Timber Tax Basis Appraisals
In the decade plus that I’ve been practicing forestry, I’ve found that landowners, much to their detriment, are unaware about what their actual tax liability is as it pertains to how much in taxes they must pay out of timber sale proceeds.
Disclaimer: I am not an accountant or an expert in tax law.
Generally, what happens is that landowners will claim the gross proceeds from the sale of their timber as being subject to capital gains. What’s unfortunate is that they need not report all of their gross proceeds. Just as you only pay capital gains tax on the gain in value when you sell stock and make a profit, you are also only required to pay the taxes on the gain in value from when you acquired the timber asset.
While a licensed and qualified CPA can only be the professional who can determine what you must pay in taxes, a professional forester can determine what the timber was worth when you acquired it. We can take growth ring measurements from either the stump or by examining tree cores, and then make the calculations needed to determine how much timber was on the property when it was purchased, and then use available records to determine what it was worth at that time.
This can save landowners thousands of dollars!
In some cases, landowners may claim a loss on the timber should it be damaged by fire, insect infestation or storm damage. In stands of timber that are in decline due to old age, a loss in value from the time of purchase may also be taken into consideration.
Nathan Green
Consulting Forester
N R Green Resource Consulting, LLC
N. R. Green Resource Consulting, LLC 