Capital Gains Determination
The next item to consider for a Section 631(a) transaction is whether the timber cut was for sale or use in a trade or business.
Only timber cut for sale or use in a trade or business of the taxpayer qualifies for Section 631(a) treatment. Timber cut by the taxpayer includes that which is personally cut by the taxpayer or which is cut by persons in the taxpayer's employ or under contract to the taxpayer. Timber cut for personal use does not qualify.
Was the timber cut for sale or use in a trade or business?