Rev. Rul. 61-57, 1961-1 CB 243
REV-RUL, Elections to consider cutting as sale or exchange., Rev. Rul. 61-57, 1961-1 CB 243, (Jan. 01, 1961)
SECTION 631.--GAIN OR LOSS IN THE CASE OF TIMBER OR COAL
26 CFR 1.631-1: Elections to consider cutting as sale or exchange.
For purposes of section 631(a) of the Internal Revenue Code of 1954, the
holding period for timber held by a taxpayer under a cutting contract
carries over when the timber so held is acquired by outright purchase by the
same taxpayer.
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Advice has been requested whether, for purposes of section 631(a) of the Internal Revenue Code of 1954, the holding period for timber held by a taxpayer under a cutting contract carries over when the timber so held is acquired by outright purchase by the same taxpayer.
Section 631(a) of the Code grants an election to have the cutting of timber considered as a sale or exchange where the election is "by the taxpayer who owns, or has a contract right to cut such timber (providing he has owned such timber or has held such contract right for a period of more than 6 months before the beginning of such year)."
The requirements of the statute are met if the timber has been either owned or held by the taxpayer under a cutting contract for more than six months before the beginning of the taxable year. It is immaterial that in the instant case a change is made from one form of right to another, provided there is no interruption or cessation of the taxpayer's right to cut the timber involved for sale or for use in his trade or business. See also section 1.631-1(a)(4) of the Income Tax Regulations.
Accordingly, it is held that, for purposes of section 631(a) of the Code, the holding period for timber held by a taxpayer under a cutting contract carries over when such taxpayer makes an outright purchase of the timber so held.