“A bill 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 dollar limitations on reforestation expenditures (i.e., costs for planting or reforesting qualified timber property) that a taxpayer may elect to expense immediately rather than amortize over 84 months—from $10,000 to $30,000 under IRC §194(b)(1)(B)(i) and from $5,000 to $15,000 under clause (ii) (for married individuals filing separately). It also requires annual inflation adjustments to these amounts for taxable years beginning after 2026, based on cost-of-living changes from calendar year 2025 and rounded to the nearest $100. The changes apply to amounts paid or incurred in taxable years beginning after December 31, 2026.
This section establishes an elective deduction under new IRC §194B for disaster-related reforestation expenditures on qualified timber property (i.e., standing uncut timber damaged or destroyed by a qualified natural disaster, defined as a Presidentially declared disaster under the Stafford Act, with reforestation occurring within five years). (As background, reforestation expenditures are normally amortized ratably over 10 years under IRC §194.) The deduction equals the lesser of $500,000 ($250,000 for married individuals filing separately) per property or $1 million ($500,000 for married filing separately) in aggregate across all properties, with amounts adjusted for inflation after 2026; special rules apply to controlled groups, pass-thru entities, and trusts/estates. (Thus, no other deductions are allowed for the same expenditures, and amounts deducted are subject to recapture as ordinary income under IRC §1245 rules if the property is disposed within 10 years, except for casualty, condemnation, or death.)