Prague & Company, P.C. offers tax consulting and compliance services related to investments in timber, whether these investments be made as an individual or through various private equity entities.  Understanding the sometimes complex provisions within the Internal Revenue Code (IRC) relating to timber is essential in order to optimize the tax treatment of your income and deductions.

While some of our timber clients are individuals who own tracts of land and care for them as an investment with the intent of turning it into a trade or business, the majority of our timber clients invest primarily through private equity partnerships which own various types of investments:  directly-held mature forests, leased tracts from unrelated landowners, operating working tree farms, new tracts purchased in order to start plantations from the groundup, and any number of other types of timber investments. 

We can advise on the tax ramifications to not only the investment entities, but also to the eventual limited partners/investors.  Additionally, some of these entities own logging operations and other related businesses through corporate or other investment vehicles.  Many of our private equity partnership clients invest through Real Estate Investment Trusts (REITs) which hold domestic investments.

Prague & Company, P.C. has experience with various aspects of timber taxation under the Internal Revenue Code, including:

• Satisfying the requirements of IRC §631(b) in order to secure capital gain treatment;
• Understanding the workings of IRC §631(a), how to elect it, and what it means;
• Explaining the different tax treatments that result from owning your timber as an investment, trade or business, or as a hobby or personal use;
• Allocating your purchase price across merchantable trees, pre-merchantable trees, land, and equipment accounts;
• Why you may not want to use an LLC for investments in certain states . .  . . but why you might in others;
• How to calculate depletion, whether it's based on an entire property or specific species of tree;
• Lump-Sum versus Pay-As-Cut (stumpage);
• How to structure timber investments for non-profit investors and why electing §631(a) may not be a good idea;
• Why you might want to "check-the-box" for the entity owning your foreign timber investment . . . . . . .or why you might not;
• How the passive loss rules interact with your timber investment;
• The availability of reforestation tax incentives

We are experienced in the completion of required IRS forms, such as Form T, in order to report depletion, earnings from §631(b) contracts, §631(a) elections, and to maintain cost bases.  We also have experience with the multi-state taxation of timber investments.

Whether your needs are for us to provide general advice to you or your investors, or if you require more in-depth assistance in terms of structuring the investment based on your investor profile, maintaining depletion and cost allocation schedules, assisting with ensuring proper §631(b) treatment, or any number of other areas, Prague & Company, P.C. can help.

Our Private Equity & Limited Partnership Administration service can provide you and your timber investment with outsourced accounting and tax functions that allow you to focus on identifying investment opportunities and to run your top-level organization rather than dealing with the time consuming activties of day-to-day administrative operations and investor communications.

**The material contained on this web site is provided for information purposes only and is not intended to constitute legal or tax advice. The quality, timeliness, accuracy or completeness of any information at this web site, as well as its operation, is provided as is without representation, warranty or condition of any kind. All liability in respect of such information is disclaimed. Do not rely upon the information or apply it to your situation without first consulting Prague & Company, P.C. or other qualified professionals. Any reference or link to a third party is not an express or implied endorsement by Prague & Company, P.C. and Prague & Company, P.C. is not responsible for the materials on such linked third party web sites.