An individual business taxpayer owns land on which he grows trees for logging.The land has been held more than 10 years and the trees growing on the land were planted eight years ago.Normally, the timber would be inventory for this taxpayer, but the tax law allows the taxpayer to elect to treat cutting the timber as the disposition of a § 1231 asset.

Question

Quizplus · Accepted Answer

This is true. Section 631(a) allows individual taxpayers to treat the cutting of timber held for the production of income as a sale or exchange of a § 1231 asset, which can result in capital gain treatment. The taxpayer must have held the land for more than 1 year and the timber for more than 6 years.

An Individual Business Taxpayer Owns Land on Which He Grows