OT: Tornado timber damage, I took a significant

[coach66]

Hit last night. Any of you guys have any experience with this and advice on salvage and the best way to handle from a tax perspective. I’ve been googling, it’s pretty depressing.

 

[RocketDawg]

Can you not just use what's already laying down, or is broken up too much? Or were the trees too small for timber use? Just asking because I know nothing about it.

Any insurance coverage?

 

[coach66]

Can’t insure timber, this is 30 year old pine timber

I was planning to cut in three years. They can salvage but the price will be poor. I think the tax loss implications are my only real hope of any relief.

 

[maroonmadman]

I had this happen to me back in 2011. My brother and I had inherited about 100 acres of pine timber that was 22 years old. A tornado went through it on New Years Eve, damn near right at the stroke of midnight. It took out about 25 acres. My timber guy was a member of a hunting club that has land adjacent to ours and was also hit by the storm. He was on scene that afternoon after the storm and I ran into him while I was surveying the damage on ours. Anyways we got a salvage job under way within a week and salvaged what we could but it was still a fraction of what it could have been. I'd say you'll get about 1/3 of what it would be worth on the stump so to speak. It sucks but you can write off some of the loss on your taxes. I have an accountant do that for me as I don't know much about that stuff. Good luck but be prepared to take a screwing. Mother Nature can be a ***** sometimes.

 

[xxxWalkTheDawg]

We went through the same thing in the 94 ice storm. Took a brutal hit. Beetles got in them afterwards. Had to cut em and get what we could.

If you have a neighbor in the same situation.. see if you can get a better price by cutting multiple stands. Waiting will not make it better. If it’s bent and broken... you are going to have to move. Whatever your closest mill is...ask who their procurement forester is and start there for a price: only thing is... they know you are going to have to cut.

 

[PhredPhantom]

It depends on the quality and size of the timber. maroonmadman is about right; we (family-owned land and timber LLC) lost about 2/3 of the value of the most beautiful stand of timber I've ever seen in my 33 years in the lumber and timber business. We hadn't harvested the timber in this beautiful tract because we weren't in an immediate need for the money and considered it to be like "money in the bank". We thought we could just wait a few years until we thought we needed it for something and harvest it then. We never thought that we'd have a storm like the one we had about 3 years ago to come through and wipe it out. The typical dbh (diameter breast high) of the trees was about 24"-36" or somewhere near that. We had other tracts near there with smaller trees that were more able to bend with the strong winds without snapping off or uprooting. This particular stand of timber was too tall and too large to do much bending and was mostly just snapped off like somebody went through it with a giant bush hog. We lost about 2/3 of the value of what it was worth if we had sold it before the storm got to it. After devastation like that you are left with a salvage job.

I don't remember being able to take a tax write-off after that because we had no exact way to determine what the timber would have been worth before. The timber had not been recently cruised. I don't think the IRS would have accepted guesses about what anyone thought it had once been worth at any particular point in time.

 

[stateu1]

Sorry but you're 17'd. All you can write off is basis(which you may have already written off at planting) and that will only be when you sell. You can't write off any increase in value. Sucks but it's the facts.

 

[stateu1]

Sorry but you're 17'd. All you can write off is basis(which you may have already written off at planting) and that will only be when you sell. You can't write off any increase in value. Sucks but it's the facts.

I'm a CPA feel free to PM for any further details.

 

[maroonmadman]

I should have mentioned that we had a thinning cut done on said timber about 4 years prior so we had a good idea what everything was worth plus my timber guy hunted right next door so he had put eyes on my timber recently so that helped me some. But as I said earlier, be prepared to take a screwing. While I was able to declare some loss on taxes it still wasn't a lot. My problem was the storm hit almost right at the stroke of midnight on New Years Eve. I had to dig up info and find out exactly when so we could determine what tax year to declare it on. Turns out the radar signature had the storm hitting my property at 12:03 AM so it went on the next years taxes. (2012) I still lost a significant amount of value so once again, prepare to be screwed.

 

[GreaterCowbell]

Sorry but you're 17'd. All you can write off is basis(which you may have already written off at planting) and that will only be when you sell. You can't write off any increase in value. Sucks but it's the facts.

Yep, You're loss is limited by your timber basis. Not to bad if it is recently inherited or purchased property, but if you held the property for a while your basis is likely low, and in turn the loss you are able to deduct.

 

[StillTbonewannabe]

Sorry but you're 17'd. All you can write off is basis(which you may have already written off at planting) and that will only be when you sell. You can't write off any increase in value. Sucks but it's the facts.

I agree, unless there is some type of special tax credit or write off that I don't know about. I am a General Accountant so I don't deal in depth with taxes.

 

[turkish]

Yep, You're loss is limited by your timber basis. Not to bad if it is recently inherited or purchased property, but if you held the property for a while your basis is likely low, and in turn the loss you are able to deduct.

This is true, and interesting. Suggests trading land could on some interval could help mitigate some of these types of losses. But I’m no CFP, CPA, or forester.

 

[stateu1]

This is true, and interesting. Suggests trading land could on some interval could help mitigate some of these types of losses. But I’m no CFP, CPA, or forester.

Nope. If you trade, you keep the basis of the original property. Trading simply defers the gain.

 

[turkish]

Nope. If you trade, you keep the basis of the original property. Trading simply defers the gain.

Interesting. Is selling, then buying more acreage elsewhere, considered “trading?”

Or is “trading” only a cash-neutral transaction?

 

[stateu1]

Interesting. Is selling, then buying more acreage elsewhere, considered “trading?”

Or is “trading” only a cash-neutral transaction?

No, selling and buying is not trading.
Trading isn't always cash neutral. You can always add more money or take money out. you would just pay tax on whatever cash you take.

 

[coach66]

The old master cut C66 a break. I surveyed the damage

This morning. The tornado took out two large power line transmission towers about a mile from my 60 acre tract. By the time it got to me it was only about one hundred yards wide. It followed a creak bottom on the lower third of my property that is younger hardwoods and I think it stayed out of my pines. I’m going to look closer this weekend, my forester was with me and estimated about a 10k loss. He said I could claim it as a casualty loss, I have plenty of basis. I appreciate the comments and concerns.

 

[The Usual Suspect]

Hit last night. Any of you guys have any experience with this and advice on salvage and the best way to handle from a tax perspective. I’ve been googling, it’s pretty depressing.

Have pine timber prices come up any? We had some mixed timber cut about 3 years ago, and could hardly find mills to take the pine. The guy cutting and hauling had to go to about 3 different places to sell it. The hardwood was the only thing that brought much money.

 

[kramer_192]

Nope... prices are still down.

 

[MarkDallas]

Saw this on Facebook. Maybe your Extension office can offer some advice.

https://m.facebook.com/story.php?story_fbid=2663822793633331&id=178180985530870

 

[soccerdad]

Cutting pine now in Claiborne County, prices down 10% from last year. Just lucky I have CRP coming in. To much planted in Ms all at the same and coming to market at once. Also 50% less mills than we had 10 years ago.

 

[stateu1]

This morning. The tornado took out two large power line transmission towers about a mile from my 60 acre tract. By the time it got to me it was only about one hundred yards wide. It followed a creak bottom on the lower third of my property that is younger hardwoods and I think it stayed out of my pines. I’m going to look closer this weekend, my forester was with me and estimated about a 10k loss. He said I could claim it as a casualty loss, I have plenty of basis. I appreciate the comments and concerns.

New tax law did away with casualty loss deduction.

 

[coach66]

More good news**

Nm

 

[coach66]

It looks like you can still do it but the rules are tougher, it has to be fed

disaster area.

Prior to the TCJA, you could claim itemized deductions for personal casualty losses that were not compensated by insurance, including losses from storms, theft, fire, or other incidences. Now, for tax years 2018 through 2025, the personal casualty and theft loss deduction is only available in the cases of natural disaster – and only for taxpayers with property in a federally declared disaster area.If you have been affected by a natural disaster in a federally declared disaster area, you can claim an itemized deduction for your personal casualty loss. These itemized deductions are subject to a $100 per casualty threshold, 10% of adjusted gross income limitation, and may be offset against personal casualty gains, if any.

They have declared Clarke County a Fed Disaster area https://mississippitoday.org/2019/0...-eligible-for-disaster-relief-fema-announces/



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