Power Line Logging Project

[timster2]

The power company will be stacking the logs along side the new road they are building. They did not seem interested in clearing them out of the way in a hurry and had no plan in place to do so. From what I understand they will clear the timber pile it along the edges of the rite of way and then build their road. I have an area out of their way to make a landing that I could move the logs to and either have someone pick them up or load them myself.

As for taxes I have not considered all that would be involved. Gee could I write off the cost of a new truck to haul off the logs?:cool2: I will have to find someone skilled in the art of taxation. Could this be "hobby income" or the start of my new tree farm? Hmmmmm:scratchchin:

I would use the B for the lifting it has a bit more capacity than the BX about 750lbs at the bucket for the B vs 550lbs for the BX and the B is a heaver machine. I would like to sell some of the logs just for the experience. Perhaps I can sort out some, not all, the Cherry to sell myself and let a logger take all the rest? I can use all the stuff I have a accumulated over the years, at least once It would justify all those times the wife said why do you need that! The brain is excited the body not so much, however, the body will go along with the idea just to be a good sport. The body may have the last laugh. :laughing:

 

[Jstpssng]

Considering that it's only a couple of acres I didn't think that you would have to worry overly much about the taxes. A new saw, fuel for the tractor, a few incidentals; maybe you need new chaps? (Just don't forget to declare it as income!)

 

[timster2]

This may sound like a dumb question but do you get a 1099 from the mill at the end of the year?

 

[Jstpssng]

This may sound like a dumb question but do you get a 1099 from the mill at the end of the year?

Some places I sell to will send you one, some won't. You can bet that they are declaring it though.

 

[mark02tj]

This may sound like a dumb question but do you get a 1099 from the mill at the end of the year?

That's not a dumb question at all - I was wondering about the same thing. And, if so, what kind of 1099 (MISC?) and what box is the amount in?

I would definitely recommend seeing a QUALIFIED CPA about the taxation aspect of it. SMStonyPoint brings up a good point about "regular income" vs. "capital gains". The Self-Employment Tax/FICA question comes into play on whether or not it's "trade or business income." If this is a one time thing, one could argue that it's not your trade/business and therefore maybe not subject to SE-Tax/FICA. If this is something that you're planning on doing on an ongoing basis - even if part time - then it becomes a "trade or business."

That's why I said to get a QUALIFIED CPA. I'm a CPA, but haven't really practiced in tax for about 15 years so I'm not qualified. Nor would I go to a "tax person" at HR Block, Jackson Hewitt, etc. Ask around and find a good CPA that does taxes for small-medium sized businesses and knows how to do a little research. Depending on how much the lumber is worth (and your other income), the tax difference between Capital Gains vs. Ordinary Income vs Ordinary Income + subject to FICA could be fairly significant.

 

[fishheadbob]

I've never seen a 1099 from my timber sales.
If you put it on your taxes, a sale of timber you've owned for one year or more is a long term capital gain which is usually a lower tax rate than ordinary income. See a pro because you're getting into things like basis and depletion which scare off most preparers, or at least it should. A CPA above recommended seeing a CPA. Hmmm. IF you can find a non CPA familiar with this stuff it's less expensive, but definitely avoid the hacks at H&R block, Jackson Hewitt et al . They're not trained for that sort of thing and usually do a hatchet job on oddball stuff.
I think that the small amount a mill might pay would be eaten up with chain saws , broken equipment repairs, and similar things.
I wonder if you have enough timber to interest any buyer. Most won't bother with a few thousand board feet.
A one shot timber sale doesn't, in my opinion, put you in the trade or business category so no SE tax should be paid.
Google up the Doyle rule so you can give yourself a rough estimate on what you have, then look up stumpage prices in your area.
Lastly any logs you saw up for your own use aren't income to anybody.

 

[smstonypoint]

I have received a 1099 for each of my three timber sales, but I have always worked through a consulting forester. The forester received the payments from the mill and sent me a check for the proceeds less his commission. I received the 1099s from the forester rather than the mill.

Steve

 

[timster2]

I have made it a point to do my own taxes for years and spend a good deal of time reading the tax code. Ok call me a geek but I make it a point to know what I am up against before problems arise. And yes I have been audited and survived unscathed when I quoted the code in the tax publications. When I found an error on my taxes done by a CPA, not an H&R type, I figured I was qualified enough to do my own. Lots more reading to be done on this subject for sure and a consult is in order.

I'm sure my small lot is not the only parcel that a logger will be hauling away. The project is many miles long most through heavily wooded areas. Last year when they were clearing the area for the substation a few miles away there was a constant parade of logging trucks going down the road daily. Hundreds of truck loads from self loaders to semis and tri axle dumps. No doubt that much available timber has depressed the local market somewhat.

 

[Jstpssng]

If they send you a 1099 they will first ask for your SS#. I did not get 1099's from the mill when I had an EIN#. The rest of what wood I cut goes through a broker, and the honus is on me to keep my records straight.

 

[timster2]

Wouldn't you know it there is a tax publication covering the subject of Federal taxes Forest Landowners Guide to the Federal Income Tax Looks like I have some reading to do.:reading: