The Forest Landowners Guide to the Federal Income Tax
Table 15-4 - Evergreen Tree Farm: Reforestation tax credit
| For 1996 Federal Tax Returns | |
| Site preparation cost (see ref. 19) | $12,500 |
| Less FIP cost-share payment (see ref. 21) (payment excluded from gross income-Internal Revenue Cose (CODE) Section 126) |
$5,500 |
| Total out-of-pocket cost eligible for credit and amortization | $7,500 |
| Investment credit (report on IRS Form 3468) $7,500 x 10% | $750 |
| Amortization schedule (report on IRS Form 4562) | |
| 1. Reduce amortizable basis on one half of credit claimed: $7,500 - ($750 x 0.5) | $7,125 |
| 2. Compute deductions over 84 months (8 tax years) using half-year
convention (that is, only 6 months is claimed in first and last years) |
|
| 1996 and 2003 returns (see ref. 22) $7,500 x (1/14) |
$509 |
| 1997 to 2002 return (see ref. 24) $7,500 x (1/7) |
$1,018 |
| For 1997 Federal Tax Returns: | |
| Planting cost (see ref. 23) | $3,600 |
| Total out-of-pocket reforestation cost eligible for credit and amortization (that is, cost-share payments was not received on this activity) |
$4,320 |
| Investment credit: $3,600 x 10% | $360 |
| Amortization schedule | |
| 1. Reduce basis for credit taken $3,600 - $18- ($360 x 0.5) |
$3,420 |
| 2. Amortization deductions | |
| 1997 and 2004 returns (see ref. 24) $3,600 x (1/14) |
$244 |
| 1998 to 2003 returns $3,600 x (1/7) |
$489 |