Sale of timber for individuals:

Forum|Forum|5 years ago
October 15, 2020
11 replies
40 views

Clients are NOT in business of selling timber, but sold several small plots of timber on their own personal property. How to determine cost basis of trees sold.

ProSeries Professional

This topic has been closed for replies.

Best answer by dkh

I always enter $0. My clients purchased the property w/o expectations of selling timber therefore the purchase price is for the land not the standing timber.

dkhAnswer

Level 15

I always enter $0. My clients purchased the property w/o expectations of selling timber therefore the purchase price is for the land not the standing timber.

T

Terry53029

Intuit Community Champion

So @dkh if the same client sold the land for a profit you would use a basis of $ 0, because they never expected to sell it ? Occasional sale of timber is sale of investment if kept longer than 1 year as a capital gain. It is considered an investment. While not easy it is possible to figure basis, and if the amount is large enough you should contact a professional. A place to start is: www.timbertax.org

dkh

Level 15

My choice of wording was poor but I stand by using $0 as the basis for the sale of timber. Whenever I have a client that sells some timber from his property I do not report any cost basis. However, I've never had a client that maintained a property strictly for harvesting timber. All my clients situations have been property purchased with some wooded area that client had some good trees removed to put some money in their pocket.

And @Terry53029 , while I may not be a CHAMP, I'm not an idiot. While I find your follow up question

@Terry53029 wrote:
So @dkh if the same client sold the land for a profit you would use a basis of $ 0, because they never expected to sell it ?

irritating, an oyster probably finds a bit of sand irritating also, so I'm off to make a beautiful gem.

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