Installment sales: How they relate to timberland

Abstract

If certain conditions are met, the gain recognized on the sale of real property-such as forest land and/or standing timber-can be spread over more than one year for income tax purposes. Such sales are referred to as "installment" or "deferred payment" contracts. An outright sale, on the other hand, triggers immediate recognition of all gain in the year of sale for income tax purposes. Although the 1967 Revenue Act repealed the installment sale method of reporting for dealers in real and personal property, it specifically exempted sales of property used or produced in the trade or business of farming as defined in Section 2032A of the Internal Revenue Code. This definition of farming includes timber growing.

Citation

Siegel, William C. 2004. Installment sales: How they relate to timberland. National Woodlands 27(1): 23-25