It is important to maintain an accurate timber account. For most timber, your recovery of basis will be through depletion. The amount depleted will be your original basis plus adjustments for any additions or deductions. If you sell all your timber in a given account, you can take all the basis of the timber as depletion. If only a portion of the timber is sold, as in a selective cutting, the depletion is determined on a proportionate basis.
Total depletion can never exceed the timber cost.
This is timber considered to be marketable, such as sawlogs, veneer, etc. The cost of this timber account is recovered through depletion at time of sale. If the value of young growth in the woodlot is significant, a portion of the total timber cost should be allocated to this account. This cost, plus additional amortized costs, can be recovered through depletion at the time of sale, the same as merchantable timber. This is the cost to regenerate a timber stand.