Important Change to Timber Sale Reporting Rules
By David Ray, Forestry Research Scientist
Tax season is approaching and it is worth noting that new rules affecting the reporting of lump-sum timber sales were instituted earlier this year. According to the Dictionary of Forestry, a lump-sum sale is defined as ‘a timber sale in which the buyer and seller agree on a total price for marked standing trees or for trees within a defined area before the wood is removed’ and further notes that ‘the timber is usually paid for before the harvesting begins’. The other common approach by which landowners sell timber is referred to as a per unit sale, which, according to that same source, is ‘a timber sale in which the buyer and the seller negotiate a set price per unit of harvested wood, usually based on wood volume or weight and product class’ also noting that ‘the buyer pays for the timber after it has been cut and the weight or volume has been determined’.
If you conduct lump sum timber sales then you will want to know more about this change; those who use per unit sales are not affected. Fortunately the change appears to be rather simple, requiring the buyer provide the seller a 1099-S Form (Proceeds From Real Estate Transactions). A straightforward description and example can be obtained from the NC State Cooperative Extension at the following URL: http://www.ag-econ.ncsu.edu/faculty/vanderhoeven/TD9450ReportingofLumpSumTimbersales20090602.pdf.
If you have further questions after reviewing this material, you should contact your consulting forester. Tall Timbers’ staff are also available to help.