Taxes...can someone familiar with working in NH answer a couple questions?

[NH-Murph]

Well, I have some fellows coming in next week to harvest 150,000-200,000 feet of pine from our property.  This has brought up a couple of questions tax wise that I was hoping someone could enlighten me about.
I know that here in NH, the intent to cut is filed with the town, and the approximate stumpage to be cut is recorded on the form.  I know taxes must be paid on the timber harvested.  At what point are the taxes collected?  Will they be my (the landowner) responsibility, the logger's or the mill's to pay?  Does it get reported as income on my federal return?  I just don't want to wind up with some tax default down the road because I didn't know someone else wanted a piece of the timber sale.
I have complete confidence and faith that the guys are going to do a great job and act in my best interest.  I know them personally for lots of years, and totally trust them, but we are just having a hard time communicating the fine details of my responsibility as a landowner.  Any light shed would be very much appreciated.  Thanks fellas!

[beenthere]

I believe that you are responsible for reporting your income when you make out your federal and state income taxes. Who paid you for your wood will also have to fill out their taxes and likely theirs will be listed as a deductible expense.  Or something like that. Whether they have to fill out a 1099 for checks written over $600, I don't know how that works in their business.

But you may want to get a tax attorney involved or your accountant early in the "game" of taxes to protect your interests. Or your forester would likely be good for advice. You may be able to protect some or a lot of that income.

Wish you the best..

[NH-Murph]

I'm thinking you are right.  I should consult a tax attorney before I go spendin' any of the revenue that comes out of this harvest.  I can't imagine it is overly complicated, but I really like to fully understand everything I do. 

[sprucebunny]

A tax preparer should be able to answer your questions.
Don't think you need a lawyer.

[loggah]

When you fill out the report of cut,the town will send you the timber tax bill,generally before a logging job the landowner and logger will agree who has to pay the timber tax.If the logger pays it the landowner usually receives less for his stumpage. In my area the town usually asseses the tax value of about 10% of the stumpage value. Don

[thecfarm]

You should see a CPA or someone like that. They know the laws and know how to file the taxes.

[Clark]

What about federal taxes?

Clark

[beenthere]

What about federal taxes?

Clark

We pay fed. taxes on income made.. they will want their share.

Good to know what deductions you can take against that income. And if one doesn't have a basis to set up their forest income against, those deductions may be hard to come up with. So I've heard. IRS has some pretty strict rules for forest timber income and hard to get around them if have neglected to do certain things along the lifetime of the forest.

[NH-Murph]

Thanks for all the suggestions.  Sounds like I need to make an appointment with a tax pro for next week to discuss the details.  I think I will be safe if I put 10% of the total value plus 25% of my cut away for local and federal taxes.  At least we don't have a state income tax here in the granite state.  They sure don't like to let one keep very much of their own money in their pocket these days.  Wouldn't hurt so much if someone with enough brain power to assemble a tricycle was calling the shots from the golf course...errr..white house.  Oh well... Ya can't fight city hall!

[Claybraker]

Here's the really tricky part- finding a pro that actually knows the rules regarding timber.

Case in point- when we were settling my Mom's estate, our attorney thought a broker's opinion would suffice for the land value. I insisted we get a full blown appraisal with a timber cruise. The attorney had someone she wanted to use based on a recommendation from someone she knew. it was cheaper to use her way. I wanted to use a Forester that had worked for us in the past. Words, sometimes heated, were exchanged. Fortunately everyone decided to be reasonable and do things my way.

It cost a little more upfront to get a full blown cruise, but we have an established cost basis.

Just because someone is a tax professional doesn't mean they know squat about timber.

[beenthere]

Well stated there Claybraker.

I've heard there is a very good tax forester writing informed articles out of Purdue Univ.

http://www.timbertax.org/taxpolicy/FS_Landowners_Tax_Guide.pdf

[NH-Murph]

Thanks for that link, Beenthere.  Looks like an informative read.  I'll get into it this evening.

Luckily, I do know of a tax pro that works with a lot of wood land owners, and is familiar with local and federal tax regs pertaining to timber sales.  This will most likely be a one time thing, as once this cut is complete, I just plan to harvest personal use firewood and saw logs for my own projects and buildings on the homestead.  Should I wind up with some larger tracts, I'll surely need to enlist help to develop the most economically sound and forest friendly management plan.

[Ron Scott]

Also see the FF Thread on Timber Sale Taxes; be sure to review Purdue;s and the USFS updated site and check with your State's extension service or conservation district for any landowner work shops on timber taxes.

https://forestryforum.com/board/index.php/topic,49713.msg1227021.html#msg1227021

[NH-Murph]

More good info.  Thanks!  I had a forester come by to walk the lot and flag the bounds yesterday.  Great guy, and had lots of good info on this subject as well as some fantastic info on species, a management plan, and planning this first harvest.  It's really cool walking a lot with someone that knows so much.  It was a very informative day, and I thoroughly enjoyed it. 

[Ron Scott]

Well done!