Proceeds From Lump-Sum Timber Sales Are Required To Be Reported As Income
Information Return Forms 1099 have long been required for I.R.C. § 631(b) “pay-as-cut” sales but not for lump-sum timber sales.
In December of 2007, the Internal Revenue Service issued a proposed amendment to the Income Tax Regulations under section 6045(e). This proposed amendment, when finalized, will require lump-sum timber sale information to be reported by the timber purchasers on Forms 1099. As of the date of this article, this proposed amendment has not been finalized; therefore, the changes in the proposed amendment, requiring the reporting of lump-sum timber sales on Forms 1099, do not apply to sales occurring in 2008.
The fact that the proposed amendment has not been finalized does not change the sellers’ obligation to report and pay income tax on the gain from the sale of the lump-sum timber.
The Internal Revenue Code requires a taxable sale or exchange of an asset, including a lump sum timber sale, to be reported on an individual’s or entity’s tax return whether a Form 1099 is received or not.
More information on the specific tax treatment of timber can be found in I.R.C. §§ 611 and 631 and the associated regulations. The instructions for Form T -Timber can be consulted to determine if the timber seller is required to file this form with the tax return.
Page Last Reviewed or Updated: February 06, 2009