USA capital gains tax on timber

Geary N. Searfoss gscpa at
Tue Nov 18 12:23:53 EST 1997

Joseph Zorzin wrote:
> Taxes is NOT one of my favorite subjects and I don't know anywhere near
> as much as I should. The subject seldom comes up in my work, but in my
> recent timber sale, the landowner said he'll consider a capital gains
> treatment of the profits.
> I know that I'll have to come up with an estimate of the value of the
> timber when he bought the property.
> But I vaguely seem to recall that there was a major overhaul of capital
> gains treatment on timber recently. Was it done away with?
> So, what's the scoop? Der Forestmeister is in the dark on this one.
> Joe 
Finally someone asks about something I know about!

The Tax Relief Act of 1997 (aka Tax Complication Act of 1997 or Tax 
Preparer's Job Security Act of 1997) made some big changes to the capital 
gains picture. These changes, however, are limited to rates and holding 
periods. They did nothing to change the way that basis is computed.

In essence, the gain (gross profit less basis less expenses of sale) from 
a timber sale will be taxed at lower rates if the timber was sold (or 
payment received on an installment sale) after May 6, 1997. 

If you have any other specific questions, let me know.


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