Tree Farmer - September/October 2011 - (Page 26)

Who Must File Form 1099-S to the IRS and the Seller? By Timber Sales: The following are exempt from the 1099-S reporting: • Sales of less than a total of $600 or $10 for pay-as-cut timber sale (Tax Code Sec. 6050N (a)) are exempt from Form 1099-S reporting (Tax Regulation Sec.1.6045-4(c)(1)(iii)); • If the transferor (timber seller) is a corporation or a government unit, the sale is exempt from 1099-S reporting (Tax Regulation Sec. 1.6045-4(d)(1)); • High-volume sellers (sales of “at least 25 separate items of real estate”) are exempt from 1099-S reporting. taxing issues Wang LINDA Form 1099-S (“Proceeds from Real Estate Transactions”) is used for reporting the sale or exchange of real estate, including standing timber sales (Tax Regulation Sec. 1.6045-4 and Tax Code Sec. 6050N). In this column we will explore some of the commonly asked questions regarding this form, as well as examples of how to use the form. Example 1. Tim Cohen sold timber from his 44-acre woodland to a timber buyer for $5,500. This sale of standing timber is required to be reported to the IRS, on Form 1099-S. The timber buyer agreed to file this form with the IRS, plus furnish a copy to Tim as part of the sale contract. Example 2. Woodland property owner Sam Watson sold $12,000 worth of standing timber during the year. He received a 1099-S shortly after year’s end, which showed the gross proceeds of $12,000 paid to him. His tax preparer used this 1099-S to file his income tax return. The IRS also received this form, which helps them match against Sam’s tax return. How Does Form 1099-S Work? Form 1099-S works in the same way as the more common type of Form 1099-INT by which the bank reports to you and the IRS the interest it paid to you during the year. Form 1099-S shows the proceeds of a timber sale, which can be used by the payment recipient (the seller) to file his or her income taxes and is also used by the IRS to match the amount against the recipient’s tax return. It is also referred to as the “information return.” Is Form 1099-S Required for a Lump-Sum or Pay-as-Cut Standing Timber Sale (or Exchange)? Form 1099-S is required for both lump-sum standing timber sales or exchange (effective after May 28, 2009) and pay-as-cut standing timber sales. Linda Wang is a national timber tax specialist with the U.S. Department of Agriculture’s Forest Service, based in Washington, D.C. 26 International Year of Forests, 2011 Tree Farmer SEPTEMBER/OCTOBER 2011

Table of Contents for the Digital Edition of Tree Farmer - September/October 2011

Tree Farmer - September/October 2011
Contents
Cover Story
Inspectors Honored
Tree farmers Gather
A family of Tree farms
Sharing Your experiences
Taxing Issues
Wildlife Matters

Tree Farmer - September/October 2011