Publications > Forest Landowners Guide to the Federal Income Tax, Ag. Handbook No. 718

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