Timber Taxes and Woodland Owners
Selling timber is something that most woodland owners do infrequently; and therefore, they are not familiar with how to claim the income or deductions when filing income tax forms. Click the following link for 2007 Tax Tips for Landowners.
Selling Timber
Division of Forestry employees are not experts when it comes to timber tax issues. However, we do know that most forest landowners have little knowledge about timber tax issues.
The division may not be able to assist you directly with your timber tax issues, but it can provide you with information about available publications and a list of tax professionals who have attended a timber tax workshop sponsored by the division.
Here is a list of situations/activities that may affect the way you file your income tax returns.
Selling Your Timber
If you have sold timber or plan to sell timber, the way you sell may determine how much taxes are owed. There can be a substantial difference in taxes owed if you have to treat the dollars received as ordinary income versus capital gains.
Cost-Share Payments
Are you receiving cost-share payments? You will need to know how to treat this on your tax return.
Tree Planting
Are you planting trees in abandoned fields or conducting site preparation for your woodlands next timber rotation? Then you may qualify for a reforestation tax credit.
Timber Stand Improvement
Are you conducting timber stand improvement (TSI) practices in your woodlands or paying someone else to do this? Are you building roads or fixing drainage problems? Then you will want to know about the IRS Timber Tax Form T available for download from the Internal Revenue Service (IRS) at http://www.irs.gov/pub/irs-pdf/ft.pdf.
Losses
Have you received ice or other storm damage to your woodlands? Did Southern pine beetles kill pine trees that you planted for future harvesting opportunities?
Trading
Have you and a neighbor traded some woodlands for better management opportunities?
For answers to these and other questions visit the National Timber Tax Web site. The site also includes downloadable copies of the required IRS tax forms and the “Forest Landowners’ Guide to the Federal Income Tax.”
Here is a list of Kentucky tax professionals who attended a timber tax workshop sponsored by the division. Listing these professionals does not mean endorsement by the division but merely that the division is providing a service to forest landowners.
Please note that the documents listed on this page are in Adobe Acrobat PDF format and requires the FREE Acrobat Reader, available by visiting the Adobe Web page.
