The portion of the gain on the sale of timber that qualifies for § 1231 treatment is only the difference between the fair market value at the beginning of the tax year of harvest and the adjusted basis of the timber.

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This is true according to the IRS guidelines for how to treat the gain on the sale of timber for tax purposes. The gain that qualifies for § 1231 treatment is the difference between the fair market value at the beginning of the tax year of harvest and the adjusted basis of the timber.

The Portion of the Gain on the Sale of Timber