Happy Christmas to All!

0 Flares Filament.io 0 Flares ×

PT will be taking a brief hiatus until Monday.  Wishing you all a happy and healthy holiday season.

One quick trip down memory lane, which ties in some interesting tax provisions.  When I was a teenager in central Pennsylvania, I spend summers (and sometimes Novembers and Decembers) working on my friend’s father’s Christmas tree farm.  The pay was lousy (sorry, Jimmy, no offense—wait, no way in h#@! he is reading this), and we worked in the rain, snow, sweltering heat, freezing cold, etc, but it was fun because it was me, my buddy, and a few other friends working together.  We would also go and trim and cut trees on other peoples’ land (with permission) who had trees planted around their primary residence and who were sort of in the business of tree farming.  You would hear rumblings that this was good tax planning (no one stating this had any tax background).

Out of curiosity this year, I looked up the tax treatment of Christmas tree farms (I am a lot of fun at holiday parties).  Because everything is on the internet, if you are interested, you can find out about it at timbertax.org.  There actually is some fairly good tax treatment.  Christmas tree farmers, unlike other farmers, are entitled to capital gains treatment on the sale of the trees if an appropriate election is made (Section 631).  A fairly substantial income tax savings.  And, Christmas tree farmers do not have to capitalize many expenses, and can instead take them immediately upon incurring them (Section 263A).  The election under Section 631 treats gains and losses as capital losses moving forward, but that election can be made any time.  Without really researching this area, it seems like it would be possible to generate ordinary losses for a number of years (until profitable—but passive loss rules do apply), and then convert to capital gain.   Again, huge caveat that I did not really research this.  Stealth Congressional favoritism for Christmas, or just good lobbying?  Probably lobbying, but apparently the Code is not waging a war on Christmas, or at least not Christmas tree farms.


Keith, his father, and his grandson during this holiday season.


Les and Valinda looking happy but chilly.


Oh, man, I have a lot of children.

Avatar photo About Stephen Olsen

Stephen J. Olsen’s practice includes tax planning and controversy matters for individuals, businesses and exempt entities for the law firm Gawthrop Greenwood, PC.



  1. Robert Nassau says

    Great stuff, as always. Keep up the good work in 2016. Happy Holidays to Team Procedurally Taxing.

  2. Deborah Percell says

    Love the fact that there are tax benefits for farmers…including those who plant, harvest and sell Christmas trees. I had the occasion to research this farming industry in the past and so happy that Congress is not the Grinch who steals Christmas for this industry.

  3. Of course the Code makes no mention of Christmas trees. There are a few provisions regarding “ornamental” trees. Are we sure they’re not just talking bonsai?

Comment Policy: While we all have years of experience as practitioners and attorneys, and while Keith and Les have taught for many years, we think our work is better when we generate input from others. That is one of the reasons we solicit guest posts (and also because of the time it takes to write what we think are high quality posts). Involvement from others makes our site better. That is why we have kept our site open to comments.

If you want to make a public comment, you must identify yourself (using your first and last name) and register by including your email. If you do not, we will remove your comment. In a comment, if you disagree with or intend to criticize someone (such as the poster, another commenter, a party or counsel in a case), you must do so in a respectful manner. We reserve the right to delete comments. If your comment is obnoxious, mean-spirited or violates our sense of decency we will remove the comment. While you have the right to say what you want, you do not have the right to say what you want on our blog.

Speak Your Mind