Submitted by: Submitted by cajun
Views: 213
Words: 1072
Pages: 5
Category: Literature
Date Submitted: 06/21/2011 12:03 PM
Debbie Gaddis, Ph.D. Mississippi State Extension Service Dept. of Forestry
! When
! Involuntary
timber is • Destroyed • Stolen • Condemned
conversion ! A deductible loss
1
! Did
trees die from . . . • Overcrowding? • Routine levels of insect infestation? • Routine disease? • Low rainfall (not abnormal drought)? ! These are normal losses and are not deductible.
! Sudden-specific
date/event ! Unexpected and Unusual ! Natural or External forces ! Asset left unfit for use
Hurricane Katrina – August 29, 2005
2
! Did
the timber die from
• Unusual and unexpected event such
!
These may be noncasualty business losses.
as southern pine beetle or emerald ash borer outbreak? • Prolonged drought recognized as a disaster by President or Sec. of Ag.?
3
! Just
a few trees— probably not worth the effort of determining loss ! FMV loss requires the estimation of loss in FMV for entire Single Identifiable Property
! Documentation
of the casualtypictures, news articles ! Documentation of the loss in fair market value ! Documentation of the basis in the timber
4
! The
amount of the deductible loss is ! Loss in FMV ! Or Basis, ! Whichever is less
! Initial
basis set when acquired ! Adjusted to reflect
• T imber sold • T imber destroyed or stolen • Capitalized expenses
5
! Timber
grew naturally after purchase or after clearcut ! Gifted property with no donor basis ! Inherited property where timber was clearcut and basis offset sale proceeds or unused on a timely return ! Forest established after acquisition and all costs deducted
• Retroactive establishment
possible • Unless " T imber already cut " Records not available
6
! Farmer
Jones acquires a farm for $100,000 ! 50 acres in cropland ! 50 acres in timberland ! Total available for basis: $100,000
! Market
value for cropland is $1,700 per acre ! Market value for bare land is $100 per acre ! T imber value determined by...