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:

 

[luvmexfood]

Just a thought and I am not by any means knowledgeable in taxes. I just wonder if it would even be considered a timber sale for tax purposes. Your not cutting anything for timber. All you are doing is a salvage operation of something left behind by others. Now if the power company had paid you for the value of the timber they were taking down then that might fall into the relm of income from selling timber. There are some documents that can be obtained online from either the Forest Service or IRS, not sure which, that are specific to timber sells. Your not talking about a lot of money here.

In glancing at these regulations they keep mentioning "standing timber". I relate this sale similar to selling some scrap metal you have or may pick-up left behind by others. Once it is cut by others and left to rot it makes me wonder what category it would fall into.

 

[timster2]

So if the power company destroys all the timber on the ROW can I claim that as a loss and write it off my taxes. No future income from timber sales possible if clear cut, well not at least in my lifetime. If a forester gives me a value on the standing timber and I get less at the mill is that a loss as well? Lots of things to consider here......more reading:reading:

 

[Jstpssng]

So if the power company destroys all the timber on the ROW can I claim that as a loss and write it off my taxes. No future income from timber sales possible if clear cut, well not at least in my lifetime. If a forester gives me a value on the standing timber and I get less at the mill is that a loss as well? Lots of things to consider here......more reading:reading:

If you own the land, aren't they giving you compensation? I'm still not sure how that works.
Up here they would buy the land from you, and you would surrender rights to anything on it.
(Which would really stink if they dug up a huge gold nugget. :laughing
If they're putting a power line in you won't be able to grow timber anyhow, although some people do grow Christmas trees.

 

[Birdhunter1]

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'm all for doing things yourself but 750 lbs doesn't go far when dealing with logs.

 

[luvmexfood]

Don't have a clue about taxes but some good questions. If the road to be built looks as good as the one in the picture and no sharp turn to get on it you could probably, in dry times, back a tandem with self-loader down it to load if you had enough to justify. You would just need to skid them together.

 

[motownbrowne]

I'm all for doing things yourself but 750 lbs doesn't go far when dealing with logs.

+1 on this. I have over 2000 lbs lift capacity after figuring the weight of my pallet forks, and sometimes that doesn't feel like enough for moving saw logs. Since I started trying to move them with an 8n and a couple of cant hooks, it is a huge improvement, but the weight of a log adds up quick. I think paying a self & loading truck is a good idea if you can manage it.

 

[timster2]

In the past before all the arthritis I did fell and skid logs. Not all that many but enough to know what's involved in handling the timber. Back then it was all for firewood never got to the selling to a mill part of the process. What a logger could do in one day will take me week but that's what keeps me going. As long a I don't have to get them to the mill within a week of felling I can pick away at the project as weather and body will permit. First I will have to sort out some of the standing dead to use for firewood this year, used most of my reserve stack last season.

I have a winch to mount on the car trailer that could be used to drag the log on once one end is lifted high enough to miss the dove tail. Will be passing the mill tomorrow I hope to stop in and get some more info on how they will fit in to the project.

 

[luvmexfood]

If you do mount the winch on your tongue as you mentioned get you a log that when placed at the rear of your trailer crossways will be taller than your trailer. Taller the better if you are going to put on two layers. Lay one end of the log you are loading on this log and then winch up. Keeps the weight off the rear of your trailer.

First layer butt end toward the tongue. Keeps you from having to clear it with the second layer. (If a big difference) Longer logs on the bottom. Second layer butts toward the rear. This keeps the end of the log closest to the trailer up in the air longer hopefully clearing the first layer. Use a small chain around the log to hook your winch cable to. Log will tend to go to the side opposite where the cable is hooked. Sometimes you will have to use your tractor or the winch to remove the chain that is hooked around the log. Wireless remote for the winch is almost a necessity. Saves many steps back and forth. I have loaded probably well over a hundred loads this way.

 

[MossRoad]

Personally, I'd load them from the side with a winch using a technique called "parbuckling". You gain a 2:1 mechanical advantage over just dragging them from an end, and they load right where you want them. There's tons of videos, pictures and descriptions out on google. Here's a video of how it works.

 

[MossRoad]

Another parbuckling video. Anyhow, you'll get the idea. Just don't stand in the winch cable path or anywhere near that rolling log should something break.