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What to do with a 1099-S for a Sale of Timber?

Asked by: vpalmer 508 views YA Discussion

Hi. These folks sold some timber off their land and received a 1099 S. Isn’t there some depletion involved? There has to be some basis so the speak. Any help would be appreciated.

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  1. Wayne Z on Feb 12, 2013 Reply

    Probably not…..

    From IRS.gov:

    >>>You can figure timber depletion only by the cost method. Percentage depletion does not apply to timber. Base your depletion on your cost or other basis in the timber. Your cost does not include the cost of land or any amounts recoverable through depreciation.

    Depletion takes place when you cut standing timber. You can figure your depletion deduction when the quantity of cut timber is first accurately measured in the process of exploitation.

    Figuring cost depletion. To figure your cost depletion allowance, you multiply the number of timber units cut by your depletion unit.

    Timber units. When you acquire timber property, you must make an estimate of the quantity of marketable timber that exists on the property. You measure the timber using board feet, log scale, cords, or other units. If you later determine that you have more or less units of timber, you must adjust the original estimate.<<<<

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