We purchased a farm in 2016 - has a house on 130 acres, and planted pine as well. We bought it as a second home and hobby farm, but not to sell things for profit, at least not yet. We didn't LLC it or or anything. The money from the sale of pine was put back into the farm with a tractor purchase, but again the farm remains ours and privately owned. I have the breakdown of how much the land is worth, and the house from tax cards from the county. This year, we had the pine heavily thinned and will be receiving a 1099. The total was approx $19k received. We were paid by the ton of pine, as it sold for pulp only.
What is the cost basis for a ton of pine? I can't believe there is no standard cost basis, as we paid for the land which held a higher value with the pine on it and now has been heavily removed. There should be a simple "cost per ton for pine". We sold about 2000 tons of pine. I understand paying income tax (or capital gains?) but there has to be a cost basis based on what we paid for the land in 2016.
Thanks!
