Washington (June 3, 2004) -- Costs incurred by a timber grower for post-establishment fertilization of an established timber stand are deductible expenses, according to new guidance announced by the Treasury Department and the Internal Revenue Service.

“Whenever possible we should provide guidance on significant issues rather than developing rules through litigation,” said acting assistant secretary for tax policy Greg Jenner.

“Taxpayers have been seeking clarification of this issue for a considerable length of time. The lack of guidance has meant that the issue is often settled on audit by negotiation between the taxpayer and the IRS, which is not an appropriate outcome," Jenner said. "After reviewing the applicable statutory provisions and court decisions on similar costs, we concluded that we should issue guidance consistent with those authorities to clarify the treatment of these fertilization costs.”

Post-establishment fertilization and other post-establishment practices include fire, disease, insect and brush control; promotion of healthy development; and maximization of timber volume, and are performed for the management, maintenance and protection of the timber stand.

-- WebCPA staff

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