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Anne, Master Tax Preparer
Category: Tax
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Experience:  Enrolled Agent with 25 Years Experience specializing Individual and Small Businesses
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I am harvesting the timber on my farm land ----- what federal

Resolved Question:

I am harvesting the timber on my farm land ----- what federal taxes will be owed
Submitted: 6 years ago.
Category: Tax
Expert:  Anne replied 6 years ago.
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Anne :


Expert:  Anne replied 6 years ago.

Thank you for using justanswer. If you held the timber primarily for sale to customers, or if you are cutting the timber yourself and selling it as firewood,or pulp wood, then this is ordinary business or loss included in your Form 1040 Schedule F.

If you are selling standing timber that was NOT held for sale to customers, then this is a capital asset, and the sale is reported on Form 1040 Schedule D. You would only need to pay tax on the difference between your cost into the tree (which may very well be $0 if you didn't plant them, grade the land for them, etc. but I wanted to mention that if you have a cost associated with the timber, you will want to use that to lower your tax liability)

Please see below for more in depth information (especially page 53)

2009 Publication 225" border="0" alt="PDF" title="PDF"/>Farmer's Tax Guide

I hope this helps

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