118 STAT. 1474 PUBLIC LAW 108–357—OCT. 22, 2004 ‘‘(iii) the aggregate expenditures made by the trust, or a partner of the trust, during the 4 year period preceding the date of sale which— ‘‘(I) are includible in the basis of the property (other than timberland acquisition expenditures), and ‘‘(II) are not directly related to operation of the property for the production of timber, or for the preservation of the property for use as timberland, do not exceed 5 percent of the net selling price of the property, ‘‘(iv)(I) during the taxable year the trust does not make more than 7 sales of property (other than sales of foreclosure property or sales to which section 1033 applies), or ‘‘(II) the aggregate adjusted bases (as determined for purposes of computing earnings and profits) of prop erty (other than sales of foreclosure property or sales to which section 1033 applies) sold during the taxable year does not exceed 10 percent of the aggregate bases (as so determined) of all of the assets of the trust as of the beginning of the taxable year, ‘‘(v) in the case that the requirement of clause (iv)(I) is not satisfied, substantially all of the marketing expenditures with respect to the property were made through an independent contractor (as defined in sec tion 856(d)(3)) from whom the trust itself does not derive or receive any income, and ‘‘(vi) the sales price of the property sold by the trust is not based in whole or in part on income or profits, including income or profits derived from the sale or operation of such property.’’. (b) EFFECTIVE DATE.—The amendments made by this section shall apply to taxable years beginning after the date of the enact ment of this Act. SEC. 322. EXPENSING OF CERTAIN REFORESTATION EXPENDITURES. (a) IN GENERAL.—So much of subsection (b) of section 194 (relating to amortization of reforestation expenditures) as precedes paragraph (2) is amended to read as follows: ‘‘(b) TREATMENT AS EXPENSES.— ‘‘(1) ELECTION TO TREAT CERTAIN REFORESTATION EXPENDI TURES AS EXPENSES.— ‘‘(A) IN GENERAL.—In the case of any qualified timber property with respect to which the taxpayer has made (in accordance with regulations prescribed by the Secretary) an election under this subsection, the taxpayer shall treat reforestation expenditures which are paid or incurred during the taxable year with respect to such property as an expense which is not chargeable to capital account. The reforestation expenditures so treated shall be allowed as a deduction. ‘‘(B) DOLLAR LIMITATION.—The aggregate amount of reforestation expenditures which may be taken into account under subparagraph (A) with respect to each qualified timber property for any taxable year shall not exceed 26 USC 857 note.
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