Protecting Arkansas’s forests, and those who enjoy them, from wildland fire and natural hazards while promoting rural and urban forest health, stewardship, development, and conservation for all generations of Arkansans

Tax Tips

Tax Tips for Forest Landowners

Revenue generated from a timber sale is taxable. Whether the taxes are computed as ordinary income or capital gains is determined by your motive for ownership.  IRS tax laws relating to timber taxation are complicated, and not all professional tax advisors understand these rules. Please keep the following in mind when preparing to file your taxes. 

  • Landowners should seek professional advice only from individuals with experience in timber tax issues. (Do this when you acquire timberland and before you have a timber sale.) 
  • Landowners should keep good records, even if it is simply invoices and receipts in an old shoe box. 
  • Landowners should have an established cost basis in their timber. Proper taxes can be calculated only if a basis is established. Sometimes this is difficult if your timberland was acquired long ago or inherited.
  • National Timber Tax Website
  • Tax Tips for Forest Landowners, 2021 (226.39 KB)