Willamette Industries, Inc. - Page 1

                                   118 T.C. No. 7                                     

                               UNITED STATES TAX COURT                                

                     WILLAMETTE INDUSTRIES, INC., Petitioner v.                       
                    COMMISSIONER OF INTERNAL REVENUE, Respondent                      

               Docket Nos. 20094-97, 7712-99.    Filed February 12, 2002.             

                    Some of P’s trees were partially damaged and P was                
               compelled to salvage the trees or they would have been lost            
               through decay, insects, etc.  The damage forced P to harvest           
               the trees before intended.  P had several alternatives for             
               salvage and chose to process the damaged trees into the end            
               products that it normally produces.  P, under sec. 1033,               
               I.R.C., seeks to defer only the portion of the gain                    
               attributable to the difference between P’s basis and the               
               fair market value of the damaged trees in place.  P does not           
               seek to defer the part of the gain attributable to the                 
               processing of the trees or manufacturing of the end                    
               products.  R determined that P is not entitled to defer any            
               gain because P’s ability to use the damaged trees in the               
               ordinary course of its business resulted in a conversion               
               that was not “involuntary” within the meaning of sec. 1033,            
               I.R.C.  P contends that it was not its intent to harvest the           
               trees in the taxable year under consideration and that the             
               damage caused an involuntary conversion within the meaning             
               of sec. 1033, I.R.C.                                                   

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