35 Miss. Code. R. 3-05-09-106

Current through October 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