Timber basis allocation with incomplete records

摘要

Forest owners are required to maintain complete and accurate accounting records of their timber transactions. This allows for proper allocation of basis, calculation of depletion allowance, and accurate calculation of tax due from timber sales. If accounting records are incomplete (basis allocation was not properly performed in the past), the forest owner and his or her accountant and forester will need to calculate the basis allocation that should have taken place in the past. The proper basis allocation and a methodology to allocate basis when records are incomplete are illustrated.