Client has legitimate reforestation expenses from prior years. In the past he has claimed the costs of clearing/site preparation/seeds/planting. The 84-month amortization period has been used (adjustment to income) and in years where allowed the appropriate tax credit was also claimed.
For 2008, there are legitimate expenses for clearing undergrowth/spraying/etc around the established trees. The mature trees (on fifty acres or so) will be ready for harvesting within ten years.
Question #1: Can these 2008 costs still be considered as "reforesting" expenses and allowable for the 84-month amortization, or are they too far down the road to be treated as such? (It's kinda like "what is is?") There is no Schedule F or similar being filed, and I really would hate to clutter up a tax return with Sch F/Form 4562 unless it is absolutely necessary to do so, especially since there will not be any tree income in the reasonably foreseeable future.
Question #2: For estate reasons, the "farm" (client lives there and just has a LOT of trees on the surrounding property) is now inside a revocable trust owned by the client. A similar arrangement exists with the mortgage et al. Does this change anything, along the lines of the trust cannot expense but must amortize issue?
Again, client wishes to take the most reasonable approach possible. Prior year reforestation costs are still being claimed and the "new" ones could easily be added to that running total. OTOH, client probably would rather just forget the whole thing re 2008 expenses if the tax paperwork becomes bothersome.
Thanks - hopefully some of the gurus here might have encountered a situation such as this!
FE
For 2008, there are legitimate expenses for clearing undergrowth/spraying/etc around the established trees. The mature trees (on fifty acres or so) will be ready for harvesting within ten years.
Question #1: Can these 2008 costs still be considered as "reforesting" expenses and allowable for the 84-month amortization, or are they too far down the road to be treated as such? (It's kinda like "what is is?") There is no Schedule F or similar being filed, and I really would hate to clutter up a tax return with Sch F/Form 4562 unless it is absolutely necessary to do so, especially since there will not be any tree income in the reasonably foreseeable future.
Question #2: For estate reasons, the "farm" (client lives there and just has a LOT of trees on the surrounding property) is now inside a revocable trust owned by the client. A similar arrangement exists with the mortgage et al. Does this change anything, along the lines of the trust cannot expense but must amortize issue?
Again, client wishes to take the most reasonable approach possible. Prior year reforestation costs are still being claimed and the "new" ones could easily be added to that running total. OTOH, client probably would rather just forget the whole thing re 2008 expenses if the tax paperwork becomes bothersome.
Thanks - hopefully some of the gurus here might have encountered a situation such as this!
FE