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Sub-Section 612, Number of Units Cut During the Period

Internal Revenue Manual
Specialized Industry Guidelines - Timber
Sub-Section 612, Number of Units Cut During the Period
Last amended: 6-26-1978

Number of Units Cut During the Period

(1) The number of units cut during a particular period is based on the taxpayer's actual cutting records. In areas of the country where scaling bureaus are employed, their conclusions are used to determine quantities cut. A scaling bureau is an independent organization that measures the quantity and quality of logs for a fee. They adhere to certain standards that permit uniformity in scaling practices between various companies. Where these independent log scales are part of the taxpayer's cutting records, they can usually be relied upon by examiners.

(2) Many taxpayers scale their logs, using company log rules. The examiner should ascertain that the log rule used on the logs and the one used in estimating the quantity of timber are the same. The examiner should also determine whether the log scaling specifications are standard for the area. For instance, the taxpayer may be using net Scribner short log scale where net Scribner long log scale is standard. Such information will be useful in checking IRC 631(a) timber values and the remaining timber balances.

(3) It is important that the number of units cut be expressed on the same basis as the total number of units available. For instance, the total number of units expressed on a net Scribner short log scale and the units cut expressed on a net Scribner long log scale would produce a low depletion allowance.

(4) The problem of inconsistent measurements is probably more frequent with smaller mills. The quantity of timber cut may be determined by a scaling bureau log scale while the total quantity left standing is based on a lower or higher scale. Some small sawmills have no log scale records. They use lumber tally (green chain tally) for determining depletion. Board feet lumber tally may overrun log scale by 25% or more if the Doyle log rule is used for the timber estimate. On the other hand, if the International 1/4 " rule is used, lumber tally and log scale should be about equal. Overrun or underrun will vary according to the log rule used, the size and condition of the logs, the efficiency of the sawmill, and other factors.