I'm looking for some insight to how my proceeds will be taxed.
I harvested timber from land I inherited over a year ago. Let's say I received $30k for the harvest. My timber basis (provided by registered forester) was approx. $28k. Therefore I would pay capital gain tax on approx. $2k I earned, correct?
Now let's say the tax assessed value was $55k when I received the property. Now that the timber is gone I assume the tax assessed value is decreased. So if I were to sell the property (minus timber) for say $35k, would there be a new "land basis" to determine by gains or loss? If I compared the sale to todays assessed value I would have a $20k loss. If there is a new land basis, say $30k, then I would have $5k in gains. Any insight would be greatly appreciated!
