This is the most advantageous way to deduct expenses. Unfortunately, timber held by a business is no longer a capital asset. Contract requirements are listed below. But with high timber prices coupled with the new tax rates, forest landowners are getting more scrutiny. Volume of timber cut is determined by weighing or scaling.
Payment is made to owner at a specified rate for each unit of volume harvested.
Buyer must be obligated to cut the timber and make payment. This decision will not only affect how expenses are deducted but also how timber is sold. Landowners holding timber as a business need to review their timber sales contracts to ensure income qualifies for capital gains treatment. Recommendations on this web site do not endorse any commercial products or trade names.