[WSBARP] 1031 Exchange and Like Kind Property

Mon Apr 20 22:38:11 PDT 2015

A contract for the sale of standing timber is personal property.

WAC 458-61A-113

 <http://app.leg.wa.gov/WAC/registerfiling.aspx?cite=458-61A-113> Agency
filings affecting this section 

Timber, standing.

(1) The real estate excise tax applies to the sale of timber if the
ownership of the timber is transferred while the timber is standing. The tax
applies to the sale of standing timber whether the sale is accomplished by
deed or by contract. See also chapters
<http://app.leg.wa.gov/RCW/default.aspx?cite=84.33> 84.33 RCW and
<http://app.leg.wa.gov/WAC/default.aspx?cite=458-40> 458-40 WAC for specific
regulations and rules regarding the taxation of timber and forest land.

(2) The grantor's irrevocable agreement to sell timber and pass ownership to
it as it is cut is a taxable transaction if the total amount of the sale is
specified in the original contract.

(3) A contract to transfer the ownership of timber after it has been cut and
removed from land by the grantee is not a taxable transaction.

(4) A contract between a timber owner and a harvester when the harvester
provides the service of cutting the timber and transporting it to the mill
is not subject to the real estate excise tax if the timber owner retains
ownership of the timber until it is delivered to and purchased by the mill.

[Statutory Authority: RCW
<http://app.leg.wa.gov/RCW/default.aspx?cite=82.32.300> 82.32.300,
82.01.060(2), and 82.45.150. WSR 05-23-093, § 458-61A-113, filed 11/16/05,
effective 12/17/05.]

  U.C.C. Article 9 applies to "any transaction (regardless of its form)
which is intended to create a security interest in personal property or
fixtures including goods ..." RCW 62A.9-102(1)(a).

"Goods" includes all things which are movable at the time the security
interest attaches or which are fixtures (RCW 62A.9-313) ... "Goods" also
includes standing timber which is to be cut and removed under a conveyance
or contract for sale, 
.

It is quite clear that the proceeds from the sale of personal property is
itself personal property and not “like kind” in a 1031 exchange for real
property.

Howard Herman

From: wsbarp-bounces at lists.wsbarppt.com
[mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of Koons, Warren
Sent: Monday, April 20, 2015 7:14 PM
To: WSBA Real Property Listserv
Cc: WSBA Real Property Listserv; Lloyd McGee
Subject: Re: [WSBARP] 1031 Exchange and Like Kind Property

Yes - if you are buying the standing timber via a timber deed and harvest
after the deed transfers title -- usually buyer has defined period of time
to remove the timber. 1031 Services, Inc. in Bellevue is an excellent
qualified intermediary. Warren Koons

Sent from my iPhone

On Apr 20, 2015, at 6:47 PM, "Jim Doran" <jim at doranlegal.com
<mailto:jim at doranlegal.com> > wrote:

In your opinion if there is a purchase agreement “before” the trees are cut,
then they are real property.  Right?

James R. Doran

Attorney at Law

100 E. Pine Street – Suite 205

Bellingham, WA 98225

(360)393-9506

jim at doranlegal.com <mailto:jim at doranlegal.com> 

www.doranlegal.com <http://www.doranlegal.com> 

From: wsbarp-bounces at lists.wsbarppt.com
<mailto:wsbarp-bounces at lists.wsbarppt.com>
[mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of Tom J. Westbrook
Sent: Monday, April 20, 2015 5:54 PM
To: WSBA Real Property Listserv
Subject: Re: [WSBARP] 1031 Exchange and Like Kind Property

Timber (trees) is part of the real estate. When severed, timber or trees
become logs. Logs are personal property. The sale of logs cannot be part of
a 1031 exchange – while the sale of trees on land can be part of a 1031. You
just need to get the vernacular correct.

Sincerely,

Tom

Thomas J. Westbrook

Attorney at Law

<image001.jpg>

Rodgers, Kee & Card, P.S.

324 West Bay Drive NW, Suite 201

Olympia, Washington  98502

Phone: 360-352-8311

Facsimile: 360-352-8501

Email: tjw at buddbaylaw.com <mailto:tjw at buddbaylaw.com> 

Skype: thomas.westbrook

www.buddbaylaw.com <http://www.buddbaylaw.com> 

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From: wsbarp-bounces at lists.wsbarppt.com
<mailto:wsbarp-bounces at lists.wsbarppt.com>
[mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of Jim Doran
Sent: Monday, April 20, 2015 4:10 PM
To: 'WSBA Real Property Listserv'
Subject: [WSBARP] 1031 Exchange and Like Kind Property

Here is the line from the IRS information website that I think clearly
denies the use of a 1031 Exchange to a the situation where the owner of real
property with timber on it sells the timber and then wants to use the
proceeds from the timber sale to buy more real estate.  The trees are
personal property, are they not?

“Real property and personal property can both qualify as exchange properties
under Section 1031; but real property can never be like-kind to personal
property.”   

James R. Doran

Attorney at Law

100 E. Pine Street – Suite 205

Bellingham, WA 98225

(360)393-9506

jim at doranlegal.com <mailto:jim at doranlegal.com> 

www.doranlegal.com <http://www.doranlegal.com> 

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