Federal Income Tax on Timber: A key to your most frequently asked questions

Federal Income Tax on Timber. USDA FS. R8TP34.

This publication examines the most common situations noncorporate taxpayers face when calculating Federal income tax on their timber holdings.  It addresses aspects of each situation using a three-column format.  The columns are:  Type of Forest Activity, How to Qualify for Best Tax Treatment, and Reporting and Tax Forms.  The responses are necessarily brief, and taxpayers should consult the other sources of information listed at the end of the publication for a more comprehensive discussion of these issues.

The major purpose of this publication is to provide taxpayers with a quick reference to the Internal Revenue Service forms necessary when filing Federal income tax returns for forestry-related activities.  Nonetheless, each taxpayer must first determine whether he or she operates his or her timber activities as an investment, a trade or business, or for personal use.