It depends,
If you are not in the business of selling timber (as a general rule if you only occasionally sell timber (one or two sales every three or four years) you are not in the timber business) then this sale would be considered an investment and the sale of a capital asset.
(If you are in the business of selling Timber, you will report this income and related expenses as self-employment income on Schedule C)
To enter this
as a capital asset sale in TurboTax, log into your tax return and type "investment income (gains
and losses)" in the search bar then select "jump to investment
income (gains and losses)". TurboTax will guide you in entering this
information (see step 6 below)
Alternatively, To enter this
transaction in TurboTax Online or Desktop, please follow these steps:
- Once
you are in your tax return, click on the “Federal Taxes” tab
("Personal" tab in TurboTax Home & Business)
- Next click on “Wages &
Income” ("Personal Income" in TurboTax Home & Business)
- Next click on “I’ll choose
what I work on”
- Scroll down the screen until
to come to the section “Investment Income”
- Choose “Stocks, Mutual Funds,
Bonds, Other” and select “start’ (or “update” is you have already worked
on this section) (see Screenshot #1)
- The
first screen will ask if you sold any investments during the current tax
year (This includes any asset held as an investment
property so answer “yes” to this question)
- Since you did not receive a
1099-B, answer “no” to the 1099-B question
- Choose
type of investment you sold - select everything else
- Some basic information:
- Description
– Usually the address of the property sold
- Sales Proceeds – Your
net proceeds from the sale (usually reported on 1099-S)
- Date Sold – Date you sold the
property (on 1099-S)
- Tell us how you acquired the
property - purchased
- Enter the your cost basis- You
may be able to recover your cost basis in the timber sold, also referred to as
a depletion allowance. Click this website for more information about this topic
http://www.timbertax.org
- Date acquired (Just remember that the date acquired should be more than a year before the date sold in order for the sale to get long term capital gains treatment and the lower capital gains rate)
Click this link for further information about reporting
the sale of a capital asset
