04-01-2003, 07:48 PM
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Schedule "T" Question to Foresters
In article ,
writes:
Dear US Foresters:
As I understand it, a timber sale should be taxed by Uncle Sam only to the
extent of the growth of the trees since I've acquired the property (capital
gains). In practice, just how much of a burden to the forester (me) will it
be to calculate the capital gains of a timber sale on a property that has
not had a basis established since that purchase?
Specifically, the parcel of interest was purchased as primary residence in
1998. In spite of some personal hardships (everything is relative) I've
managed (so far) to retain the property despite my relocation and resist the
several "timber pimps" (thanks I think to JZ for the term) that have knocked
on my door.
I'm not a forester, just a timber owner like you. The basis is an
appraisal, not a cruise. The basis depends on the value of the timber at
the time you purchased the land. The trees grow at a more or less steady
rate, but the price of timber fluctuates widely. During a period of
falling stumpage prices, the trees may be growing nicely but the value
may be shrinking.
I hired an accountant who keeps all that stuff straight for me.
Foresters usually don't know that much. Should you decide to sell the
property without logging it, there is no need to pay any capital gains
taxes at all. If you decide to log it as part of the sale, you may still
be able to shelter your capital gains, depending on how the contract is
written.
Should you hire a forester to recreate a 1998 basis, be sure to tell him
you want a top dollar appraisal. I don't know of any foresters
interested in filling the government's coffers. Value is based on market
conditions, scale and grade. Scaling is more or less a scientific
process, but market conditions vary depending on the day of the week, and
grade of a standing tree depends on X-ray vision.
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http://home.teleport.com/~larryc
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