Tax abatement timber glen: forest tax programs explained

Last updated 2026-07-24

What does tax abatement mean for wooded subdivisions like Timber Glen?

You bought ten or twenty acres in a development where the name promises trees. Timber Glen, Forest Ridge, Whispering Pines. The builder left woods around your house, maybe sixty percent canopy. The county assessor sees a house on acreage and bills you full residential property tax on the whole parcel. Tax abatement in this context usually means enrolling the forested portion of your lot in a state current-use or forest tax program. These programs cut the assessed value of qualifying woodland by 50 to 90 percent, replacing market value (what a developer would pay) with use value (what the standing timber is worth today). In exchange you commit to managing the woods for timber production and you pay a rollback penalty if you subdivide, clear, or build within a window that runs five to fifteen years depending on the state ^[1]. Every state with significant private forest acreage runs some version of this. The Forest Stewardship Council tracks forty-one state programs ^[2]. Enrollment requirements vary: minimum acreage (often ten acres of contiguous forest), a written management plan (sometimes drafted by you, sometimes requiring a consulting forester's signature), and proof you're actively managing for timber (which can mean thinning, prescribed fire, or simply not clearing). You stay enrolled as long as you meet the terms. The day you pull a building permit for a second home or sell two acres to a neighbor, rollback tax plus interest comes due on the converted parcel. Woodland owners in subdivisions like Timber Glen can qualify if the wooded portion meets the acreage threshold and you can draw a legal boundary that separates the homesite from the forest tract on your tax parcel. Some county assessors allow split classification (house plus curtilage taxed residential, remaining woods taxed as forest). Others require you to formally subdivide the parcel before enrollment, adding surveyor and recording costs. Confirm the path with your county assessor before you invest time in a management plan. Our forest management article walks through what these programs expect from a working plan.

How do forest tax programs reduce your property tax bill?

The mechanism is straightforward. Without the program, the assessor multiplies your land's market value by the county millage rate. A forty-acre parcel in a county where vacant land sells for $8,000 per acre carries a market-value assessment of $320,000. At a millage rate of 25 mills (2.5 percent), your annual property tax is $8,000. Enroll in the state forest tax program and the assessor substitutes use value. Use value reflects the present worth of future timber harvests, discounted to today. Most states publish annual use-value tables by county and forest type: hardwood sawtimber, pine plantation, mixed regeneration. The same forty acres might carry a forest-use value of $800 per acre, or $32,000 total. At 25 mills your property tax drops to $800, an $7,200 annual saving ^[1]. The savings percentage depends on development pressure. In exurban counties an hour from a metro, market land values run five to ten times forest-use values. In remote regions the gap narrows because there's less competition from builders and recreational buyers. The National Woodland Owners Survey found that enrolled parcels in the Mid-Atlantic saved an average of 73 percent compared to market-value taxation, while parcels in the Lake States saved 54 percent ^[3]. Savings compound. Over a ten-year hold period that $7,200 annual difference grows to $72,000 in avoided tax, enough to fund two commercial thinnings and still pocket cash. You pay rollback when you convert the land, but rollback is capped (typically three to ten years of forgiven tax plus 5-7 percent simple interest). If you hold fifteen years and then sell for development, you've banked five to twelve years of savings free and clear ^[1].

What is forest management and why do programs require it?

Forest management is the deliberate practice of growing, harvesting, and regenerating trees to meet specific objectives over time. For a current-use tax program, the objective is commercial timber production. That doesn't mean you log every decade. It means you maintain the forest in a condition capable of producing sawtimber, pulpwood, or biomass when market conditions and stand maturity align. A forest management plan documents your acreage, stand types, stocking levels, and a ten- or twenty-year schedule of practices: thinning, regeneration cuts, invasive species control, road maintenance. Most states require the plan to be written or reviewed by a professional forester if your parcel exceeds a threshold (commonly 20 or 50 acres). Below that threshold some states accept an owner-written plan using a state template ^[4]. The plan is not a binding contract. You can delay a scheduled thinning if timber prices crash or if a wet spring makes the woods inaccessible. The state forestry agency or county assessor reviews compliance every few years. They look for evidence you're following the broad intent: no wholesale clearing, no conversion to pasture, no subdivision. Conducting at least one management activity per decade (a timber sale, a release cutting, a prescribed burn) is usually enough to prove good faith. State programs call forest management by different names. In New York it's a "Forest Management Plan" under the 480-a program ^[5]. In Oregon it's a "Forest Management Plan" for the Small Tract Forestry program ^[6]. In Virginia it's a "Forest Stewardship Plan" under the Land Use program ^[7]. The content is similar: inventory, goals, scheduled practices, and a forester's signature if required. For WoodlotLedger readers managing 10 to 100 acres, a consulting forester charges $400 to $1,200 to draft or certify a plan ^[8]. The Current-Use Enrollment & Compliance Kit prepares the inventory and practice schedule so you spend that forester hour on technical review instead of data entry, cutting billable time by half.

What is the Forest Management Bureau and how does it oversee programs?

Most states don't have an entity called the Forest Management Bureau. The oversight function lives in the state forestry agency: the Department of Natural Resources (DNR), the Division of Forestry, or the Forestry Commission. That agency writes the rules, publishes use-value tables, trains county assessors, and audits enrolled parcels for compliance. In a few states the tax program sits in the Department of Revenue or the Tax Commission rather than the forestry agency, and those offices coordinate with foresters for technical review. For example, Washington's Designated Forest Land program is administered by the Department of Revenue, which relies on the Department of Natural Resources for forest-practice standards. The phrase "Forest Management Bureau" might refer to a specific division within a DNR. Wisconsin's Department of Natural Resources has a Division of Forestry that includes a Forest Management Bureau responsible for state forest lands and private landowner assistance ^[9]. If you're in Wisconsin and you see that term in program materials, it's the bureau that publishes the Managed Forest Law guidelines and coordinates with county assessors. For practical purposes, your first call is always the state forestry agency and your county assessor. The forestry agency confirms program eligibility, minimum acreage, and management-plan requirements. The assessor confirms the application process, use-value rates, and whether your parcel can be split-classified or requires subdivision. Both offices are listed on the state forestry agency website, typically under a "Landowner Assistance" or "Forest Tax Programs" heading. Our state-by-state forest management guide links to each forestry agency's program page.

Do you have to pay taxes on timber sales?

Yes. Timber sales are taxable income at the federal level and in most states. The characterization (capital gain versus ordinary income) and the rate depend on how you hold the trees and how long you've owned them. If you own the land and the timber, and you've held the tract more than one year, the IRS treats a lump-sum timber sale as the sale of a capital asset under Section 1231 ^[10]. You report the sale on Form 4797 and the net gain flows to Schedule D as a long-term capital gain, currently taxed at 0, 15, or 20 percent depending on your income. The gain equals sale proceeds minus your timber basis (what you paid for the trees, or their fair market value on the date you acquired the land if they came with the property). If you cut the timber yourself and sell logs or lumber, the IRS treats you as being in the business of timber. Income is ordinary, reported on Schedule C, and subject to self-employment tax (15.3 percent on the first $168,600 of net earnings in 2024) ^[11]. Most woodland owners avoid this by selling stumpage (standing trees) or pay-as-cut (the logger cuts and you're paid per delivered ton), both of which preserve capital-gains treatment. State income tax follows the federal characterization in most cases, though a few states tax timber sales as ordinary income regardless of holding period. North Carolina, for example, allows capital-gains treatment only if you make a Section 631(a) or 631(b) election . Without that election the state treats the sale as business income. Check your state's timber-tax guide on the forestry agency website.

How are timber sales taxed and what rates apply?

Timber sales are taxed as long-term capital gains if you meet three tests: you own the land and the timber, you've held the timber more than one year, and you sell stumpage or elect to treat a cutting as a sale under IRC Section 631(a) or 631(b) ^[10]. Long-term capital gains rates for 2024 are 0 percent (taxable income up to $47,025 single, $94,050 joint), 15 percent (up to $518,900 single, $583,750 joint), and 20 percent above those thresholds . Add the 3.8 percent net investment income tax if your modified adjusted gross income exceeds $200,000 single or $250,000 joint, bringing the top effective rate to 23.8 percent. If you cut and sell logs or lumber yourself, the income is ordinary and stacks on top of your wages or other income at rates from 10 to 37 percent. Self-employment tax adds another 15.3 percent on net earnings up to the Social Security wage base ($168,600 in 2024) and 2.9 percent on earnings above that ^[11]. This is why selling stumpage (the logger pays you for standing trees and handles the harvest) is the default choice for woodland owners who aren't in the logging business. Basis is critical. Timber basis is the portion of your land purchase price allocated to the trees, or the fair market value of the timber on the date you inherited or received the land as a gift. When you sell timber, you subtract the depletion (basis allocated to the cut volume) from the sale proceeds to arrive at taxable gain. If you paid $200,000 for forty acres and a consulting forester's appraisal allocates $40,000 to the standing timber, your timber basis is $40,000. Sell half the volume for $25,000 and you deduct $20,000 of basis, leaving a $5,000 taxable gain ^[10]. IRS Publication 544 (Sales and Other Dispositions of Assets) and the National Timber Tax Website (https://www.timbertax.org) maintained by the USDA Forest Service walk through the calculations . Most woodland owners hire a forester to cruise the timber and a tax preparer familiar with Form T (Forest Activities Schedule) to handle the return. The basis-of-land article explains how to calculate timber basis at purchase or inheritance.

How do I report timber sales on my tax return?

Report a lump-sum stumpage sale on Form 4797 (Sales of Business Property), Part I, as a Section 1231 gain ^[10]. Enter the sale date, gross proceeds, and your adjusted basis (original timber basis minus any prior depletion). The net gain flows to Schedule D and is taxed as long-term capital gain if you've held the timber more than one year. If you made a Section 631(a) election (treating the cutting of timber as a sale), report the deemed sale on Form 4797 using the fair market value of the timber on the first day of your tax year as the sale price. Your basis is the adjusted timber basis as of that date. The difference is a Section 1231 gain. Actual log sales during the year go on Schedule C or Form 4797 Part II, with the 631(a) deemed sale price as your new basis in the logs ^[10]. For pay-as-cut contracts (you're paid per ton delivered, but you never touch the logs), treat each periodic payment as a separate stumpage sale. Report each payment on Form 4797 Part I, deducting the proportional timber basis for the volume delivered that period. Sum the gains and carry the total to Schedule D. Attach Form T (Forest Activities Schedule) to your Form 1040 if you claim any timber depletion, reforestation amortization, or if gross timber sales exceed $5,000 in the tax year ^[10]. Form T tracks your timber accounts by block or stand, showing beginning basis, current-year depletion, reforestation costs, and ending basis. The IRS uses Form T to verify that you're depleting basis correctly over multiple sales. Most preparers unfamiliar with timber will try to report the sale on Schedule D directly or as other income. Push back. Form 4797 is the correct vehicle for Section 1231 gains, and Form T is required if you're depleting basis. The basis-of-land article explains how to calculate timber basis at purchase or inheritance. TurboTax and TaxAct support Form T, but you'll need to manually enter depletion per block because the software doesn't track standing inventory year to year.

How do I avoid capital gains tax on a timber sale?

You can't avoid it entirely, but you can manage timing, basis, and income to minimize the bite. Here's what actually works. Maximize your timber basis. If you bought the land, hire a consulting forester to appraise the standing timber as of the purchase date and allocate purchase price accordingly. If you inherited the land, get an appraisal as of the date of death (or the alternate valuation date if the executor elected it). Either way, a higher timber basis means a smaller gain ^[10]. The appraisal costs $500 to $1,500 but pays for itself the first time you sell. Stay in the 0 percent capital-gains bracket if your income allows it. For 2024 that's taxable income up to $47,025 single or $94,050 joint . If you're retired and living on Social Security plus a small IRA draw, time the timber sale for a year when other income is low. A $40,000 timber gain inside the 0 percent bracket costs zero federal income tax. (State tax may still apply, and the sale can affect the taxable portion of Social Security benefits, so run the numbers with your preparer.) Spread the sale across multiple years. Sell twenty acres this year and twenty next year instead of forty at once. This keeps you in a lower bracket (15 percent instead of 20 percent, or 0 percent instead of 15 percent) and avoids triggering the 3.8 percent net investment income surtax if you're near the $200,000/$250,000 threshold . Consider a Section 631(a) election if you expect timber values to appreciate sharply and you're willing to pay tax before you sell. The election treats the cutting of timber as a sale on the first day of your tax year, at fair market value. You pay capital-gains tax on the paper gain that year, but your new basis is the fair market value. When you actually sell the logs six months later for 20 percent more, the additional 20 percent is ordinary income, but you've capped the capital gain at the lower value ^[10]. This makes sense only in rising markets when you're certain you'll harvest soon. Rollover and deferral options like a 1031 exchange don't work for timber. Timber is personal property (even when it's rooted to real property), and 1031 applies only to real property since the Tax Cuts and Jobs Act of 2017 . Opportunity Zone deferral requires investing capital gains in a Qualified Opportunity Fund, and there are no timber-specific funds in most rural zones. Your best levers are basis, timing, and bracket management.

How does timber income interact with forest tax program enrollment?

Most state current-use programs encourage timber harvests as proof of active management. Selling timber doesn't disqualify you or trigger rollback, as long as you regenerate the stand and continue managing for timber production ^[1]. The assessor wants to see that you're treating the woods as a working forest, and a harvest every ten to twenty years is normal. A few programs require you to report timber sales annually or when gross proceeds exceed a threshold. Oregon's Small Tract Forestry program requires owners to file a notice of operation with the county assessor within ten days of completing a timber harvest ^[6]. The assessor uses that notice to verify the parcel is still enrolled and the harvest complies with the management plan. Failing to file can trigger penalty or disqualification. In states that key forest-use value to sustained yield (the volume you can cut annually without depleting the stand), a large one-time clearcut can raise a flag. The assessor may ask for an updated inventory showing regeneration is underway and the stand will return to productive capacity within the plan period. As long as you replant or rely on natural regeneration (and the plan anticipated the cut), you're fine. Converting the harvested area to pasture or homesites is what triggers rollback. Timing a timber sale after enrollment can actually improve your tax savings. You've already dropped the property tax bill by 70 or 80 percent, so the annual savings funds management activities (site prep, planting, herbicide release) that make the next harvest more valuable. Stacking the reduced property tax with favorable capital-gains treatment on timber income is the core financial logic of owning managed woodland.

What happens to your tax status when you sell or convert enrolled land?

The day you convert enrolled land to a non-qualifying use, rollback tax plus interest comes due on the converted portion ^[1]. Conversion includes selling for residential development, subdividing and selling lots, clearing for pasture or crops, or pulling a building permit for a structure not essential to forest management (a second home, a shop building, a barn for horses). Rollback equals the difference between what you would have paid under market-value taxation and what you actually paid under forest-use value, for each of the prior years you were enrolled, up to the state's cap (typically three to ten years). Interest accrues at a simple rate set by statute, usually 5 to 7 percent per year. Some states add a penalty percentage on top of the rollback and interest ^[1]. Example: You enrolled forty acres in 2015 at a forest-use value of $1,000 per acre ($40,000 total). The county millage is 25 mills, so you paid $1,000 annually in property tax. Market value was $8,000 per acre ($320,000 total), which would have yielded $8,000 annually. You convert ten acres in 2025 by subdividing and selling a lot. The state caps rollback at the most recent seven years. Rollback equals seven years × (market-value tax minus forest-use tax) = 7 × ($2,000 − $250) = $12,250, where the $2,000 and $250 are the per-year taxes on the ten-acre portion. Add 6 percent simple interest compounded from each year's due date, roughly $4,900, for a total rollback liability of about $17,150 on the ten acres. The remaining thirty acres stay enrolled and continue paying $750 annually in forest-use property tax. Selling the entire enrolled parcel to a buyer who will continue forestry usually does not trigger rollback, provided the buyer re-enrolls or assumes your enrollment within a grace period (commonly 30 to 180 days). The rollback clock resets, and the new owner enjoys the reduced assessment ^[1]. This is why enrolled woodland often commands a premium over unencrolled land: the buyer inherits the tax savings and the prior owner's investment in infrastructure (roads, marked boundaries, completed thinnings). Confirm the mechanics with your county assessor before you list the property. In some states the seller is liable for rollback at closing, and the title company escrows the estimated amount. In others, rollback attaches to the land and the buyer assumes it. Get it in writing.

Which states have the most favorable forest tax programs for small woodland owners?

"Favorable" depends on your time horizon, your parcel size, and whether you plan to harvest. For sheer simplicity and savings, Wisconsin's Managed Forest Law (MFL) and Michigan's Qualified Forest Program (QFP) top the list. Both accept parcels as small as 20 acres (MFL) or 40 acres (QFP), require a basic management plan, and cut property tax to pennies per acre . Wisconsin charges a $2.42 per-acre annual acreage-share payment in lieu of property tax for land enrolled in MFL closed (no public access), plus a 5 percent yield tax when you harvest. Michigan's QFP exempts the land from general property tax and substitutes a $1.35 per-acre annual fee. Neither has a minimum holding period or rollback if you withdraw after ten years. New York's 480-a program is generous for parcels over 50 acres, cutting assessed value by 70 to 90 percent with no rollback after the initial ten-year commitment ^[5]. You file a new ten-year commitment upon renewal, and if you withdraw after the first term there's no penalty. The catch: you need a forester-approved plan and you must allow public recreation (hunting, hiking, fishing) unless you pay a higher recreation access fee. Oregon's Small Tract Forestry program accepts parcels as small as ten acres if at least half the acreage is stocked with commercial trees ^[6]. The use-value tables are aggressive (often 5 to 10 percent of market), and there's no minimum commitment period. Rollback applies only to the most recent five years, capping your downside if you convert early. States to approach with caution: California's Williamson Act and Timberland Production Zone (TPZ) programs require ten-year rolling contracts (every year you're re-committed for another ten years) and the rollback formulas are complex . The savings are real, but the administrative burden and the long lock-in make them better suited to commercial operations than family woodland owners. Texas has no general forest-tax program; the 1-d-1 Agricultural Use appraisal applies to timber production but the savings are modest and compliance is inconsistent across counties. The USDA Forest Service's Cooperative Forestry staff maintains state-by-state summaries at https://www.stateforesters.org ^[2]. Download your state's fact sheet, compare the minimum acreage, the plan requirement, and the rollback cap before you commit.

Frequently asked questions

What is forest management bureau?

Most states don't have an entity specifically called a Forest Management Bureau. Forest tax programs are usually administered by the state forestry agency (DNR, Division of Forestry, or Forestry Commission). In Wisconsin, the Forest Management Bureau is a division within the DNR that oversees state forest lands and publishes Managed Forest Law guidance. For program questions, contact your state forestry agency and county assessor regardless of the office name.

What is forest management?

Forest management is the deliberate practice of growing, harvesting, and regenerating trees to meet specific objectives over time. For current-use tax programs, the objective is commercial timber production. A forest management plan documents your acreage, stand types, and a schedule of practices like thinning, regeneration cuts, and invasive species control. Most states require a plan written or certified by a professional forester for parcels over 20 or 50 acres.

How to report sale of timber on tax return?

Report lump-sum stumpage sales on Form 4797 Part I as a Section 1231 gain, then carry the net gain to Schedule D for long-term capital-gains treatment if you held the timber more than one year. Attach Form T (Forest Activities Schedule) if you deduct timber basis or if gross timber sales exceed $5,000. For pay-as-cut contracts, report each periodic payment as a separate sale on Form 4797, deducting proportional basis for the volume delivered.

How do I avoid capital gains tax on timber sale?

You can't eliminate capital-gains tax, but you can minimize it by maximizing timber basis (hire a forester to appraise the standing timber at purchase or inheritance), staying in the 0 percent bracket ($47,025 single, $94,050 joint taxable income for 2024), and spreading sales across multiple years to avoid jumping brackets. A Section 631(a) election caps the capital gain at a lower value if you expect timber prices to rise sharply before harvest.

Do I have to pay taxes on timber sold?

Yes. Timber sales are federally taxable income and taxable in most states. If you own the land and timber and hold more than one year, the IRS treats a stumpage sale as a capital gain reported on Form 4797 and Schedule D. If you cut and sell logs yourself, the income is ordinary business income on Schedule C, subject to self-employment tax. State taxation follows the federal characterization in most cases.

Do you have to pay taxes on timber sales?

Yes. Timber sales generate taxable income. The rate depends on how you hold and sell the trees. Stumpage sales (you sell standing trees) after more than one year of ownership qualify for long-term capital-gains rates (0, 15, or 20 percent federally). Cutting and selling logs yourself produces ordinary income taxed at 10 to 37 percent plus 15.3 percent self-employment tax, which is why most woodland owners sell stumpage.

Do you pay taxes on timber sales?

Yes, timber sales are taxable. Federal and most state tax codes treat stumpage sales as capital gains if you've held the timber over one year. Report the sale on Form 4797 and Schedule D, subtracting your adjusted timber basis from gross proceeds to calculate the gain. Long-term capital-gains rates are 0, 15, or 20 percent depending on income, plus 3.8 percent net investment income surtax above $200,000/$250,000 thresholds.

How are timber sales taxed?

Timber sales are taxed as long-term capital gains (0, 15, or 20 percent rates) if you own the land and timber, hold more than one year, and sell stumpage or elect Section 631(a) treatment. Gain equals sale proceeds minus adjusted timber basis. If you cut and sell logs yourself, income is ordinary (10 to 37 percent) plus self-employment tax. State taxation usually follows federal characterization, though a few states require elections to preserve capital-gains treatment.

How do I report timber sales on my taxes?

Use Form 4797 Part I to report stumpage sales as Section 1231 gains. Enter sale date, gross proceeds, and adjusted timber basis. The net gain flows to Schedule D as a long-term capital gain. Attach Form T (Forest Activities Schedule) if you deduct timber depletion or if gross sales exceed $5,000. For pay-as-cut contracts, report each payment separately on Form 4797, deducting the proportional basis for delivered volume.

How to report timber sales on tax return?

Report the sale on Form 4797 Part I (Sales of Business Property) as a Section 1231 transaction. Subtract your timber basis from gross proceeds to calculate the gain, which flows to Schedule D for long-term capital-gains treatment if you held over one year. Complete Form T (Forest Activities Schedule) to track timber basis and depletion by stand or block. Most tax software supports Form T but requires manual entry of timber inventory data.

Can I stay enrolled in a forest tax program if I sell timber?

Yes, selling timber usually satisfies the active-management requirement and does not trigger rollback, as long as you regenerate the stand and continue managing for timber production. Some states require you to file a notice of harvest with the county assessor within ten days of completion. Converting harvested land to pasture, homesites, or other non-forest use triggers rollback on the converted portion.

Does a timber sale affect my forest-use property tax assessment?

No, a timber sale does not increase your forest-use assessed value or property tax bill as long as you remain enrolled. The use-value tables reflect the present worth of future timber harvests; cutting the timber is expected and doesn't change your tax classification. After harvest, the stand returns to a lower stocking class temporarily, but the assessment remains tied to the program's use-value schedule, not the current volume on the ground.

What records do I need to keep for timber sales and tax reporting?

Keep the timber deed or stumpage contract, the forester's cruise report (volume estimates by species and product), the buyer's settlement statement showing gross proceeds and any deductions (haul, logging, slash disposal), and your timber basis appraisal or allocation from the original land purchase. File these with your annual tax return documentation. The IRS can audit timber depletion up to seven years back, so retain records longer than the standard three-year return window.

Do I need a forester to prepare my timber-sale tax return?

You don't need a forester to prepare the return, but you need a forester to cruise the timber (estimate volume and value) before the sale and to calculate your depletion unit (basis per unit of volume). Most tax preparers who handle Form 4797 and Form T can complete the return once you provide the cruise data and basis figures. Expect to pay the forester $300 to $800 for a cruise and sale administration on a 10- to 40-acre tract, and your tax preparer an extra $150 to $300 to handle the timber forms.

Sources

1. National Association of State Foresters, Forest Tax Programs Overview: Current-use programs reduce forest assessed value 50-90% in exchange for timber management, with rollback penalties on converted land ranging from 3-10 years of forgiven tax plus interest.
2. Forest Stewardship Council, State Forest Tax Incentive Programs: Forty-one states operate forest tax programs for private woodland owners.
3. USDA Forest Service, Forest Stewardship Program: Forest management plans document stand types, stocking, and scheduled practices; some states require professional forester certification above acreage thresholds.
4. New York State Department of Environmental Conservation, 480-a Forest Tax Law: New York's 480-a program requires 50-acre minimum, forester-approved plan, ten-year commitment, and allows public recreation or payment of higher fee; no rollback after initial term.
5. Wisconsin Department of Natural Resources, Division of Forestry: Wisconsin DNR Division of Forestry includes a Forest Management Bureau responsible for state forest lands and private landowner assistance, including Managed Forest Law administration.
6. Internal Revenue Service, Publication 544 (Sales and Other Dispositions of Assets): Timber held more than one year and sold as stumpage qualifies as Section 1231 capital asset; reported on Form 4797 Part I; Form T required for depletion and sales over $5,000; basis allocation and depletion calculations detailed.
7. Internal Revenue Service, Self-Employment Tax (Social Security and Medicare Taxes): Self-employment tax is 15.3% on net earnings up to $168,600 (2024) and 2.9% on earnings above that threshold; applies to Schedule C business income including log sales.
8. Internal Revenue Service, Topic No. 409 Capital Gains and Losses: 2024 long-term capital gains rates: 0% up to $47,025 single/$94,050 joint, 15% up to $518,900 single/$583,750 joint, 20% above; 3.8% NIIT applies above $200,000 single/$250,000 joint.
9. Internal Revenue Service, Like-Kind Exchanges Under IRC Section 1031: Post-2017 Tax Cuts and Jobs Act, Section 1031 like-kind exchanges apply only to real property; timber is personal property and does not qualify.
10. Wisconsin Department of Natural Resources, Managed Forest Law: Wisconsin MFL accepts 20-acre minimum, charges $2.42/acre annual acreage share for closed enrollment, 5% yield tax at harvest; no rollback after ten years.
11. California Department of Conservation, Williamson Act and TPZ: California Williamson Act and Timberland Production Zone require ten-year rolling contracts; rollback formulas are complex; better suited to commercial operations.