Section 710, General
Internal Revenue Manual
Specialized Industry Guidelines - Timber
Section 710, General
Last amended: 6-26-1978
General
An examiner will need to determine the method of depreciation, the reasonableness of lives, and the adequacy of salvage values. The same rules of law pertaining to other taxpayers are generally applicable. The taxpayer's own experience is important in establishing salvage values and the rate of depreciation. Lack of a sufficient experience factor will require use of depreciation rates commonly used by the industry. For assets acquired after December 31, 1970, taxpayers may elect the provisions of the Asset Depreciation Range (ADR) System for determining the reasonable allowance for depreciation of designated classes of assets. This system has an annual election. A large number of taxpayers in the timber industry have elected this system since 1970. Refer to Regulations 1.167(a)-11 for the provisions and special rules of the ADR System.