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 occurred during the tax year.
For additional information regarding federal income tax rules for reporting forest-related activities, see the following
Pub. 225, Farmer’s Tax Guide,
Pub. 535, Business Expenses, and
Pub. 544, Sales and Other Dispositions of Assets.
Complete and attach Form T to your income tax return only if you:
Claim a deduction for depletion of timber,
Elect under section 631(a) to treat the cutting of timber as a sale or exchange, or
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.
You are not required to file Form T if you only have an occasional sale of timber (one or two sales every 3 or 4 years).
However, you must maintain adequate records of these transactions and other 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
If you are required to file Form T for the current tax year (as discussed above 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 (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 depreciation) or statement to your income tax return to report these
activities. Also, maintain adequate records as discussed in Recordkeeping, below.
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 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 administration of any Internal Revenue law.
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.
Maintain separate cost 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 constructed and how the total expenditures were either (a) 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.