Hunter 257W
Well-Known Member
pass-thru":2oz3t64z said:Hunter 257W":2oz3t64z said:Regarding considering timer sales as Capitol Gains, how do you establish the value of the timber at the time you bought the land? You have to have some defend-able method for separating out the land value vs. timber value at the time of purchase to be able to calculate what your capitol gain is at the time you log your land. All I can think of is to try to find the sale price of comparable land in the area that was sold right after a clear cut???
You can have a qualified forester submit evaluations. I don't believe it's necessary though. If you own the land for at least a year, and the cut on a pay per load basis, you should be good. I have heard of getting evaluations for the purpose of having timber cuts treated as a reduction in basis.....which would result in no tax to the extent basis is reduced. If that's actually legal. If you sell the stumpage as a boundary, I'm not sure what hoops need to be jumped through to get capital gains treatment.
I'm not that up on taxes to fully understand what "reduction in basis" means but if it results in Zero taxes then obviously that is even better than Capitol Gains tax rates. Do you mean that timber values could go down so far compared to when you purchased the land that the loss of value offsets the increase from growth that occurred since the original purchase?? Also not sure what you mean by selling "stumpage as a boundary"? I can see the value in using a forester for all this!