Procurement

[Jesse]

Anyone deal w/ Christmas tree sales or loggers?

New client came in that sold timber and Christmas trees to several other businesses. Some of the businesses issued 1099S, some 1099MISC(nonemployee comp), and some nothing because they said their accountants said it was "procurement" and they did not have to issue any forms. This is new to me, wouldn't procurement then be a purchase of a timber and/or trees and a 1099S still issued?

I have loggers that I do 1099S for payments they make to others and would like to know if this is not necessary for some reason?

[TaxLadyinPA]

What you didn't say is if he is in the logging business or Christmas Tree farm business or did he just happen to have some timber and trees on his property that he sold.

I have 4 "logger" clients who are in the business to do the logging work, then sell the logs to the logging company. 3 of those are issued a 1099-misc for non-employee comp, 1 never has anything, he just says here is what I got paid. (his gross income is extremely small in comparison to the other 3). I just assumed the logging company just didn't bother sending him anything because he is a "Peon" {although the income is quite a bit over the $ 600 peon amount}

Then I have plenty of people who come in each year telling me they sold timber off their land. None of them have ever received a 1099-misc box 3 NOR 1099-S . And I've had a couple that have received over $ 100,000.

I finally stopped asking them if they received a 1099, I just write what they tell me now. (Some have had a check stub to show how much they received)

I only say all this to say to you that I feel you are right in sending these 1099-S.

I've had many say to me "Oh I sold some timber off last year but I didn't get anything so I guess I don't have to claim it" To which I reply ... and just what are you going to do when the timber company that purchased it from the logger who cut it or the logger gets audited and your name shows up.

They then claim the $ 10,000 or $ 20,000 that they received.

[Jesse]

He has been in the business for many years. I think procurement = purchase of timber and a 1099S should have been issued.

Do you do any section 631 elections?