The Income Treatment of Tree Stumps

From IRS publication 544

Tree stumps.   Tree stumps are a capital asset if they are on land held by an investor who is not in the timber or stump business as a buyer, seller, or processor. Gain from the sale of stumps sold in one lot by such a holder is taxed as a capital gain. However, tree stumps held by timber operators after the saleable standing timber was cut and removed from the land are considered by-products. Gain from the sale of stumps in lots or tonnage by such operators is taxed as ordinary income.

 

The point of this post – there is actual tax rules if you sell your tree stumps, is tree stump sales so common that the IRS made sure they included it in a publication?

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