• Home
• Federal Income Taxes
• State Tax Laws
• Estate Planning
• Publications
• Professional Research
  • Master Index
  • Case Law
  • Revenue Rulings
  • Private Letter Rulings
  • Regulations
  • Internal Revenue Code
  • Public Laws
  • Research Process
• Tax Workshops/Education
• Tax Policy
• Links

Rev. Rul. 58-295, 1958-1 CB 249

REV-RUL, Election to consider cutting as sale or exchange., Rev. Rul. 58-295, 1958-1 CB 249, (Jan. 01, 1958)

SECTION 631.--GAIN OR LOSS IN THE CASE OF TIMBER OR COAL

26 CFR 1.631-1: Election to consider cutting as sale or exchange.
(Also Part II, Section 117(k), Regulations 118, Section 39.117(k)-1.)

To be entitled to the benefits of section 631(a) of the Internal Revenue Code of 1954 as the holder of a "contract right to cut," a taxpayer must have acquired under such contract a proprietary interest in the timber which he cuts. Compare Helga Carlen v. Commissioner, 220 Fed. (2d) 338. Whether a taxpayer has a proprietary interest in timber cut by him depends upon the substance of the grant to him as determined in the light of all of the pertinent facts. Where a taxpayer is granted a contractual right to cut and remove all or a described part of the merchantable timber on a particular tract of land, he has a proprietary interest in the timber cut by him if at the time of the cutting he has an unrestricted right to sell the logs or to use them in his trade or business. If the circumstances are such that the grantor in fact takes for his own use or for sale on his own account substantially all of the logs cut, whether or not in the exercise of a right in the form of an option to purchase, the taxpayer-grantee will not be deemed to have an unrestricted right to sell the logs or to use them in his trade or business.