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year. See Reforestation Costs in chapter 7. You can elect to amortize the qualifying costs that aren't deducted currently over an 84-month pe- riod. There is no limit on the amount of your am- ortization deduction for reforestation costs paid or incurred during the tax year. The election to amortize reforestation costs incurred by a partnership, S corporation, or es- tate must be made by the partnership, corpora- tion, or estate. A partner, shareholder, or bene- ficiary can't make that election. A partner's or shareholder's share of amor- tizable costs is figured under the general rules for allocating items of income, loss, deduction, etc., of a partnership or S corporation. The am- ortizable costs of an estate are divided between the estate and the income beneficiary based on the income of the estate allocable to each. Qualifying costs. Reforestation costs are the direct costs of planting or seeding for foresta- tion or reforestation. Qualifying costs include only those costs you must capitalize and in- clude in the adjusted basis of the property. They include costs for the following items. • Site preparation. • Seeds or seedlings. • Labor. • Tools. • Depreciation on equipment used in plant- ing and seeding. Qualifying costs don't include costs for which the government reimburses you under a cost-sharing program, unless you include the reimbursement in your income. Qualified timber property. Qualified timber property is property that contains trees in signif- icant commercial quantities. It can be a woodlot or other site that you own or lease. The property qualifies only if it meets all of the following re- quirements. • It is located in the United States. • It is held for the growing and cutting of tim- ber you will either use in, or sell for use in, the commercial production of timber prod- ucts. • It consists of at least one acre planted with tree seedlings in the manner normally used in forestation or reforestation. Qualified timber property doesn't include property on which you have planted shelter belts or ornamental trees, such as Christmas trees. Amortization period. The 84-month amortiza- tion period starts on the first day of the first month of the second half of the tax year you in- cur the costs (July 1 for a calendar year tax- payer), regardless of the month you actually in- cur the costs. You can claim amortization deductions for no more than 6 months of the first and last (eighth) tax years of the period. Life tenant and remainderman. If one person holds the property for life with the remainder go- ing to another person, the life tenant is entitled to the full amortization for qualifying reforesta- tion costs incurred by the life tenant. Any re- mainder interest in the property is ignored for amortization purposes. Recapture. If you dispose of qualified timber property within 10 years after the tax year you incur qualifying reforestation expenses, report any gain as ordinary income up to the amortiza- tion you took. See chapter 3 of Pub. 544 for more information. How to make the election. To elect to amor- tize qualifying reforestation costs, complete Part VI of Form 4562 and attach a statement that contains the following information. • A description of the costs and the dates you incurred them. • A description of the type of timber being grown and the purpose for which it is grown. Attach a separate statement for each property for which you amortize reforestation costs. Generally, you must make the election on a timely filed return (including extensions) for the tax year in which you incurred the costs. How- ever, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Attach Form 4562 and the state- ment to the amended return and write “Filed pursuant to section 301.9100-2” on Form 4562. File the amended return at the same address you filed the original return. Revoking the election. You must get IRS ap- proval to revoke your election to amortize quali- fying reforestation costs. Your application to re- voke the election must include your name, address, the years for which your election was in effect, and your reason for revoking it. Please provide your daytime telephone number (op- tional), in case we need to contact you. You, or your duly authorized representative, must sign the application and file it at least 90 days before the due date (without extensions) for filing your income tax return for the first tax year for which your election is to end. Send the application to: Internal Revenue Service Associate Chief Counsel Passthroughs and Special Industries CC:PSI:6 1111 Constitution Ave. NW, IR-5300 Washington, DC 20224 Geological and Geophysical Costs You can amortize the cost of geological and ge- ophysical expenses paid or incurred in connec- tion with oil and gas exploration or development within the United States. These costs can be amortized ratably over a 24-month period be- ginning on the mid-point of the tax year in which the expenses were paid or incurred. For major integrated oil companies (as defined in section 167(h)(5)), these costs must be amortized rata- bly over a 5-year period for costs paid or incur- red after May 17, 2006 (a 7-year period for costs paid or incurred after December 19, 2007). If you retire or abandon the property during the amortization period, no amortization deduc- tion is allowed in the year of retirement or aban- donment. Pollution Control Facilities You can elect to amortize the cost of a certified pollution control facility over 60 months. How- ever, see Atmospheric pollution control facili- ties, later, for an exception. The cost of a pollu- tion control facility that isn't eligible for amortization can be depreciated under the reg- ular rules for depreciation. Also, you can claim a special depreciation allowance on a certified pollution control facility that is qualified property even if you elect to amortize its cost. You must reduce its cost (amortizable basis) by the amount of any special allowance you claim. See chapter 3 of Pub. 946. A certified pollution control facility is a new identifiable treatment facility used in connection with a plant or other property in operation be- fore 1976 to reduce or control water or atmos- pheric pollution or contamination. The facility must do so by removing, changing, disposing, storing, or preventing the creation or emission of pollutants, contaminants, wastes, or heat. The facility must be certified by state and fed- eral certifying authorities. The facility must not significantly increase the output or capacity, extend the useful life, or reduce the total operating costs of the plant or other property. Also, it must not significantly change the nature of the manufacturing or pro- duction process or facility. The federal certifying authority won't certify your property to the extent it appears you will recover (over the property's useful life) all or part of its cost from the profit based on its oper- ation (such as through sales of recovered wastes). The federal certifying authority will de- scribe the nature of the potential cost recovery. You must then reduce the amortizable basis of the facility by this potential recovery. New identifiable treatment facility. A new identifiable treatment facility is tangible de- preciable property that is identifiable as a treat- ment facility. It doesn't include a building and its structural components unless the building is ex- clusively a treatment facility. Atmospheric pollution control facilities. Certain atmospheric pollution control facilities can be amortized over 84 months. To qualify, the following must apply. • The facility must be acquired and placed in service after April 11, 2005. If acquired, the original use must begin with you after April 11, 2005. • The facility must be used in connection with an electric generation plant or other property placed in operation after Decem- ber 31, 1975, that is primarily coal fired. • If you construct, reconstruct, or erect the facility, only the basis attributable to the construction, reconstruction, or erection completed after April 11, 2005, qualifies. Page 34 Chapter 8 Amortization