Plan holds land as asset and sells timber

[jkharvey]

Does the sale of timber that is clear cut from land owned by the 401(k) plan present any issues with UBTI or anything else I might be missing?

[mbozek]

This is an interesting question. IRS pub 598 P 10 states that UBTI excludes gains from the sale or exchange of property other than cutting of timber that an organization ( 401(k) plan) has elected to consider as the sale or exchange of the timber. I don't know anything else. Plan needs to consult a tax professional to determine whether to file a form 990-T if more than $1000 in UBTI was received by the plan.

[masteff]

Try second paragraph here: http://www.aicpa.org/publications/taxadviser/2013/december/pages/clinic_story-06.aspxAlso further down where it addresses tax exempt entities. Hopefully you can determine that applies and that the plan can treat it as sale of capital asset rather than business income.

I merely googled "ubti timber" and that was one of the first results.