Determine Your Basis and Keep More Timber Income

Wow! It finally happened! You are now the proud owner of some woodland acres. Like most new owners, you cannot wait to enjoy the property. Therefore, you pull on your boots, file the sale papers and head for the woods. This is what all too often happens when a new owner takes title to forestland. However, you should place the joys of ownership on hold for one very important determination. A new owner should first determine the original basis, or value, of all merchantable timber at the time of acquisition.

Estate Planning for Forest Landowners: What Will Become of Your Timberland?

The purpose of this book is to provide guidelines and assistance to nonindustrial private forest owners and the legal, tax, financial, insurance, and forestry professionals who serve them on the application of estate planning techniques to forest properties. The book presents a working knowledge of the Federal estate and gift tax law as of September 30, 2008, with particular focus on the unique characteristics of owning timber and forest land. It consists of four major parts, plus appendices. Part I develops the practical and legal foundation for estate planning. Part II explains and illustrates the use of general estate planning tools. Part III explains and illustrates the use of additional tools that are specific to forest ownership. Part IV describes the forms of forest land ownership, as well as the basic features of State transfer taxes and the benefits of forest estate planning. The appendices include a glossary and the Federal forms for filing estate and gift taxes.

Federal Income Taxes for Timber Growers

Three fourths of North Carolina’s commercial timber is owned by individuals with little expertise in tax law accounting. Every year at income tax time, these growers face an extra challenge—the task of dealing with a complex set of federal tax laws governing timber ownership. Understanding some of the intricacies of tax law can help timber owners minimize their tax liability. They can learn how to establish complete records for each tract of timber, how to choose the best method of selling their timber, and how to take advantage of all deductions and tax incentives permitted by law.

Forest Landowner’ Guide to the Federal Income Tax

The primary purpose of this handbook is to foster good forest management by combining, in one source, relevant information for analyzing investments in forest management and an explanation of the Federal income tax law associated with those investments. It is the latest in a series of income tax handbooks for nonindustrial private forest owners that extends back over 45 years.

New Reporting Rules for Lump-Sum Timber Sales

On May 28, 2009, new rules for reporting of lump-sum timber sales went into effect. The changes require purchasers of standing timber in a lump-sum transaction to report the sale or exchange of the timber to the IRS using IRS Form 1099-S and to provide the completed form to the seller.

North Carolina’s Forestry Present-Use Valuation (PUV) Property Tax Program

Qualified North Carolina owners of soundly managed commercial forestland have been eligible for property tax reductions since 1974 through the state’s forestry present-use property tax program. To be eligible for Forestry Present Use Valuation, qualified forestland must be actively engaged in the commercial growing of trees under sound management (NC General Statues 105 277.2- 277.7). Commercial growing of trees will entail a harvest as a thinning, partial, or complete harvest of trees (as prescribed in the forest management plan filed with the county tax office).

The Present-Use Value Program

Effective January 1, 1974, the General Assembly enacted a voluntary program that allows certain agricultural land, horticultural land, and forestland to be assessed at its present-use value. This manual seeks to provide a thorough, but not exhaustive, explanation of the present-use value program, as it exists at the time of publication.

Setting up the Books: A Forest Owner’s Guide to Capital Accounts and Record-keeping for Federal Income Tax Purposes

Forest owners have a number of federal income tax incentives available to them. Growing timber can be an income-producing activity, with the trees being considered a capital asset. Income from sales or other disposition of capital assets is then taxed at capital gains rates, as opposed to ordinary income tax rates. Investments in timber can be recovered through depletion deductions and reforestation expenses, qualifying for a tax credit. These provisions and others in the tax code encourage timber production, which is generally considered to be good for both the ecology and the economy. This publication will assist you in the first steps toward taking full advantage of these incentives.

Voluntary Conservation Options for Land Protection in North Carolina

Landowners share a deep connection to their land and the legacy they’ll leave behind. With so many conservation options to consider, landowners need to have a working knowledge of the choices to protect their land in the near and long term. Landowners should identify their goals before embarking upon a conservation strategy. Once a conservation strategy is selected, then the implications of state and federal taxes can be explored. This publication reviews the most common land conservation and protection options.

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