Capital Gains Determination
Based on your responses you sold timber in the form of "cut products", you elected to "treat the cutting as a sale", under the provisions of Section 631(a), you owned or had a contract right to cut the timber, the timber was "for sale or use in a trade or business", and the timber was held for more than one year.
Income from the sale of timber in a form other than stumpage is ordinary income unless you "elect" and "qualify" to treat the cutting as a sale under the provisions of Section 631(a) of the Code.
Your sale of "cut products" met all the requirements to be treated as capital gains under the provisions of Section 631(a).
The gain from this sale is reported in two parts. For a complete discussion of how to calculate and report the gain under this type of sale click here.