Types of Timberland Ownership
The table below should be used as a general reference only. However, it addresses a complex area of law, and competent legal counsel should be consulted in matters pertaining to these ownership structures.
(1) "General partners do not have liability limitations (i.e., personal assets are exposed to partnership obligations). However, "limited partners" in limited partnerships do have limitations on their personal liability.
(2) In addition, Limited Liability Companies can be designed to assign "income" and "losses" differently, to different members (owners). In other words, the allocation of income and loss does not have to follow the proportion of ownership.
(3) "Capital Gains" treatment for sales of land and timber is not available for C-Corporations. The revenue from those transactions would be taxed at corporate income tax rates.
(4) S-Corporation rules limit the number of shareholders to 100 or less, and prohibit some types of trusts from owning shares.
(5) Different flexibilities exist for each of the different entity structures - consult your legal advisor.
(6) informational.
(7) optional.
The author, David Watson, is a financial advisor specializing in working with rural landowners, sportsmen and conservation-minded families. D. A. Watson & Company, 17263 Wild Horse Creek Rd., Suite 202, Chesterfield, MO 63005, 636.230.3900, 888.230.3999
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The table below should be used as a general reference only. However, it addresses a complex area of law, and competent legal counsel should be consulted in matters pertaining to these ownership structures.
| Simplicity |
Entity Pays Income Taxes |
Limited Liability for Owners |
Revenues & Losses Flow to Owners |
Entity Files a Tax Return |
Capital Gains Treatment Available |
Annual Meetings & Record Keeping |
Limits on Number/ Types of Owners |
Estate / Succession Flexibility |
|
|---|---|---|---|---|---|---|---|---|---|
| Individual or Joint (Sole Proprietor) |
YES |
YES |
YES |
||||||
| Partnership (General or Limited) |
MAYBE1 |
YES |
YES6 |
YES |
YES |
YES |
|||
| Corporation (C-Corp) |
YES |
YES |
YES |
YES | YES |
||||
| Sub-Chapter S Corporation (S-Corp) |
YES |
YES |
YES6 |
YES |
YES |
YES4 |
YES |
||
| Limited Liability Company (LLC) |
YES7 |
YES |
YES2,7 |
YES6 |
YES |
YES |
YES |
(1) "General partners do not have liability limitations (i.e., personal assets are exposed to partnership obligations). However, "limited partners" in limited partnerships do have limitations on their personal liability.
(2) In addition, Limited Liability Companies can be designed to assign "income" and "losses" differently, to different members (owners). In other words, the allocation of income and loss does not have to follow the proportion of ownership.
(3) "Capital Gains" treatment for sales of land and timber is not available for C-Corporations. The revenue from those transactions would be taxed at corporate income tax rates.
(4) S-Corporation rules limit the number of shareholders to 100 or less, and prohibit some types of trusts from owning shares.
(5) Different flexibilities exist for each of the different entity structures - consult your legal advisor.
(6) informational.
(7) optional.
The author, David Watson, is a financial advisor specializing in working with rural landowners, sportsmen and conservation-minded families. D. A. Watson & Company, 17263 Wild Horse Creek Rd., Suite 202, Chesterfield, MO 63005, 636.230.3900, 888.230.3999
( Return to Succession Main Page )