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Best Answer Click here
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If they had a valuation done of the property when it was purchased showing the value of the timber you are in like Flint. If not, you may have to show zero basis.
Slava Ukraini!
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Someone else asked that question a few weeks ago and a practitioner who deals a lot with stumpage posted a great answer. Unfortunately, the Search function here sucks, so you will never find it, unless it only appears on even days and you try again tomorrow.
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This one? https://proconnect.intuit.com/community/proseries-discussions/discussion/sale-of-cut-timber/00/62917
Schedule T did not make it into that conversation and I believe it should have.
https://www.irs.gov/instructions/it
Answers are easy. Questions are hard!
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No, the one I saw specifically mentioned stumpage, which made me think of Long John Silver.
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Argh, Matie! I searched and found the following points of interest:
https://www.extension.purdue.edu/extmedia/FNR/FNR_FAQ_3.pdf AND https://www.extension.purdue.edu/extmedia/FNR/FNR_FAQ_2.pdf
ALSO https://www.irs.gov/instructions/it and the related code https://www.law.cornell.edu/uscode/text/26/631
Answers are easy. Questions are hard!
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Thanks IRonMan...They didn't have the valuation on the timber done... Most properties in our area of northern MI don't... But I appreciated the response it was helpful.
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Thanks George4Tacks. This was helpful and gave us some areas to discuss with our client.
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Thanks again George4Tacks. this is pretty much how we solved the issue. The one thing I found in working this problem out was that stumpage is slightly different from timber in most of the lititure... anyway the recommendation from Purdue (from your link) was this
Net gain (loss) = sale proceeds - allowable basis - sale expenses
thanks again for the help