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Form T Instructions

Instructions for Form T (Timber), Forest Activities Schedule

Rev. December 2013

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Department of the Treasury  
Internal Revenue Service  
Instructions for Form T  
(Rev. December 2013)  
Forest Activities Schedule  
Section references are to the Internal  
Revenue Code unless otherwise noted.  
If you are required to file  
Form T for the current tax  
year (as discussed above  
capitalized, (b) amortized, or (c)  
claimed as an ordinary expense.  
Keep separate records for each  
unique stand identifier, depletion  
account, block, tract, or geographic  
area tributary to a mill or mill complex.  
Also, keep records that verify the  
basis in property for as long as they  
are needed to figure the basis of the  
original or replacement property.  
Future Developments  
under Who Must File), complete all  
the parts of the form that apply.  
However, if you are not required to file  
Form T but have other forest-related  
activities (reportable in Part I  
For the latest information about  
developments related to Form T  
(Timber) and its separate instructions,  
such as legislation enacted after it is  
published, go to  
(Acquisitions), Part IV (Reforestation  
and Timber Stand Activities), or Part V  
(Land Ownership), complete and  
attach the appropriate tax form (for  
example, Form 4562 to claim  
General Instructions  
Purpose of Form  
Specific Instructions  
Part I. Acquisitions  
depreciation) or statement to your  
income tax return to report these  
activities. Also, maintain adequate  
records as discussed in  
Use Form T (Timber), Forest Activities  
Schedule, to provide information on  
timber accounts when a sale or  
deemed sale under sections 631(a),  
631(b), or other exchange has  
Complete this part if you acquired  
timber, timber-cutting contracts, or  
forest land during the tax year,  
whether the acquisition was by  
purchase, exchange, gift, or  
Recordkeeping, below.  
occurred during the tax year.  
For additional information  
regarding federal income tax rules for  
reporting forest-related activities, see  
the following publications:  
Maps. Do not attach maps of your  
timber properties to Form T to  
substantiate any claimed deduction  
for depletion of timber. Instead, you  
are required to retain records  
How to Report Acquisitions  
Report acquisitions during the tax  
year (whether taxable or not) of  
timber, timber-cutting contracts, or  
forest land. Report separately each  
acquisition of $10,000 or more.  
Pub. 225, Farmer’s Tax Guide,  
Pub. 535, Business Expenses, and  
Pub. 544, Sales and Other  
sufficient to substantiate your right to  
claim the deduction, including a map  
(where necessary) to show clearly the  
location(s) of timber and land  
acquired, timber cut, and timber and  
land sold for as long as their contents  
may become material in the  
Dispositions of Assets.  
You may combine acquisitions of  
less than $10,000 for each account  
and omit lines 2 and 3. For an  
acquisition by gift or inheritance, skip  
lines 4 through 7.  
Who Must File  
Complete and attach Form T to your  
income tax return only if you:  
Claim a deduction for depletion of  
administration of any Internal  
For an acquisition or lease of  
Revenue law.  
Elect under section 631(a) to treat  
the cutting of timber as a sale or  
exchange, or  
timber-cutting rights on a pay-as-cut  
basis, except for those under which all  
cutting is completed within the tax  
year, do not complete lines 4 through  
8. Instead, list the provisions of the  
purchase or lease agreement,  
Other business records. You must  
also keep business records to support  
other items reported on your tax return  
such as expenses incurred during the  
tax year for road construction and for  
building drainage structures.  
Make an outright sale of timber  
under section 631(b).  
Complete Form T in accordance  
with sections 194, 611, 631, and  
1231, and the related regulations.  
including the number of years from  
the effective date to the expiration  
date, annual minimum cut or payment,  
and the payment rates for different  
kinds of timber and forest products.  
Follow the format of lines 1 through 9  
on additional sheets if necessary.  
Note. Maintain separate cost  
Exceptions. You are not required to  
file Form T if you only have an  
accounts for road construction and  
drainage structures, such as ditches  
and canals. For example, for roads  
constructed for logging timber or to  
conduct management activities on fee  
land or land held under long-term  
cutting contracts, maintain records  
showing the number of miles  
occasional sale of timber (one or two  
sales every 3 or 4 years). However,  
you must maintain adequate records  
of these transactions and other  
What Is Included in Each  
You must include your timber in one  
or more accounts. Generally, each  
account must include all your timber  
timber-related activities during the  
year, as discussed in Recordkeeping,  
below. These transactions may be  
treated as an investment for tax  
purposes if your property is not held  
for use in a trade or business.  
constructed and how the total  
expenditures were either (a)  
Jun 20, 2013  
Cat. No. 39879B  
that is located in one “block.” A block  
may be:  
1. An operational unit that includes  
all timber that would logically go to a  
single point of manufacture,  
2. A logging unit that includes all  
timber that would logically be  
removed by a single logging  
development, or  
Line 18a  
Valuation evidence. The records  
must provide evidence in the form of  
actual sales of comparable timber as  
of the valuation date, along with other  
valuation evidence used. Include a  
computation showing the difference  
between the cost (excluding timber or  
stumpage cost) and value of the  
primary wood product (logs or other  
roundwood, chips, etc.) at the mill or  
plant. Give detailed evidence that  
permits a comparison with the timber  
on which you report a value.  
Additional information. The records  
must include the following additional  
1. Location of the sawmill, log  
market, or other point of delivery of  
the logs or wood to the user or buyer.  
2. The total MBF, log scale, cords,  
or other units of timber cut, and the  
length and diameter of the average  
log or the average number of units per  
3. The percentage of rough  
lumber grades, by species,  
manufactured from the timber during  
the year, or, if cut timber is sold as  
logs, the percentage of log grades, by  
If you are making the 631(a) election,  
or have made the election in a prior  
tax year, check the “Yes” box on  
line 18a.  
Note. The 631(a) election cannot be  
made on an amended return.  
You must maintain the following  
3. An area established by the  
Adjusted basis for depletion.  
Maintain records that show the  
adjusted basis for depletion, fair  
market value (FMV), and gain or loss  
for each sale or exchange of standing  
timber for which you have a section  
631(a) election. The records must  
show the adjusted basis for depletion  
and the FMV of the timber as of the  
first day of the tax year in which timber  
was cut. The records must show  
these amounts by species and unit  
rates if these transactions are  
geographical or political boundaries of  
logical management areas. Timber  
acquired under a cutting contract may  
not be included in part of a block, but  
should be kept in a separate account.  
For exceptional cases, the timber in  
a given block may be divided into two  
or more accounts. See Regulations  
section 1.611-3(d) for more  
Part II. Timber Depletion  
Complete this part for each timber  
account that has changed in quantity  
or dollar amount. A timber account  
may change in quantity or dollar  
amount as a result of acquisitions,  
dispositions, the cutting of timber,  
capitalized expenditures, casualty or  
theft losses, corrections, additions for  
growth, and transfers from other  
accounts. Use this part to figure  
depletion for timber cut or the basis  
for timber sold or lost during the tax  
year. A depletion schedule is required  
to be maintained for all types of timber  
reported on a species basis. The gain  
or loss on standing timber is reported  
on Form 4797, Sales of Business  
Date of acquisition. The records  
must provide the date of acquisition of  
timber that was cut in the tax year, if  
acquired after March 1, 1913; the  
quantity of timber remaining (adjusted  
for growth, correction of estimates,  
changes in use, and any change in  
the log rule or other measure used);  
and the adjusted basis at the  
Timber owned or held under a con-  
tract right to cut. Show the amount  
of timber owned, or held under a  
contract right to cut, for a period of  
more than 1 year. Show separately  
the quantity of timber cut that was  
held for less than 1 year. The scale of  
logs purchased during the year must  
be shown by species and quantity and  
excluded from the quantity shown as  
cut under section 631(a) in Part II,  
line 17. Also show the number, cost,  
and point of delivery of purchased  
logs by species and grade.  
beginning of the tax year. The records  
must state the acreage cut, the  
Lines 1 through 6  
amount of timber cut from the  
applicable block during the tax year,  
and the log rule or other method used  
to determine the quantity of timber  
cut. If depletion accounts are kept by  
separate tracts or purchases, give the  
information separately for each tract  
or timber purchase.  
Provide data for each timber account  
separately. Account for any changes  
that have occurred during the tax  
year. Attach as many additional pages  
as needed. If you deplete on a block  
basis, combine new purchases with  
the opening balances and use the  
average depletion rate shown on  
line 8, column (b), for all timber cut or  
sold, regardless of how long held.  
Line 18b  
If you are revoking your 631(a)  
election, check the “Yes” box.  
If an average depletion rate based  
on the average value or cost of a  
timber block was used in earlier years,  
the adjusted basis referred to in  
section 631(a) is the average basis  
shown on line 8, column (b), after  
Line 14, column (b)  
The casualty loss limitation is  
If you made a section 631(a)  
election for any tax year ending before  
October 23, 2004, you can revoke that  
election without the consent of the  
IRS for any tax year ending after  
October 22, 2004. The prior election  
(and revocation) is disregarded for  
purposes of making a subsequent  
election. Unless this special rule  
applies, or the election was made for  
a tax year beginning before 1987, you  
can only revoke a section 631(a)  
election with IRS consent.  
determined by the decrease in fair  
market value (FMV) of the Single  
Identifiable Property (block) before  
and after the casualty event, not to  
exceed the basis in the affected block.  
Keep FMV appraisals in your records  
to support the claimed loss (see  
Recordkeeping, earlier).  
Characteristics of the timber. The  
records must describe in detail the  
characteristics of the timber that affect  
its value, such as total quantity,  
species, quality, quantity per acre,  
size of the average tree, logging  
conditions, and distance to markets.  
spraying, and thinning) applied to a  
timber stand regardless of age.  
block) for which depletion is allowed  
or for casualty losses (that is, lines 13  
and 14 of Part II) or other purposes.  
The qualified timber property account  
must be maintained until after the  
timber is disposed of through sale,  
harvest, or other transaction.  
Part III. Profit or Loss From  
Land and Timber Sales  
Line 4a. Reforestation  
By entering an amount on this line,  
you are indicating that you have  
elected to deduct qualifying  
Complete this part to report all  
dispositions of timber, timber-cutting  
contracts, or forest land during the tax  
year (whether taxable or not). Do not  
report dispositions by gift or  
For each qualified timber property  
(QTP), keep detailed information to  
support reforestation costs, showing  
treatments and dates of application.  
Each qualified timber property is  
required to have a unique stand  
identifier. Retain this information for  
your records. Report expenses such  
as supplies, labor, overhead,  
distributions made by an estate or to a  
reforestation expenses that were paid  
or incurred after October 22, 2004, for  
each qualified timber property under  
section 194(b). You must complete  
line 1 of Part IV listing the following:  
The account, block, tract, area or  
stand identification number for each  
qualified timber property (QTP);  
The kind of activity (burning,  
Report each sale involving total  
consideration of $10,000 or more.  
You may combine sales of less than  
$10,000 for each timber or land  
account and omit lines 2 and 3 for  
each combined small sale.  
Outright sales of timber. Certain  
rules under section 631(b) allow the  
landowner to treat outright sales of  
timber as capital gain. The rules  
extending capital gains treatment to  
outright sales of timber are similar to  
certain disposals of timber under a  
contract with a retained economic  
interest. However, for outright sales,  
the date of disposal is not deemed to  
be the date timber is cut because the  
owner may elect to treat the payment  
date as the date of disposal. For more  
information, see section 631(b) and  
Pub. 544.  
Timber-cutting contract. For a sale  
or lease of timber-cutting rights on a  
pay-as-cut basis, that will be paid for  
at intervals during the cutting period  
according to the number of units cut,  
complete lines 4, 7, and 8, only for  
accounts that must be reported on  
your current year income tax return.  
Instead of completing lines 5a, 5b,  
and 6, briefly state the provisions of  
the sale or lease agreement, including  
the number of years from the effective  
date to the expiration date, annual  
minimum cut or payment, and the  
payment rates for the different kinds  
of timber and forest products. You  
may combine small sales or leases of  
timber-cutting rights on a pay-as-cut  
basis that were completed within the  
tax year. Follow the format of lines 1  
through 8 on additional sheets if  
transportation, tools, and depreciation  
on equipment.  
Site preparation. Report all  
chopping, spraying, planting, seeding,  
thinning, pruning, fertilizing, etc.);  
The number of acres treated; and  
The total expenditures.  
expenses incurred during the tax year  
for preparing the land for planting or  
seeding (including natural seeding).  
Include expenses for clearing the land  
of brush and culling trees by burning,  
disking, chopping, shearing and  
piling, spraying with herbicides, or  
other measures taken to aid  
The aggregate amount of  
reforestation expenses which can be  
claimed on line 4a for any tax year  
cannot exceed $10,000 ($5,000 if  
your filing status is married filing  
separately) for each qualified timber  
property for any tax year. The  
successful site reforestation. Report  
this information separately for each  
unique stand identifier, depletion  
account, block, tract, or operating  
area tributary to a mill or mill complex.  
Report contract work separately from  
your employees' work.  
Planting or seeding. Report the  
expenses you incurred during the tax  
year for planting seedlings or sowing  
seed to reforest the land. Report this  
information separately for each  
unique stand identifier, depletion  
account, block, tract, or operating  
area tributary to a mill or mill complex.  
Report contract work separately from  
your employees' work.  
Other silvicultural activities.  
Report all expenditures that must be  
capitalized and items that you elect to  
capitalize. Also, list on a separate  
attachment items that are treated as  
current deductions (including, but not  
limited to, weed control, pruning,  
fertilization, thinning, insect and  
disease control). Report this  
remaining costs (line 4b) can be  
amortized over an 84-month period  
using the half-year convention under  
section 194(a). For more information  
on reforestation costs, see Pub. 535.  
If you do not elect to deduct  
reforestation expenses under section  
194(b), all reforestation expenses will  
be capitalized in a deferred timber  
depletion account.  
Reforestation expenses are direct  
costs incurred for reforestation by  
planting or artificial or natural seeding.  
This includes costs for the preparation  
of the site, of seeds or seedlings, and  
for labor and tools, including  
depreciation of equipment such as  
tractors, trucks, tree planters, and  
similar machines used in planting or  
Reimbursements under govern-  
mental reforestation cost-sharing  
programs. If you have been  
reimbursed under any governmental  
reforestation cost-sharing program,  
you may not claim these expenses  
unless the amount reimbursed has  
been included in your income.  
information separately for each  
unique stand identifier, depletion  
account, block, tract, or operating  
area tributary to a mill or mill complex.  
Report contract work separately from  
your employees' work.  
Part IV. Reforestation and  
Timber Stand Activities  
Summarize your expenditures for  
reforestation and timber stand  
Qualified timber property (QTP).  
Any qualified timber property subject  
to section 194(b) may not be  
activities during the tax year. Timber  
stand activities include all silvicultural  
prescriptions (such as burning,  
For more information, see section  
combined with any other qualified  
timber property account (depletion  
194 and Regulations section 1.194-3.  
is subject to the Paperwork Reduction their individual income tax return. The  
Part V. Land Ownership  
Act unless the form displays a valid  
OMB control number. Books or  
records relating to a form or its  
instructions must be retained as long  
as their contents may become  
material in the administration of any  
Internal Revenue law. Generally, tax  
returns and return information are  
confidential, as required by section  
estimated burden for all other  
taxpayers who file this form is shown  
Complete this part to show all  
changes in your land account,  
including sales or exchanges, during  
the tax year. Attach as many  
additional sheets as needed, following  
the format of lines 1 through 6.  
Learning about the law or  
the form .  
Preparing and sending  
the form to the IRS  
34 hr., 12 min.  
42 min.  
Paperwork Reduction Act Notice.  
We ask for the information on this  
form to carry out the Internal Revenue  
laws of the United States. You are  
required to give us the information.  
We need it to ensure that you are  
complying with these laws and to  
allow us to figure and collect the right  
amount of tax.  
1 hr., 17 min.  
If you have comments concerning  
the accuracy of these time estimates  
or suggestions for making this form  
simpler, we would be happy to hear  
from you. See the instructions for the  
tax return with which this form is filed.  
The time needed to complete and  
file this form will vary depending on  
individual circumstances. The  
estimated burden for individual  
taxpayers filing this form is approved  
under OMB control number  
You are not required to provide the  
1545-0074 and is included in the  
estimates shown in the instructions for  
information requested on a form that