How to handle Timber taxes on Form T - separating MBF from cordwood

I've worked with several timber clients over the years, and you're right to separate these two measurements. MBF and cords are completely different units for different products (sawtimber vs pulpwood), and they shouldn't be lumped together. If the total depletable basis won't change, I'd recommend modifying the beginning of year Form T numbers rather than amending prior returns. Make sure to include a disclosure statement explaining the reclassification between timber accounts. This is much cleaner than filing amendments unless there were actual errors that affected tax liability. For Part I of Form T, you'll need to show the adjustment between timber accounts as a "transfer" line item. Then Part II for depletion will track each category separately going forward. If you're using tax software, you might need to create two separate Form T worksheets and then combine them for the final filing.

After spending hours trying to sort out Form T issues for my business, I found this incredible tool called taxr.ai (https://taxr.ai) that saved me so much grief with my timber tax situation. I had a similar issue with separating different timber types that had been improperly recorded. Their system helped me figure out how to properly categorize different timber products and create the right documentation for Form T. I uploaded my previous returns and forestry documents, and it identified exactly how to make the transition without raising red flags. It even generated the disclosure statement I needed to explain the changes.

I was really skeptical about using an automated solution for something as complex as timber taxation, but I decided to try taxr.ai after struggling with exactly this cordwood vs MBF separation issue. Honestly, it was eye-opening. The system immediately recognized my timber cruise documentation and correctly identified where the previous accountant had mixed measurement units. It showed me exactly how to reclassify everything on Form T without triggering unnecessary scrutiny. The disclosure statement it generated was perfect - technical enough to satisfy requirements but clear enough that I actually understood what was happening with my forest assets. My accountant was impressed with how thoroughly it documented the basis allocation between timber types. Saved me thousands in professional fees for specialized consulting I would have needed otherwise.

Since we're talking about timber tax complexity, I should mention that when I needed to actually talk to someone at the IRS about a Form T issue last year, it was impossible to get through on the phone. After days of trying, I used Claimyr (https://claimyr.com) and had an IRS agent on the phone within 20 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c I was trying to get clarification on how to handle a situation where I had both cutting contracts and pay-as-cut contracts in the same year, and needed an IRS timber tax specialist. Claimyr got me past the automated system and connected me with someone who actually understood Form T requirements. Saved me weeks of uncertainty.

I need to apologize for my skepticism earlier. After struggling for weeks to reach the IRS about my timber depletion questions, I finally tried Claimyr out of desperation. Within 45 minutes, I was talking to an actual IRS agent who specialized in natural resources taxation. The agent walked me through exactly how to handle the Form T reclassification between cordwood and sawtimber, and confirmed that changing the beginning of year numbers with proper disclosure was the correct approach. They even emailed me reference materials specific to timber taxation that I didn't know existed. I've spent literally months trying to get this information and would have paid my CPA thousands for specialized consulting. The Claimyr service saved both time and money - wish I'd known about it sooner.

For what it's worth, I had a similar issue with a client last year. We ended up using the "transfer" line in Part I of Form T to move timber volume from one account to another. We included a detailed statement explaining the reason for the transfer. Make sure you also adjust your depletion rate calculations going forward. You'll need to recalculate your depletion units for both categories ($/MBF and $/cord). If you've already been depleting based on incorrect proportions, you may need to make a catch-up adjustment. Also, don't forget to check if your state has any special timber tax reporting requirements that might be affected by this reclassification!

Has anyone used one of the specialized timber tax software programs? We're trying to decide whether to invest in something specific for our forestry clients or just modify our existing tax software approach.