100+ acres Pine timberland reforested 2014. Sprayed Oct 2016 to kill encroaching hardwood. I report land rental/expense on Schedule E. Can I expense cost of spraying?

[chague]

Total property size is 123 acres - 16 acres are rented as farmland.

[PatriciaV · Accepted solution]

Unfortunately, unless the area that was sprayed is also your rental property, that cost would not be deductible on Schedule E.

If you report the timberland on Schedule F (farming/agriculture) or Schedule C (business), you would be able to deduct the cost of the spraying as a Farm/Business Expense.

[view2]

Taxpayers who are not active enough or who cannot expect a profit often enough to qualify as either active or passive participants in a trade or business may consider themselves investors in their timberland.  In this case you may deduct management expenses as miscellaneous itemized deductions.  The expenses are added to other miscellaneous deductions and you are allowed a deduction for the amount which is over 2% of your adjusted gross income.  You may
also chose to “capitalize” your expenses - deduct them when you dispose of your investment.

 Federal Income Tax on Timber

A Key to Your Most Frequently Asked Questions

<a rel="nofollow" target="_blank" href="http://www.fs.fed.us/cooperativeforestry/library/timbertax.pdf">http://www.fs.fed.us/cooperativefore...>

<a rel="nofollow" target="_blank" href="http://www.for.msu.edu/uploads/files/extension/facts15.pdf">http://www.for.msu.edu/uploads/files/ext...>

[PatriciaV]

@view2 Thank you for that excellent addition!

[view2]

Your welcome.