Timber Capital Gains--The Option Rule of Section 631(b)

Authors

Philip F. Postlewaite

Abstract

Section 631(b) of the Internal Revenue Code qualifies for capital gains treatment income derived from the disposition of timber by an owner who thereafter retains an economic interest in the timber. The Ninth Circuit Court of Appeals has interpreted the disposal requirement of this section as requiring a binding bilateral contractual arrangement between the parties in a timber cutting contract. This interpretation precludes timber cutting option agreements from qualifying for capital gains treatment under section 631(b). The author of this Article argues that the Ninth Circuits holding on tis point is in error and should be changed.

Recommended Citation

Philip F. Postlewaite, Timber Capital Gains--The Option Rule of Section 631(b), 29 Hastings L.J. 451 (1978).
Available at: https://repository.uclawsf.edu/hastings_law_journal/vol29/iss3/1