Reforestation Amortization not working for me How can I get it right?

[bel21]

Have 22 acres of forestland that was harvested before Purchased it. Am reforesting along with adding a non permanent gravel road which is depreciable. My the reforestation expenses are over $16,847. I am not a business & not a farm. since growing for profit I am an investor and know my regular expenses are reported on Schedule A. Turbotax want to do a schedule C. But It's very difficult the information in the right places & have confidence that Turbotax is correct.

I know that the $10,000 goes on Schedule 1 line 24d. I know I use Form 4562, line 44. But when I use the interview & enter the reforestation it just puts the whole $16,847 on Schedule 1 line 24d which is wrong. From other calculator it should be 10,000 along with the 2023 amortization deduction of $489.07. Then 6 yrs @ $978.14 & then $489.07 in the final yr. How do I really get turbotax to amoritize correctly as Turbox tax does automatically?

Same situation with the gravel road. When to intangible asset but wants a date purchased, c

[PatriciaV]

Reforestation costs are entered in two areas of TurboTax, depending on the total amount you spent.

Up to $10,000 may be entered under Less Common Business Situations >> Business Deductions. Although the program will let you enter any number, the IRS rules limit the deduction to $10,000 in the first year.

Any excess over $10,000 may be entered under the related business or rental property as an Intangible Asset. Use Code 194, which appears in the drop-down under "Select a Code Section." Enter 7 years (84 months) as the period to amortize. Use a 7/1/YY date to allow for a half-year amortization in year one. TurboTax will calculate the amortization for this year and carry the information over to future tax returns.

This process in TurboTax has been the same for the last several years - you must make the split yourself and enter the correct amounts in each area of the program.

See also: IRS Pub 535, Reforestation Costs in chapter 7.

The gravel road is not an intangible, although you can enter the cost under the intangible asset type for depreciation. Choose "Other asset type." Enter your total cost and the date the road was completed as the purchase date. You will need to choose an asset class life, which would be the length of time you plan to use the road, since it is temporary. In most cases, you would choose straight line depreciation, unless you have an authoritative reference for a different treatment. 

[bel21]

Thanks for your reply. Helpful to one on the correct path. Still not sure if it's information is showing up.

In the interview I had to go to Income to find business deductions. Then the statement comes up;

"You can deduct $10,000 for each Qualified Timber property in year you pay or incur the expenses. You amortize the balance over 84 months. Enter your total forestation or reforestation deduction for 2023."

The figure I put there goes directly to Schedule 1 line 24d and then I manually add an additional statement to be attached to the return. 

So as I understand it from above answer I manually determine that figure to fill in there right? I.e. I must already have entered the amortized total using the Asset entry Worksheet.

Though turbotax says "the Asset Entry Worksheet is the only place where you enter depreciation information.
After you've entered the information on the Asset Entry Worksheets, the deduction transfers to the other depreciation worksheets and reports, the form or schedule you're working on, and Form 4562 (Depreciation and Amortization)." Nothing is transferring for me. 

It will be the $10,000 deduction + what the amoritized expenses are that were determined from the Asset entry Worksheet which I was finally able to get to show up using the L - Intangibles with the correct 7 yr amounts. with the yearly amounts shown Asset Life History on the 

At top of form it ask for Activity: which fills in Sch C not sure why as I am not a sole prop but do have reforestation expenses. My general expenses are not reported there but on Schedule A.

My Assest 
Activity: ? I have typed Forest land Timber as an Investment
1 Description of asset I have typed Reforestation Expenses over $10,0000
2 Date Aquired 1/01/2023
3 Date placed in service 7/01/23
4 total cost when asset was aquired $6847
5 type of Asset L-Intangibles
6 Percentage of business use 100%

But how does one get the the required information into Form 4562 PART VI Amortization which on 

line 42  Amortization of costs that begins during your 2023 tax year

which says "Enter amortizable costs on the Asset Entry Worksheet."

I have done but nothing is showing up there. I cannot override or fill in this form. what it ask.

Description of costs (b) Date amortization begins (c) Amortizable amount (d) Code section (e)
Amortization period or percentage (f) Amortization for this year

The total for 2023 of which on line 44 should be going to Schedule 1 line 24d.

Then for next yr line 43 of this form how will I get the now prior year amortized amount filled in there.

Appreciate any help in getting the information corrected reported.

[DaveF1006 · Accepted solution]

First of all, this return cannot be efiled because of the attached statements that must be completed.  You would be unable to use Form 4562 that is in Turbo Tax because it doesn't allow you to make entries on the form. You would need to attach a pdf copy of the form along with the statements that are required to claim the additional $6847.  Here are the instructions that Turbo Tax mentions in it's On Demand Tax Guidance.

If you elect to deduct up to $10,000 of qualified expenses ($5,000 if MFS) in the current year, attach a statement to your return that contains the following information.

- The unique stand identification numbers.
- The total number of acres reforested during the tax year.
- The nature of the reforestation treatments.
- The total amounts of qualified reforestation expenditures eligible to be amortized or deducted.

Attach a separate statement for each property for which you amortize reforestation costs. If you have additional expenses to amortize, you must also attach Form 4562 with Part VI completed.

This is the only method you may use to amortize your reforestation expenditures as an investor because Turbo Tax has limited support in this area. You mention above using asset worksheets.  I assume you were trying to report this on a Schedule C but you do not have a business or rental.  This is strictly a personal investment and must be treated as such so you would not use a Schedule C or Schedule E to report amortization on a personal investment.

I would suggest reading the On Demand Tax Guidance that is in Turbo Tax to backup what i have already mentioned. Go to;

• Federal Taxes
• Other Tax Situations
• Business taxes
• Reforestation Amortization
• Select the hyperlink that says Learn More

Once you have completed the statements and 4562, attach these to your return to be mailed in accordance with the mailing instructions that will be provided for you when you are ready to file your return.

As an FYI, your gravel road is part of your land. This is not amortized but added to the basis of the land if you sell the property.

@bel21