Timber Tax Issues.

[dmccarty]

Harv,

I saw some numbers on the Browser market a year or so ago. IE is on top over Netscape. Which is the opposite of the market positions in the 90s. I think Netscape will eventually decline to a small part of the market, certainly on Windows platforms. I use Netscape as much a possible but there it has a bug that continues from version to version. It locks up my system about every other day. It happens on my work NT system as well as my Win98 system at home. Real Pain. I'm trying to figure out who is going to provide a browser for the UNIX platforms if Netscape stops. I suppose some freeware product will appear. I know there are already some freeware browsers I'm just not familiar with them. The Wall Street Journal had an article this week on Netscape 6 Browser. They did not like it at all. I tried it when it first came out and quickly got rid of it. One of my pet peeves is developers who just change a UI interface for the heck of it. They seemed to have done that for 6 and reliability is supposed to be a problem as well.

Quality vs marketing: Usually at this point someone brings up Beta vs VHS example as well as a few more that are escaping me at the moment. /w3tcompact/icons/smile.gif

Well, I have managed to change MY OWN thread about Timber Tax issue into Browser/OS war topics! /w3tcompact/icons/smile.gif

Later...
Dan McCarty

 

[TBN]

Hi, maybe this will be of help, if not, I know where to send you. Timber tax, is NOT as simple as mentioned in an earlier post. But the one tning you need to know, HAVE to know, is what's called "Timber Basis".

Timber basis is the value (and volume) of the timber at the point in time you aquired the property. Your taxes are computed on the difference between the value at purchase, and the value(-allowed expenses) of timber at time of sale.

Some points to consider:

1. Was the sale a clear cut? If not, you are only taxed on the value of the volume you harvested. This amount is then deducted from your basis,(the starting value of your timber.)If it was, you will be allowed to deduct the entire amount of your basis + allowed expenses. If the sale was a clear cut, your basis remaining is 0, and cannot be regained until the property is sold.

2.Type of payment. Were you payed lump sum? were you payed in installments?

3. Do not ignore the sale and think that the tax responsibility will go away. You are ahead of the game by understanding there IS a tax responsibility. Some people never think of that. Hopefully it was a responsible logger, that informed you of this as you planned your sale. The IRS may never target you from your lack of reporting, but they will find you if they ever audit the mill or logger that bought the timber. The paper trail leads to you. The bottom line is, you may or may not owe any tax, but you are still required to report the sale.

I have some workshop information here that might answer specific questions, but a better bet would be to go to www.timberbuyer.net and use the ask the forester resource, or the forum. The foresters on duty there deal with these questions everyday and can help answer most questions.

Another thought on timber tax. I was told by the a Michigan State University Doctor of Forestry, that there are only (4 FOUR!) People that work for the IRS that work in timber tax.

You need an accountant that is educated in the timber tax laws to help, because it can mean the difference in thousands of dollars sometimes.

Hope this helps

Jeff

 

[gordon]

Wow great first post, it's hard to believe that there are only four people that deal with the timber tax at the IRS. No wonder it seems muddy to alot of people.

Welcome to the board Jeff
Gordon

 

[dmccarty]

TBN,

Thanks for the great information. And welcome to TBN! /w3tcompact/icons/smile.gif

I'll check out the website you mentioned ASAP!

I have talked to a couple CPA's since my first post. I also talked with the instructor of the Timber Workshop I attended a month or two ago.

I finally boiled down my question to, "How to determine the FMV, fair market value, of the land from the purchase."

Most of the examples I see are for people who have owned the land/timber for decades. My situation is completely different in that I only owed the timber for a couple of months before selling. One item I had not thought off was the effect a growing season might have on the timber sale. If I had bought the land/timber in Jan/2000, had the timber cruised, and then sold the timber in Oct/2000, I would have had growth on the trees not accounted for in the origional inventory. But that is not my situation just more mud in the water! /w3tcompact/icons/smile.gif

I think I have my answer on the FMV of the land. But I'm always looking for more information! /w3tcompact/icons/smile.gif

I noticed you run a sawmill and I sure have questions for you! /w3tcompact/icons/smile.gif I'll have to open a new thread in Rural about sawmills.

Welcome!
Dan McCarty