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</o:shapelayout></xml><![endif]--></head><body lang=EN-US link="#0563C1" vlink="#954F72"><div class=WordSection1><p class=MsoNormal><span style='font-family:"Arial","sans-serif";color:#44546A'>Jim,<o:p></o:p></span></p><p class=MsoNormal><span style='font-family:"Arial","sans-serif";color:#44546A'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-family:"Arial","sans-serif";color:#44546A'>The mill is paying for logs in the scenario you have below. So that means the timber is cut, the logs are removed, scaled and a price paid either per ton, per thousand board feet or cubic feet (depending upon the mill and type of logs delivered). That is not the same as buying standing timber. If you are getting paid based upon a delivered product to the mill, I believe you are selling logs which is personal property and would not allow for a 1031 for other real estate investment. The devil is in the details here. As an aside, within the timber industry, selling or buying cutting rights is not the same as selling or buying standing timber. I only know this having spent the first 20 years of my adult life buying timber and operating my family’s sawmill business; dealing with 1031 exchanges regularly. Having said that, I am not a facilitator and am not offering tax advice – just timber industry opinion. Good luck.<o:p></o:p></span></p><p class=MsoNormal><span style='font-family:"Arial","sans-serif";color:#44546A'><o:p> </o:p></span></p><div><p class=MsoNormal><span style='font-family:"Arial","sans-serif";color:#44546A'>Sincerely,<o:p></o:p></span></p><p class=MsoNormal><span style='font-family:"Arial","sans-serif";color:#44546A'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-family:"Arial","sans-serif";color:#44546A'>Tom<o:p></o:p></span></p><p class=MsoNormal><span style='font-family:"Arial","sans-serif";color:#44546A'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-family:"Arial","sans-serif";color:#44546A'>Thomas J. Westbrook<o:p></o:p></span></p><p class=MsoNormal><span style='font-family:"Arial","sans-serif";color:#44546A'>Attorney at Law<o:p></o:p></span></p><p class=MsoNormal><span style='font-family:"Arial","sans-serif";color:#44546A'><o:p> </o:p></span></p><p class=MsoNormal><span style='color:#44546A'><img width=170 height=67 id="Picture_x0020_3" src="cid:image001.jpg@01D07C22.FF4AAA40" alt="cid:image001.jpg@01CFC835.0D3988D0"></span><span style='font-family:"Arial","sans-serif";color:#44546A'><o:p></o:p></span></p><p class=MsoNormal><span style='font-family:"Arial","sans-serif";color:#44546A'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-family:"Arial","sans-serif";color:#44546A'>Rodgers, Kee & Card<o:p></o:p></span></p><p class=MsoNormal><span style='font-family:"Arial","sans-serif";color:#44546A'>324 West Bay Drive NW, Suite 201<o:p></o:p></span></p><p class=MsoNormal><span style='font-family:"Arial","sans-serif";color:#44546A'>Olympia, Washington 98502<o:p></o:p></span></p><p class=MsoNormal><span style='font-family:"Arial","sans-serif";color:#44546A'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-family:"Arial","sans-serif";color:#44546A'>Phone: 360-352-8311<o:p></o:p></span></p><p class=MsoNormal><span style='font-family:"Arial","sans-serif";color:#44546A'>Facsimile: 360-352-8501<o:p></o:p></span></p><p class=MsoNormal><span style='font-family:"Arial","sans-serif";color:#44546A'>Email: tjw@buddbaylaw.com<o:p></o:p></span></p><p class=MsoNormal><span style='font-family:"Arial","sans-serif";color:#44546A'>Skype: thomas.westbrook<o:p></o:p></span></p><p class=MsoNormal><span style='font-family:"Arial","sans-serif";color:#44546A'>www.buddbaylaw.com<o:p></o:p></span></p><p class=MsoNormal><span style='font-family:"Arial","sans-serif";color:#44546A'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-size:9.0pt;font-family:"Arial","sans-serif";color:#44546A'>The information contained in this email and attachment(s) are for the exclusive use of the addressee(s) and may contain private, privileged and/or confidential information. If you are not the addressee, you are strictly prohibited from reading, photocopying, distributing or otherwise using this email or its contents in any way. If you have received this communication in error, please notify us immediately by telephone at 360-352-8311 or by e-mail to <a href="mailto:reception@buddbaylaw.com"><span style='color:blue'>reception@buddbaylaw.com</span></a>, and destroy the original message from your electronic files.<o:p></o:p></span></p></div><p class=MsoNormal><span style='font-family:"Arial","sans-serif";color:#44546A'><o:p> </o:p></span></p><div><div style='border:none;border-top:solid #B5C4DF 1.0pt;padding:3.0pt 0in 0in 0in'><p class=MsoNormal><b><span style='font-size:10.0pt;font-family:"Tahoma","sans-serif"'>From:</span></b><span style='font-size:10.0pt;font-family:"Tahoma","sans-serif"'> wsbarp-bounces@lists.wsbarppt.com [mailto:wsbarp-bounces@lists.wsbarppt.com] <b>On Behalf Of </b>Jim Doran<br><b>Sent:</b> Monday, April 20, 2015 11:13 PM<br><b>To:</b> 'WSBA Real Property Listserv'<br><b>Subject:</b> Re: [WSBARP] 1031 Exchange and Like Kind Property<o:p></o:p></span></p></div></div><p class=MsoNormal><o:p> </o:p></p><p class=MsoNormal><span style='font-size:12.0pt;color:#1F497D'>Well, it looks like we are all getting an education here.<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:12.0pt;color:#1F497D'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-size:12.0pt;color:#1F497D'>I’m not sure if the language is confusing things. There is a contract to purchase the trees. That contract exists while the trees are still standing. The trees get cut and hauled to the mill and the mill pays for the amount of timber (and species that shows up.<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:12.0pt;color:#1F497D'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-size:12.0pt;color:#1F497D'>“Cutting rights”? We are not selling the “cutting rights”. We are selling the trees and we won’t cut them until we have a sale of the trees but not the land. We would like to take the receipts from the sale of the trees and reinvest the money into an investment property, real estate.<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:12.0pt;color:#1F497D'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-size:12.0pt;color:#1F497D'>This is getting muddier by the moment. <o:p></o:p></span></p><p class=MsoNormal><span style='font-size:12.0pt;color:#1F497D'><o:p> </o:p></span></p><div><p class=MsoNormal><span style='font-size:12.0pt;color:#1F497D'>James R. Doran<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:12.0pt;color:#1F497D'>Attorney at Law<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.0pt;color:#1F497D'>100 E. Pine Street – Suite 205<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.0pt;color:#1F497D'>Bellingham, WA 98225<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.0pt;color:#1F497D'>(360)393-9506<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.0pt;color:#1F497D'><a href="mailto:jim@doranlegal.com">jim@doranlegal.com</a><o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.0pt;color:#1F497D'><a href="http://www.doranlegal.com">www.doranlegal.com</a><o:p></o:p></span></p></div><p class=MsoNormal><span style='font-size:12.0pt;color:#1F497D'><o:p> </o:p></span></p><div><div style='border:none;border-top:solid #E1E1E1 1.0pt;padding:3.0pt 0in 0in 0in'><p class=MsoNormal><b>From:</b> <a href="mailto:wsbarp-bounces@lists.wsbarppt.com">wsbarp-bounces@lists.wsbarppt.com</a> [<a href="mailto:wsbarp-bounces@lists.wsbarppt.com">mailto:wsbarp-bounces@lists.wsbarppt.com</a>] <b>On Behalf Of </b>John Teutsch<br><b>Sent:</b> Monday, April 20, 2015 7:23 PM<br><b>To:</b> WSBA Real Property Listserv<br><b>Cc:</b> Lloyd McGee; Mary Foster (<a href="mailto:mfoster@1031services.com">mfoster@1031services.com</a>)<br><b>Subject:</b> Re: [WSBARP] 1031 Exchange and Like Kind Property<o:p></o:p></p></div></div><p class=MsoNormal><o:p> </o:p></p><p class=MsoNormal>I sent this question to Mary Foster, who authored the treatise, Tax-Free Exchanges. Her answer follows:<o:p></o:p></p><p class=MsoNormal><o:p> </o:p></p><p class=MsoNormal>Cutting rights are not like-kind to a fee interest in real estate if they are limited in duration or quantity. Perhaps, a perpetual right to cut timber would possibly be considered like-kind to real estate. The IRS position, supported by case law, is that cutting rights are personal property. See Oregon Lumber Co. v. Comm. of Revenue. This is true even if cutting rights are considered real property under Washington state law, because federal tax law governs. See IRS Tech. Advice memo 9525002.<o:p></o:p></p><p class=MsoNormal><o:p> </o:p></p><p class=MsoNormal><span style='color:#1F497D'><o:p> </o:p></span></p><p class=MsoNormal><span style='color:#1F497D'><o:p> </o:p></span></p><div><p class=MsoNormal><b><span style='font-size:10.0pt;font-family:"Arial","sans-serif";color:#002060'>John Teutsch<o:p></o:p></span></b></p><p class=MsoNormal><b><span style='font-size:10.0pt;font-family:"Arial","sans-serif";color:#002060'>Teutsch Partners, LLC<o:p></o:p></span></b></p><p class=MsoNormal><span style='font-size:10.0pt;font-family:"Arial","sans-serif";color:#002060'>Cell (206) 920-8888</span><span style='color:#1F497D'><o:p></o:p></span></p></div><p class=MsoNormal><span style='color:#1F497D'><o:p> </o:p></span></p><div><div style='border:none;border-top:solid #B5C4DF 1.0pt;padding:3.0pt 0in 0in 0in'><p class=MsoNormal><b><span style='font-size:10.0pt;font-family:"Tahoma","sans-serif"'>From:</span></b><span style='font-size:10.0pt;font-family:"Tahoma","sans-serif"'> <a href="mailto:wsbarp-bounces@lists.wsbarppt.com">wsbarp-bounces@lists.wsbarppt.com</a> [<a href="mailto:wsbarp-bounces@lists.wsbarppt.com">mailto:wsbarp-bounces@lists.wsbarppt.com</a>] <b>On Behalf Of </b>Jim Doran<br><b>Sent:</b> Monday, April 20, 2015 6:43 PM<br><b>To:</b> 'WSBA Real Property Listserv'<br><b>Cc:</b> Lloyd McGee<br><b>Subject:</b> Re: [WSBARP] 1031 Exchange and Like Kind Property<o:p></o:p></span></p></div></div><p class=MsoNormal><o:p> </o:p></p><p class=MsoNormal><span style='font-size:12.0pt;color:#1F497D'>Ok. The timber gets cut under a contract to buy it, so I guess that means it is sold as real estate, right. <o:p></o:p></span></p><p class=MsoNormal><span style='font-size:12.0pt;color:#1F497D'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-size:12.0pt;color:#1F497D'>Who do you use as the 1031 faciltator?<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:12.0pt;color:#1F497D'><o:p> </o:p></span></p><div><p class=MsoNormal><span style='font-size:12.0pt;color:#1F497D'>James R. Doran<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:12.0pt;color:#1F497D'>Attorney at Law<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.0pt;color:#1F497D'>100 E. Pine Street – Suite 205<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.0pt;color:#1F497D'>Bellingham, WA 98225<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.0pt;color:#1F497D'>(360)393-9506<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.0pt;color:#1F497D'><a href="mailto:jim@doranlegal.com">jim@doranlegal.com</a><o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.0pt;color:#1F497D'><a href="http://www.doranlegal.com">www.doranlegal.com</a><o:p></o:p></span></p></div><p class=MsoNormal><span style='font-size:12.0pt;color:#1F497D'><o:p> </o:p></span></p><div><div style='border:none;border-top:solid #E1E1E1 1.0pt;padding:3.0pt 0in 0in 0in'><p class=MsoNormal><b>From:</b> <a href="mailto:wsbarp-bounces@lists.wsbarppt.com">wsbarp-bounces@lists.wsbarppt.com</a> [<a href="mailto:wsbarp-bounces@lists.wsbarppt.com">mailto:wsbarp-bounces@lists.wsbarppt.com</a>] <b>On Behalf Of </b>Bryce Dille<br><b>Sent:</b> Monday, April 20, 2015 5:21 PM<br><b>To:</b> WSBA Real Property Listserv<br><b>Subject:</b> Re: [WSBARP] 1031 Exchange and Like Kind Property<o:p></o:p></p></div></div><p class=MsoNormal><o:p> </o:p></p><p class=MsoNormal><span style='color:#1F497D'>The sale of standing timber is considered as real estate see WAC 458-61A-113 since it is subject to the real estate excise tax. I have done several of these types of 1031s and never questioned as long as timber is still in the ground when sold.<o:p></o:p></span></p><p class=MsoNormal><span style='color:#1F497D'><o:p> </o:p></span></p><div><p class=MsoNormal><span style='font-size:10.0pt;font-family:"Arial","sans-serif";color:#1F497D'>This transmission contains confidential attorney-client communications and may not be disclosed to any person but the intended recipient(s). If this matter is transmitted to you in error, please notify the sender immediately.<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:12.0pt;font-family:"Times New Roman","serif";color:#1F497D'> <o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.0pt;font-family:"Arial","sans-serif";color:#1F497D'>Bryce H. Dille <o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.0pt;font-family:"Arial","sans-serif";color:#1F497D'>Campbell, Dille, Barnett & Smith, PLLC<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.0pt;font-family:"Arial","sans-serif";color:#1F497D'>P.O. Box 488<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.0pt;font-family:"Arial","sans-serif";color:#1F497D'>Puyallup, WA 98371<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.0pt;font-family:"Arial","sans-serif";color:#1F497D'>Voice: 253.848.3513<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.0pt;font-family:"Arial","sans-serif";color:#1F497D'>Fax: 253.845.4941<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.0pt;font-family:"Arial","sans-serif";color:#1F497D'><a href="mailto:bryced@cdb-law.com"><span style='color:blue'>bryced@cdb-law.com</span></a><o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.0pt;font-family:"Arial","sans-serif";color:#1F497D'> <o:p></o:p></span></p><p class=MsoNormal><span style='color:#1F497D'>Business Entity Creation and Management<o:p></o:p></span></p><p class=MsoNormal><span style='color:#1F497D'>Business, Government and Tax Law<o:p></o:p></span></p><p class=MsoNormal><span style='color:#1F497D'>Real Estate and Land Use, Residential, Commercial and Condominium Development<o:p></o:p></span></p><p class=MsoNormal><span style='color:#1F497D'>Real Estate and Commercial Transactions & Closings, Including Performing Services as IRS Section 1031 Exchange Facilitator<o:p></o:p></span></p><p class=MsoNormal><span style='color:#1F497D'>Estate Planning, including Wills and Trusts, and Probate Administration<o:p></o:p></span></p><p class=MsoNormal><span style='color:#1F497D'>Representation Homeowners/Condominium Association Real Estate Developments<o:p></o:p></span></p><p class=MsoNormal><span style='color:#1F497D'>Real Property Foreclosures and Forfeitures<o:p></o:p></span></p></div><p class=MsoNormal><span style='color:#1F497D'><o:p> </o:p></span></p><div><div style='border:none;border-top:solid #B5C4DF 1.0pt;padding:3.0pt 0in 0in 0in'><p class=MsoNormal><b><span style='font-size:10.0pt;font-family:"Tahoma","sans-serif"'>From:</span></b><span style='font-size:10.0pt;font-family:"Tahoma","sans-serif"'> <a href="mailto:wsbarp-bounces@lists.wsbarppt.com">wsbarp-bounces@lists.wsbarppt.com</a> [<a href="mailto:wsbarp-bounces@lists.wsbarppt.com">mailto:wsbarp-bounces@lists.wsbarppt.com</a>] <b>On Behalf Of </b>Jim Doran<br><b>Sent:</b> Monday, April 20, 2015 4:10 PM<br><b>To:</b> 'WSBA Real Property Listserv'<br><b>Subject:</b> [WSBARP] 1031 Exchange and Like Kind Property<o:p></o:p></span></p></div></div><p class=MsoNormal><o:p> </o:p></p><p class=MsoNormal><span style='font-size:12.0pt'>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?<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:12.0pt'><o:p> </o:p></span></p><p class=MsoNormal>“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.” <span style='font-size:12.0pt'> <o:p></o:p></span></p><p class=MsoNormal><span style='font-size:12.0pt'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-size:12.0pt'>James R. Doran<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:12.0pt'>Attorney at Law<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.0pt'>100 E. Pine Street – Suite 205<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.0pt'>Bellingham, WA 98225<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.0pt'>(360)393-9506<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.0pt'><a href="mailto:jim@doranlegal.com">jim@doranlegal.com</a><o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.0pt'><a href="http://www.doranlegal.com">www.doranlegal.com</a><o:p></o:p></span></p><p class=MsoNormal><o:p> </o:p></p></div></body></html>