1040 EZ 104
Form 1040 X 104
Form 1065 87
Form 1099 60, 61, 90, 103
Form 2297 101
Form 2553 97
Form 2848 103
Form 3468 29
Form 4255 29
Form 4562 28, 32, 35, 36
Form4684 73,74
Form 4797 36, 53, 55, 57, 61, 66, 74, 84
Form 4952 43
Form 6251 85,86
Form 6252 83,84,85
Form 8283 81
Form 8582 42
Form 8824 66
Form SS-8 90
Form T 53, 85, 111, 145
Form W-2 89, 103

G

Gain or loss, how computed 45, 50, 55, 68,72, 73
General business accounts 114
Gifts, basis of 22
Gross profit percentage 83
Growth, accounting for 26, 45, 113

H

Hobby versus business 13
Holding period 1,50,51,55,56,63
Hurricanes, losses due to (See Windstorms)

I

Ice storm, losses due to 72
Improvements to land 23, 29, 112
Independent contractor 53, 56, 89–90
Information returns 60, 61, 90, 103
Inherited property, basis of 21
Insect protection expenses 38
Insects, losses due to 4, 67, 68, 72
Installment sales 83–85
Insurance expenses 38
Insurance, proceeds from 67, 68, 69, 70, 71, 73,
Interest 4, 6, 7, 9, 11, 21, 38, 39, 41, 42, 83, 85, 86, 103, 114
Investment expenses, how to recover 42–43
Investment tax credit 26, 29, 40, 42, 59, 61, 91
Investment, property held for 13, 17, 42, 52, 61, 63, 64, 67, 73, 74, 79
Involuntary conversions 67–77, 143–144

J

Joint tenancy 95
Journal 112, 114, 115, 116–118

L

Land account 23, 71, 112
Leases 5, 17, 28, 39, 59, 64, 72, 79, 83, 87, 114
Ledger 112
Life estate 95
Like-kind exchanges 28, 63–66, 143
Limbs, sale of 61
Limited liability companies 18, 86, 97
Limited partnership 96
Logging roads 21, 23, 29, 35, 112, 113
Losses (See Capital gains and losses, or Involuntary conversions)
Lump-sum sale 46, 51, 52–53, 61, 72, 83, 88, 92

M

Management expenses–also see specific expense 5,13, 16, 17, 25, 26, 28, 29, 31, 38, 39, 40, 41, 42, 43, 45, 70, 72, 79, 85, 91, 113
Marking of timber 45, 52
Material participation 17, 40–41, 85, 91, 97, 112
Merchantable timber 4, 25, 26, 28, 45,65, 66, 68, 69, 72, 113
Minimum tax 8 5-86

N

Non-business expenses, recovery of 13, 17
Noncasualty losses 67, 68, 70, 73, 74

0

Operating expenses–also see specific item 38, 91
Ordinary income 5, 16, 17, 28, 38, 45, 50,51, 53, 55, 61, 71, 74, 83, 87, 88, 91, 105, 114
Ordinary income accounts 114
Original basis 21
Outright sale of timber 51, 52–53, 61, 72, 83, 88, 92
Owner, defined 53, 56

P

Partial destruction, losses due to 70, 72
Partnerships 18, 26, 40, 63, 86, 87, 92, 96, 104
Passive activity 17, 40, 41, 83, 85, 91
Passive income or loss 40, 41, 42
Personal use, property held for 17, 50, 52, 56, 67, 74
Plantation subaccount 25, 26, 28, 45, 70, 113
Planting expenses 4, 21, 25, 26, 28,29, 72, 91, 113
Portfolio income 41
Precommercial thinning 38, 39, 113
Preproductive period 16, 91
Primarily for sale, timber held 30, 51, 53, 66, 74, 88, 92, 105
Profit, defined for timber investments 17, 39
Property taxes 16, 17, 38, 39, 42, 86, 113
Pruning expenses 91 Purchased property, basis of 21

Q

Quantity of timber, determination of 55

R

Recordkeeping requirements 35, 41, 108, 112
Reforestation expenses 15, 21, 26, 28, 29, 58,59, 61, 91, 113
Reforestation expenses, amortization of 26, 28,59, 61, 83, 91, 113
Reforestation tax credit 26, 29, 40, 42, 59, 61, 91
Rental income 59, 83, 87, 88
Retained economic interest 51, 53, 92
Revocation of election under Section 631(a) 56
Roads 21, 23, 29, 35, 38, 112, 113

S

S corporations 18, 26, 40, 97, 104, 108
Sale, costs of 21, 45, 83, 84, 114
Sales, types of 46, 51, 52–53, 53–55, 55–57, 91
Salvage of damaged timber 68, 70, 72, 73
Scaling of logs 45, 53, 83
Schedule A, Form 1040 28, 43, 74, 85
Schedule B, Form T 23
Schedule C, Form 1040 18, 28, 41, 53, 57, 60, 74, 95
Schedule C, Form T 73
Schedule D, Form 1040 52, 53, 66, 74, 84, 86
Schedule D, Form T 73
Schedule E, Form 1040 18, 74, 96, 97
Schedule E, Form T 28
Schedule F, Form 1040 18, 28, 41, 53, 57,61, 74, 88, 95
ScheduleF, Form T 45, 56, 57, 73
Schedules SE 87, 88
Schedules K-1 87
Section 175 deduction 25
Section 179 deduction 29, 31, 35–37, 38
Section 631 (a) transaction 46, 51, 55–57, 61, 72, 73, 87, 88, 92, 94
Section 631(b) disposal 46, 51, 53–55, 61, 72, 83, 84, 87, 92, 94
Section 2032A 41
Self-employment tax 16, 51, 61, 86–88, 107
Selling expenses 21, 45, 83, 84, 114
Service forester 69
Shearing expenses 91
Site preparation expenses 4, 21, 25
Social Security tax–also see Self-employment tax 86-88
Soil and water conservation expenses 25, 59, 88
Sole ownership proprietorship 17, 51, 86, 95, 96
Special use valuation 14, 21, 41, 59
State conservation program cost-share payments 58, 60, 88
Stewardship Incentives Program (SIP) cost-share payments 58, 59, 88, 140
Stumpage 6, 56, 57, 65
Stumps 61, 143
Subchapter S corporations 18, 26, 40, 97, 104, 108

T

Taxes, deductible and nondeductible 17, 38, 39, 41, 42, 86
Tenancy by the entirety 95
Tenancy in common 95
Theft, losses from 67, 71, 72, 73
Thinning expenses 38, 39, 113
Timber accounts 13, 25, 26, 39, 45, 50, 68, 70, 91, 113
Timber cruise expenses 23, 46 Timber owner 53, 56
Timber stand improvement (TSI) expenses 1, 8, 26, 39, 58
Timber, defined 53, 91
Timeline 7
Tops, sale of 55, 61
Tornado, losses due to (See Windstorms)
Trade or business, held for use in 17, 18, 31, 35, 36, 38, 40, 41, 51, 52, 53, 55, 56, 63, 64, 67, 74, 79, 86, 87, 88, 92, 105
Travel expense 38, 45, 107, 113
Tree stumps 61, 143
Trees, damage to 53, 67–77
Trusts 14, 18, 26, 35, 40, 97

U

Uniform capitalization rules 21, 30, 91

V

Valuation 16, 22, 80
Valuation date 21

W

Wetlands Reserve Program (WRP) cost-share payments 58, 88, 140
Wildlife Habitat Incentives Program (WHIP) cost-share payments 58, 88, 140
Wildlife habitat management 4, 39, 58, 79, 80, 88 Wildlife habitat management expense 39, 79, 88
Windstorms, losses due to 67, 68, 72

X

Y

Year of cutting 55 Year of deduction for casualty loss and theft 69, 71
Young growth, losses of 70, 72
Young growth subaccount 25, 26, 28, 45, 70

Z