If you are planning to sell timber in the coming year, how you agree to sell it can dramatically impact the amount of taxes you owe.

"The quickest way to increase your net income from a timber sale is to claim the income as capital gains," suggested Marcella Szymanski, Extension specialist in forest economics in the University of Kentucky College of Agriculture.

The typical landowner harvesting 40 acres of timber of average value could easily see increased profits of up to $5,000.

"For income sales to qualify as capital gains you must have owned the timber for twelve months and you must release your interest in the timber when it is cut," said Szymanski.

There are two basic ways to "release you interest" in the timber. One alternative is to agree to sell your timber to a buyer for a lump sum. That usually means the buyer agrees to purchase all your timber for a certain amount.

"Another way to save tax costs is to release the interest by having the buyer and seller agree to sell for a specified amount per board foot, ton or cord," said Szymanski.

For more information on ways to determine and claim income from a timber sale, check with your local UK Cooperative Extension Service office and ask for the fact sheet from the department of forestry labeled FORFS 99-2.