Timber Sales

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Inherited property our family has held for 60+ years. Timber sales occurs on 4 different sections on a rotating cycle about every 5-10 years based on tree maturity. We received income from the sale of timber in 2025. I am the nominee and my sister received half the proceeds. I think I have figured out that this is considered "ordinary income." How on earth do I report this income on my taxes? I have completed a schedule 1, 1-A, D, and From 4797. It all seems so complicated for something that should be just additional income. Any help is appreciated.

DavidD66

Alumni - Intuit

According to the National Timber Tax Website

There are three basic ways in which income can be realized from the ownership of timber property:

You may receive ordinary income from rent for use of the property itself or from other services that the property produces such as hunting leases or payments from other recreational activities.

You may receive ordinary income from the sale of logs, lumber, or other products you produce from the timber itself. You may also have ordinary income from the sale of non-timber forest products such as medicinal plants, moss, and ferns.

You may receive income from the disposal of standing timber (stumpage), or by cutting the timber and electing to "treat the cutting as a sale".

It sounds like #3 would apply to you. In that case the income may qualify for capital gains treatment, and therefore be taxed at a lower rate than your ordinary income. To see if you qualify for capital gains treatment on the sale of your timber Click Here

To report the sale of your timber and treat as a capital gain you will enter the sale the same way you would a stock sale: