35 Miss. Code R. § 3-05-09-106

Current through May 31, 2024

Section 35-3-05-09-106 - Example 1

During taxable year 1, Taxpayer incurs qualifying reforestation costs in the amount of $15,000. All of the costs incurred qualify for federal investment credit and reforestation amortization and for the Mississippi reforestation tax credit. The taxpayer elects to claim the investment tax credit and to amortize the maximum expenditure ($10,000) for federal tax purposes. Taxpayer also claims a reforestation tax credit of $7,500 ($15,000 X 50%) for Mississippi tax purposes. The taxpayer must make the following basis adjustments and is entitled to reforestation amortization deductions for both federal and state purposes as shown below:

Year	Item	Amortization Federal	Basis State
	Qualifying Reforestation Costs	$15,000	$15,000
	Investment Credit (Federal)	-500	-500
	Reforestation Tax Credit Earned		-7,500
	Remaining Basis	14,500	7,000
	Federal Amortization to be Claimed	9,500
	Remaining Basis After Federal Amortization	5,000	-5,000
	State Amortization to be Claimed		2,000
1	Amortization: $9,500/84 = 113 x 6 months	679
	Amortization: $2,000/84 = 24 x 6 months		142
2	Amortization: $9,500/84 = 113 x 12 months	1,357
	Amortization: $2,000/84 = 24 x 12 months		286
3	Amortization: $9,500/84 = 113 x 12 months	1,357
	Amortization: $2,000/84 = 24 x 12 months		286
4	Amortization: $9,500/84 = 113 x 12 months	1,357
	Amortization: $2,000/84 = 24 x 12 months		286
5	Amortization: $9,500/84 = 113 x 12 months	1,357
	Amortization: $2,000/84 = 24 x 12 months		286
6	Amortization: $9,500/84 = 113 x 12 months	1,357
	Amortization: $2,000/84 = 24 x 12 months		286
7	Amortization: $9,500/84 = 113 x 12 months	1,357
	Amortization: $2,000/84 = 24 x 12 months		286
8	Amortization: $9,500/84 = 113 x 6 months	679
	Amortization: $2,000/84 = 24 x 6 months		142
	Adjusted Basis (After federal amortization period)	$5,000	$5,000

35 Miss. Code. R. § 3-05-09-106