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How this helps you:

If you generate income and expenses from your woodland, this will help you with income tax reporting. It also will alert you to property tax programs for managed forest land, help you predict financial returns from forestry investments, and get started with estate planning.

Federal Income Tax Guidelines

and whether you own woodland primarily for

How you report forestry income and expenses depends on a correct classification of your enterprise.

This chapter focuses on taxpayers as individuals managing timber as an investment or as sole proprietor of a business. If you are not managing your woodland with the intent to make a profit, much of this chapter may not apply to your situation.

Entry #

Date

Details of the Activity

Hours

Miles

Revenue

($)

Expenses

($)

1

1/20/09

Completed timber sale
10 ac.  20 cords/ac.  @ $25/cord
contract and forest management plan in office file, time spent on site with logger

8 hr
10 miles

$5,000

2

1/21/09

Paid consulting forester fee,
Ck.519, contract in office file

Walk the property with the forester

3hr

10 miles

$300

3

2/1/09

Paid accountant – Ck.520 – 2008 income tax prep & filing

2 hr

$250

4

2/1/09

Purchased new chain saw –
Ck. 521, owner’s manual in office file under power tools

$500

5

3/30/09

Completed red pine pre-commercial thinning in stand #5, 4 ac., pictures on office computer hard drive. Work completed by owner during first three weeks of March

80 hr
200 miles

6

8/20/09

Examined property with service forester

4 hr
10 mi

7

10/1/09

Paid property tax to county assessor - Ck. 525

$1375

8

10/14/09

Received check from Minnesota Department of Revenue for SFIA

$785

9

10/14/09

Sold balsam boughs – 100 bundles @$5 per bundle

20 hr
10 mi

$500

Adapted from Recordkeeping: A How-to-do-it Guide for Small Woodland Owners. March 2007. N. E. Elwood and S. R. Gregory, Oregon State University Extension Service.

(see Employer’s Supplemental Tax Guide in Links and References section.)

Different sale methods may affect how you determine the amount of income, whether income is a capital gain or ordinary gain, and how you report income.