logs sold

[TAXMAN]

Not sure how to handle this. TP had some logs on the farm property. Rather than let the insects destroy them he sold them to the mill. Been cattle farming all his life. Received payment for the logs in 2015. Placed on Schedule d as a long term sale and a good deal of profit to which TP paid the tax. Now the Trucking Company finally sent the hauling bill to tp late 2016. TP paid the bill. What would be the best way to handle this bill. IT doesn't belong to the farm expenses. I am working on a 2016 return for TP. Don't think feasible to amend 2015 as statue closed that return.

[DANRVAN]

I have had similar cases where an expense related to a capital sale occurs in the following year.

I treat it as a capital loss in the following year and call it something like "Expense of Timber sale  in 2015".

Actually, I think that could be more appropriate than amending the prior year for a cash basis taxpayer, since the expense was paid in the current year.

Those are my thoughts, not saying it is completely correct.

 

 

[jklcpa]

I've always reported these costs exactly as Dan has described too, that is as long as they would have qualified as additional basis or expense of sale.  I'm not sure whether or not there is some authoritative source for this handling though, but this is how I've always seen it handled.

[TAXMAN]

Thanks. You pretty much matched my thoughts being a cash basis tp.