Revenue generated from a timber sale is taxable. All IRS tax laws are complicated, and timber taxation has its own set of rules. Not all professional tax advisors understand the rules for timber taxation. Please keep the following in mind when considering a timber sale:
- Landowners should seek professional advice only from individuals with experience in timber tax issues. (Do this before you have a timber sale.)
- Landowners should keep good records, even if it is simply receipts in an old shoe box.
- Landowners should have an established cost basis in their timber. Proper taxes can be calculated only if costs are established. Sometimes this is difficult if your timberland has been acquired long ago or inherited.
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