ESTABLISHING THE TAX BASIS FOR FORESTED LANDS
Ownership of forestland brings with it many pleasures. It also brings responsibilities. One of the inevitable responsibilities of land ownership is the payment of taxes.
Taxes may be inevitable, but they do not have to be overwhelming. One of the first steps to keeping your tax situation in control is to establish the BASIS in your forestland. The BASIS is simply your monetary investment in the property at the time it is purchased (or if it is inherited, the fair market value at the date of the original owner’s death). If your property has any timber, saplings, or seedlings on it then the BASIS for these trees must be delineated from the BASIS of your land.
If the value and quantity of your timber and young growth (pre-merchantable timber) is not known, Forestry Consultants, Inc. can work to determine this info for you. It is important this is accurate because the Internal Revenue Services does not readily allow changes in the original BASIS once it is established.
The time to most easily and accurately determine the BASIS of your forestland and timber is soon after you acquire it. If you did not do it at that time, Forestry Consultants can “grow your timber backwards” and use historical price information to re-create the forest you received many years ago.
Ask your Accountant what information is needed for your situation. Then contact Forestry Consultants, Inc. to inventory and value the trees on your forestland. Establish your BASIS for the future.