Schedule C or Schedule F

[Jesse]

Timber harvesting/logger/lumberjack - call it what you like is agriculture. Agriculture is usually Schedule F. Would you put it on Schedule C or Schedule F if:

1: Logger owns the land and harvests the timber from his own land?

2: Has pay to cut contracts to go to other land owned by another on a short term per job basis?

3: Has a long term contract to harvest timber over a span of several years?

[Nashville]

My take

Timber harvesting/logger/lumberjack - call it what you like is agriculture. Agriculture is usually Schedule F. Would you put it on Schedule C or Schedule F if:

1: Logger owns the land and harvests the timber from his own land?
Jesse, I would say this is Sch F. If he were not in the logging business and a harvest occurred only once or twice in 30 years, this could actually be a Sch D with preferential LTCG rates. But if this guy is a logger that probably wouldn't fly, just like capital gains is denied to a real estate professional.

2: Has pay to cut contracts to go to other land owned by another on a short term per job basis? This would be Schedule C, his normal "mainstream" business.

3: Has a long term contract to harvest timber over a span of several years? Also Schedule C stuff, however he should give the landowner a 1099-S in this situation

Jesse, this is my poorly researched answer, just drawing on experience.

[Jesse]

Thanks, I appreciate the opinions.

I have all three situations and I've done schedule C for all three. One of the loggers with mainly right to cut contracts (no land of their own) wants to hire employee's and said they were advised by a CPA that they should be reporting on a Schedule F and the employees would fall under the rules for Agricultural Employers.


I have found information regarding the section 631 capital gain treatment, but I'm still thinking it should be Schedule C, but I haven't been able to find anything to confirm or deny this.


If it should be a schedule F I think I can just transfer the depreciation items and such from the C, but I am not convinced it should be the schedule F.

[Gene V]

Timber harvesting/logger/lumberjack - call it what you like is agriculture. Agriculture is usually Schedule F. Would you put it on Schedule C or Schedule F if:

1: Logger owns the land and harvests the timber from his own land?

2: Has pay to cut contracts to go to other land owned by another on a short term per job basis?

3: Has a long term contract to harvest timber over a span of several years?

I would say probably schedule F--See Pub. 225 page 53 under Timber, also page 25
and page 47.

I have a farmer who has a Christmas tree farm. we put the expenses on schedule F and the sales on 4797(sec.631a) then to schedule D as long term capital gain.

[Gary2]

So when does Form T get into the picture?

[Jesse]

I would say probably schedule F--See Pub. 225 page 53 under Timber, also page 25
and page 47.

I have a farmer who has a Christmas tree farm. we put the expenses on schedule F and the sales on 4797(sec.631a) then to schedule D as long term capital gain.

So do you think there would be any problem in switching from a Schedule C to a Schedule F? Would I need to disclose anything on the return? Again, the bottom line profit/loss would be the same.

I'm not sure about the agricultural employees? I won't be doing the payroll, but I still would be interested to know if they do qualify.

[Jesse]

So when does Form T get into the picture?

To make the Section 631 election (w/out the Form T) you need to attach a statement to the return something like:
I elect to consider the cutting of timber as a sale or exchange in accordance with code section 631A of the internal revenue code. And then the computation of FMV of timber as of 01/01/xx.

The sale is then reported on form 4797 and then expensed as COGS. I did this several years ago for a Christmas tree farmer. My loggers - I can't say for sure why - I have just always reported on Schedule C.