“To amend the Internal Revenue Code of 1986 to allow for limited full expensing of certain reforestation expenditures.”
No CRS summary available for this bill.
This section increases the base amounts of reforestation expenditures that may be expensed under section 194 of the Internal Revenue Code to $30,000 (from $10,000) and to $15,000 (from $5,000). This section also adds an inflation adjustment to those amounts for taxable years beginning after 2026, calculated using the cost-of-living adjustment under section 1(f)(3) with 2025 as the base year and rounded to the nearest multiple of $100. The amendments apply to amounts paid or incurred in taxable years beginning after December 31, 2026.
This section establishes a new deduction under the Internal Revenue Code for disaster-related reforestation expenditures on qualified timber property damaged by a qualified natural disaster. The deduction equals the lesser of (A) up to $500,000 ($250,000 for a married taxpayer filing separately) per qualified timber property or (B) $1,000,000 ($500,000 for married filing separately) in the aggregate across all such properties. The amounts are inflation-adjusted after 2026 using the cost-of-living adjustment under section 1(f)(3), with rounding to the nearest $100. A qualified natural disaster is any disaster declared by the President under section 401 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act; disaster-related reforestation expenditures cover reforestation costs for uncut timber damaged or destroyed within the preceding five years, excluding amounts reimbursed under governmental cost-sharing programs (unless included in gross income) or deducted under section 194(a). The deduction is available only pursuant to a taxpayer election (including on an amended return) and is subject to allocation rules for controlled groups, partnerships, S corporations, trusts, and estates. Amounts deducted are subject to recapture as ordinary income under section 1245 if the property (or timber thereon) is disposed of within the 10-taxable-year period beginning with the year the deduction is claimed, with exceptions for casualty, condemnation, governmental taking, or the taxpayer’s death.