Where do I enter the cost for reforestation in my standard deductions?

[r-bkaufman]

We replanted our entire property and wanting to enter that expense in our taxes. I chose standard deductions and wanted to know what section I would enter this expense?

[TomK2023]

TurboTax does not support Form T (Timber). 

Form T - Forest Activities Schedule - See Part IV Reforestation and Timber Stand Activities

Instructions for Form T (Timber)

Complete the form and attach it to your return You will need to print, sign, and mail your return (How Do I File By Mail in TurboTax Online?).

[PAUL0828]

That answer is incorrect. You don't need to file schedule T if you just have reforestation expenses.  Input them under Business Deductions, Less Common Business situations.  Program is supposed to limit the deduction to $10,000 and amortize the excess over 84 months.  Apparently it did this correctly on the 2022 program but is not working properly in the 2023 program.  It currently is just taking the full amount, even if is excess of $10,000, in error.  I called Turbotax about this situation but the program has not been updated to calculate the deduction correctly.  Told me to keep checking the updates but nothing has changed.

[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. 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.

[PAUL0828]

That makes no sense to me.  I hold timber property as an investment not as rental property or a trade or business.  Currently the software will allow me to take more than $10,000 as a deduction without indicating that the amount is incorrect.  The software should limit the amount to $10,000 and automatically amortize the difference.  Why am I paying turbotax to calculate my taxes if the software won't do the calculations?  Do I now have to include a schedule C with no income and only an amortization expense or does the amortization carry over to the schedule 1 where it should be?

[PatriciaV]

The amount entered for reforestation (as Business Deduction) flows to Schedule 1 Line 24d Reforestation, which is included in all adjustments to income on Form 1040 Line 10. 

Amortization is calculated on Form 4562, which must be associated with a farm or business asset, even if you are not in the business of raising and selling timber. This is a program limitation. The deduction would be reported on Schedule 1 Line 3, 5, or 6, depending how you chose to report the amortization.

In summary, the amortization and the $10,000 reforestation would be reported as Adjustments to Income for your adjusted gross income on Form 1040 Line 11.

@PAUL0828

[PAUL0828]

Actually, the amortization piece will show up as a loss to offset against other income if you have any.  It is on schedule 1 but it flows to line 8 on the 1040 not to line 10, the adjustment to income line.  (It is treated as a schedule C loss, even though I do not have a trade or business.) To get the system to correctly calculate the amortization, you also need to input the date of acquiring the asset as being 07/01/2023. Otherwise, you do not get the correct amortization amount since section 194 provides for a half year convention for the amortization calculation.  Software should really do this calculation for you.  I used Lacerte for years and I am pretty sure it handles this situation.  Intuit owns both softwares so I do not understand why you would have to jump thru all the hoops to get the correct results. I did look back at the 2022 turbotax software and you are correct in that the software did not do this calculation in the past.