🚀 go-pugleaf

In article <strider-1003990147420001@ppp-67-107.dialup.winternet.com>, 
strider@ShadowMAC.org writes: 

>   Hmmm, guess I am in the chair to be learning something this time, cause
> I am being hit with a $3K tax bill due to lumber I harvested this last
> year thru capitol gains.
 
>   What exactly is needed to relieve me of this tax burden?

>   In other words MORE MORE!!!

When you purchase a tract of land with trees on it, those trees have some 
value which you paid cash for.  Your original investment is not subject 
to capital gains tax, only the return in excess of the basis for value.

The easiest and most reliable way to establish the basis is to agree on 
it with the seller at the time you purchase the land.  When it becomes 
part of the sale contract, there is no way the IRS can challenge the 
basis.  The timber was offered at that price, and you paid for it. 

Another way is to establish a basis yourself, either by hiring an 
appraisal at purchase, or doing the estimate yourself.  By waiting until 
after you log it to assign a basis, you are placing yourself in a shaky 
position with the IRS, but give it a try anyway.  There is no reason to 
pay capital gains on your original investment.

I found a few years back that hiring a good accountant who understands 
farm operations to do my taxes pays for itself and eliminates all those 
headaches at tax time.  I consult with him before I buy or sell 
equipment, land, or whatever.  You have the choice of taking returns from 
timber sales as straight income or as capital gains, depending on how you 
handle the sale.  Under the current tax code, capital gains is probably 
the better choice.

-- Larry