[Code of Federal Regulations]
[Title 26, Volume 1]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.194-1]

[Page 267]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.194-1  Amortization of reforestation expenditures.

    (a) In general. Section 194 allows a taxpayer to elect to amortize 
over an 84-month period, up to $10,000 of reforestation expenditures (as 
defined in Sec. 1.194-3(c)) incurred by the taxpayer in a taxable year 
in connection with qualified timber property (as defined in Sec. 1.194-
3(a)). The election is not available to trusts. Only those reforestation 
expenditures which result in additions to capital accounts after 
December 31, 1979 are eligible for this special amortization.
    (b) Determination of amortization period. The amortization period 
must begin on the first day of the first month of the last half of the 
taxable year during which the taxpayer incurs the reforestation 
expenditures. For example, the 84-month amortization period begins on 
July 1 of a taxable year for a calendar year taxpayer, regardless of 
whether the reforestation expenditures are incurred in January or 
December of that taxable year. Therefore, a taxpayer will be allowed to 
claim amortization deductions for only six months of each of the first 
and eighth taxable years of the period over which the reforestation 
expenditures will be amortized.
    (c) Recapture. If a taxpayer disposes of qualified timber property 
within ten years of the year in which the amortizable basis was created 
and the taxpayer has claimed amortization deductions under section 194, 
part or all of any gain on the disposition may be recaptured as ordinary 
income. See section 1245.

[T.D. 7927, 48 FR 55849, Dec. 16, 1983]

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