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As a general rule, if you only occasionally sell timber (one or two sales every three or four years), you are not in the timber business and not required to file Form T Forest Activities Schedule. If you received Form 1099-S Proceeds From Real Estate Transactions or Form 1099-MISC Miscellaneous Income for the sale, report this as a capital gain or loss on Schedule D (Form 1040) Capital Gains and Losses.

To enter Form 1099-B Proceeds From Broker and Barter Exchange Transactions for your capital gain or loss transactions into the program:

  1. From within your TaxAct return (Online or Desktop), click Federal. On smaller devices, click in the upper left-hand corner, then click Federal.
  2. Click Investment Income in the Federal Quick Q&A Topics menu to expand, click Gain or loss on the sale of investments to expand, then click Capital gain or loss (Form 1099-B).
  3. Click + Add Form 1099-B to create a new copy of the form or click Edit to review a form already created.
  4. Click Quick Entry to scroll down to answer all applicable questions or click Step-by-Step Guidance to proceed with the program interview questions.
  5. On the screen titled Investment Sales - Transaction Details, enter the information for the sale, then click Continue. The date acquired would be the date you purchased the property. The cost or other basis would be your basis in the timber plus any expenses incurred to prepare it for sale.

Note. TaxAct does not support IRS Form T. You will need to go to the IRS website to prepare the form and paper-file your return.

Per IRS Publication 544 Sales and Other Dispositions of Assets, on page 24.

Timber

Standing timber held as investment property is a capital asset. Gain or loss from its sale is reported as a capital gain or loss on Form 8949 and Schedule D (Form 1040), as applicable. If you held the timber primarily for sale to customers, it is not a capital asset. Gain or loss on its sale is ordinary business income or loss. It is reported in the gross receipts or sales and cost of goods sold items of your return.

Farmers who cut timber on their land and sell it as logs, firewood, or pulpwood usually have no cost or other basis for that timber. These sales constitute a very minor part of their farm businesses. In these cases, amounts realized from such sales, and the expenses of cutting, hauling, etc., are ordinary farm income and expenses reported on Schedule F (Form 1040).

Different rules apply if you owned the timber longer than 1 year and elect to either:

  • Treat timber cutting as a sale or exchange, or
  • Enter into a cutting contract.

Timber is considered cut on the date when, in the ordinary course of business, the quantity of felled timber is first definitely determined. This is true whether the timber is cut under contract or whether you cut it yourself.

Under the rules discussed below, disposition of the timber is treated as a section 1231 transaction. See chapter 3. Gain or loss is reported on Form 4797.

Additional Information

Note that any link in the information above is updated each year automatically and will take you to the most recent version of the document at the time it is accessed.


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