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<blockquote data-quote="treefarmer" data-source="post: 4137435" data-attributes="member: 10041"><p>An additional word on timber taxes. Although I'm not in the tax business I've attended a timber tax seminar, a class, a talk on timber taxes and have read many publications on timber taxes. The first thing you need to do is decide if you are a recreational land owner (few acres owned for fun, not profit), an investor (most landowners), or in the business of growing timber. Avoid recreational ownership because there are very few tax benefits. An investor would be the person with more than a few acres of timber but less than a hundredish acres and you get to accumulate all your timber (and wildlife ?) related expenses over the years and deduct those when you have a sale which is very seldom. I attended a talk on timber taxes at the Dickson County Forestry Association 5 years ago and after the talk the Ag. Extension forester/tax expert convinced me our 300 acre Tree Farm is a business because we make money every year but we are leaving the profit on the stump to be sold in a later year. I thought I needed regular sales but he told me that isn't the case. As a business I can deduct every year all expenses related to forestry and wildlife including mileage, purchase of seed, fertilizer, 4-wheeler, chainsaw, disc, property taxes, etc. If you are an investor or business you need to show you are in it to make money and the best way is to have a management plan that states a goal of growing timber. This is one good reason to join the free Tree Farm program because you will have a professional management plan that states growing timber is one of your objectives. If you are an investor or business keep good records - I keep a log of date, purpose of visit, miles, money spent and keep receipts. Timber taxes are not easy and most accountants are unfamiliar with it. I use the Turbo-tax Business(?) software because it knows what timber is - regular and middle grade Turbo-tax don't handle it very well. Even if you don't do your own taxes learn a little about it so you can tell your accountant a thing or two when you sell timber. I doubt a kiosk tax service at the mall could handle it. Regarding the capital gain - about 6 months ago I searched the internet and I think it works this way: If you are in the 15% tax bracket before capital gain it is taxed at 0% until the timber sale pushes you into the next higher bracket (25%?) at which time your additional timber capital gain is taxed at 15%. I'm not totally confident in this - it's just my take on it. Too many people make the mistake of calling your timber sale regular income and the tax preparer doesn't know any better to tell you otherwise.</p></blockquote><p></p>
[QUOTE="treefarmer, post: 4137435, member: 10041"] An additional word on timber taxes. Although I'm not in the tax business I've attended a timber tax seminar, a class, a talk on timber taxes and have read many publications on timber taxes. The first thing you need to do is decide if you are a recreational land owner (few acres owned for fun, not profit), an investor (most landowners), or in the business of growing timber. Avoid recreational ownership because there are very few tax benefits. An investor would be the person with more than a few acres of timber but less than a hundredish acres and you get to accumulate all your timber (and wildlife ?) related expenses over the years and deduct those when you have a sale which is very seldom. I attended a talk on timber taxes at the Dickson County Forestry Association 5 years ago and after the talk the Ag. Extension forester/tax expert convinced me our 300 acre Tree Farm is a business because we make money every year but we are leaving the profit on the stump to be sold in a later year. I thought I needed regular sales but he told me that isn't the case. As a business I can deduct every year all expenses related to forestry and wildlife including mileage, purchase of seed, fertilizer, 4-wheeler, chainsaw, disc, property taxes, etc. If you are an investor or business you need to show you are in it to make money and the best way is to have a management plan that states a goal of growing timber. This is one good reason to join the free Tree Farm program because you will have a professional management plan that states growing timber is one of your objectives. If you are an investor or business keep good records - I keep a log of date, purpose of visit, miles, money spent and keep receipts. Timber taxes are not easy and most accountants are unfamiliar with it. I use the Turbo-tax Business(?) software because it knows what timber is - regular and middle grade Turbo-tax don't handle it very well. Even if you don't do your own taxes learn a little about it so you can tell your accountant a thing or two when you sell timber. I doubt a kiosk tax service at the mall could handle it. Regarding the capital gain - about 6 months ago I searched the internet and I think it works this way: If you are in the 15% tax bracket before capital gain it is taxed at 0% until the timber sale pushes you into the next higher bracket (25%?) at which time your additional timber capital gain is taxed at 15%. I'm not totally confident in this - it's just my take on it. Too many people make the mistake of calling your timber sale regular income and the tax preparer doesn't know any better to tell you otherwise. [/QUOTE]
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