Capital Gains Determination
The next consideration is the "form" of the sale, either a pay-as-cut contract or lump sum sale.
A pay-as-cut contract is one in which the owner receives a stated amount per unit harvested and only for those units harvested. The owner maintains an economic interest in the timber that is being cut because they are only paid for the timber that is actually cut. This is sometimes referred to as a Section 631(b) transaction. Whereas a lump sum sale is the outright sale of standing timber for a fixed dollar amount agreed upon in advance. The dollar amount agreed upon is not a function of the volume of timber actually cut.
What form of sale did you use?