We sold timber from inherited property. There are no capital gains, but we need a Schedule D, Part 2 and Form 8949 according to a CPA we consulted.

[Hal_Al]

In TurboTax (TT), enter at:

- Federal Taxes tab (Personal in  Home & Business)

 - Wages & Income

-          “I’ll choose what I work on” Button

Scroll down to:

-Investment Income

   -Stocks, mutual funds, Bonds, Other (Timber is other)

. 

The sale of timber is considered a capital gain. Cost basis for timber is usually zero. Timber basis is not the cost of the property. If the decedent was carrying a cost basis, for the timber, then you would not have a zero basis, and would be allowed a step up to market value, which would result in no capital gain. For a discussion on Timber Basis, see https://www.extension.purdue.edu/extmedia/FNR/FNR_FAQ_2.pdf

[bb114]

We sold timber off property that was inherited in 2008. We still own the property. Do we need a cost basis for the timber? If so, how would we determine that?

Thanks,

[Hal_Al]

Q. Do we need a cost basis for the timber?

A. No.  Cost basis for timber is usually zero. Unless, you know, for a fact, that  the decedent was carrying a cost basis, for the timber. In that case,  you would not have a zero basis, and would be allowed a step up to market value, which would result in no capital gain. 

 Timber basis is not the cost of the property.  For a discussion on Timber Basis, see

 https://www.extension.purdue.edu/extmedia/FNR/FNR_FAQ_2.pdf

[bb114]

Thanks for clarifying.