Federal Income Taxes

Timberland Acquisitions: There are some important details that should be considered after timberland has been acquired. Taking care of these up front can save you time and money later on … Read More
Structuring Ownership: "Structure" refers to how you set up your timber investment for legal and tax purposes. How should the property be titled? Should you treat it on your tax return as an investment or a business? If you file as a business should it be a sole proprietorship, or should you form a corporation? Whether you are a new timberland owner or someone who has owned the property for a long time, these are just a few of the questions that should be considered when structuring your timber investment … Read More
Timberland Appraisal: Timber and timberland appraisal is an extensive process, the information provided here is not intended to teach you the appraisal process. Rather, it is intended to explain the terminology, processes, methods and principles used in the appraisal process … Read More
Determine Your Basis: The original basis of property is usually its cost, along with any other expenditures incurred to acquire the property. The cost is the amount you pay in cash, debt obligations, or in other property. The basis is used to calculate the depletion unit needed to determine the taxable gain (loss) when you sell timber on the stump, cut timber, or dispose of it involuntarily, such as by a casualty, theft, or condemnation … Read More
Record Keeping: The IRS does not require that a formal bookkeeping system be maintained. However, it is recommended for accuracy and clarity if you had to reconstruct your timber activities. The accounts which are required in all circumstances in which a cost basis is established are land, merchantable timber volume, and merchantable timber value … Read More
Management and Operating Expenses: These are the ordinary and necessary costs associated with the day-to-day operation and management of business and investment property. These are not capital costs and are not associated with the disposal of an asset … Read More
Reforestation Expenses: Under certain circumstances you may be eligible to deduction and/or amortize your reforestation and afforestation expenses. Otherwise, these costs are added to a deferred reforestation account … .Read More
Cost-Share Payments: In general cost share payments must be reported as part of your gross income unless a specific exclusion is provided by law. Under Section 126 of the Internal Revenue Code payments made under the Forestry Incentive Program and certain state and local cost-share programs qualify for exclusion … Read More
Depreciation: As a forest owner, you may depreciate most property used on your woodland if you hold your woodland as either a business or as an investment. Property acquired either new or used can be depreciated. Land is never depreciable … Read More; Casualty Losses; For a casualty loss to occur the event causing the casualty must be a natural or other external force acting in a sudden, unexpected, or unusual manner. This means that losses due to tornadoes, hurricanes, wild fires, etc. are deductible, but losses due to disease or insect infestations generally are not … Read More
Timber Sales & Income: There are three basic ways in which income can be realized from the ownership of timber property. You may receive ordinary income from rent for use of the property or from the sale of logs, lumber, or other products you produce from the timber itself. You may also receive income from the disposal of standing timber (stumpage) … Read More
Conservation Easements: A Conservation easement is created when the landowner transfers some or all rights to develop the property to a government agency or qualified conservation non-governmental organization (NGO) … Read More
Christmas Trees: Christmas tree growing because the nature of the activity, usually constitutes a business rather than an investment … Read More
Exchanges: Timberland and timber are sometimes traded or exchanged for other timberland, timber, or other property. This section deals with voluntary exchanges … Read More
Form T: Use Form T to provide information on timber accounts when a sale or deemed sale under section 631(a), 631(b), or other exchange has occurred during the tax year … Read More
Electronic Filing: If you file electronically using one of the commercial software packages you most likely will not be able to include Form T with your electronically filed return … Read More