Capital Gains Determination
The last item that needs to be addressed is the holding period of the timber cut.
To qualify under Section 631(a) for capital gains treatment the timber must have been held for more than one year. The holding period under Section 631(a) runs from the date you acquired the timber or contract right to cut the timber to the date it is cut.
Timber is considered cut when, in the ordinary course of business, the quantity felled is first definitely determined. Loggers in almost all regions of the country follow a more-or-less standard procedure. In the west, logs may pass through a roadside scaling station licensed by the state to scale logs and provide a scale ticket acceptable for all commercial transactions. Otherwise, logs are usually scaled or weighed at the buying mill and/or at the log landing (where logs are piled in the woods) by the logger or hauler. IRS regulations specify that deviations from your standard practice to gain a tax advantage are not acceptable.
Was the timber cut held for more than one year?