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LumpSum Timber Sale and 1099 Reporting

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'Outright timber sale' Seller is paid a pre-set, fixed amount for the sale or exchange of standing ... income from lump-sum or outright sales of timber. ... – PowerPoint PPT presentation

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Title: LumpSum Timber Sale and 1099 Reporting


1
Lump-Sum Timber Sale and 1099 Reporting
  • Proposed IRS Regulation

2
Dr. Linda Wang
  • National Forest Tax Specialist
  • USDA Forest Service
  • lwang_at_fs.fed.us

3
Two Timber Sale Methods
  • Lump-sum sale
  • Outright timber sale
  • Seller is paid a pre-set, fixed amount for the
    sale or exchange of standing timber
  • The total dollar amount received by the seller is
    independent of the amount of timber actually cut

4
Pay-as-Cut Timber Sale
  • Seller is paid based on the amount of timber
    actually cut
  • Seller continue to bear risk of loss until timber
    is cut
  • Sale agreement typically specifies unit price for
    the timber removed

5
Current Reporting Requirement
  • Pay-as-cut timber sale is required to be reported
    to the IRS (IRC 6050N)
  • The form that is used for this reporting is Form
    1099-S

6
Current Reporting Requirement
  • Lump-sum timber sale is not subject to Form 1099
    reporting
  • (Section 1.6045-4 (c) (2) (i))

7
Proposed IRS Regulation
  • Under the proposed rule, lump-sum timber sale or
    exchange will be required to be reported to the
    IRS

Source REG-155669-04
Amendment to 1.6045-4 (b) (2)
8
Lump-Sum Timber SalesProposed IRS Regulation
  • Date Proposed November 29, 2007
  • Comment deadline by Feb. 27, 2008
  • Effective date after the final regulations
    adopted in the Federal Register

Source REG-155669-04
9
Rationale for Proposed Rule
  • The IRS has found that some taxpayers are
    underreporting income from lump-sum or outright
    sales of timber.
  • Disparate treatment of lump-sum and pay-as-cut
    timber transactions is not sound tax
    administration.

Source REG-155669-04
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