II. Records and Examination Techniques

(1) Accounting and record keeping techniques will vary depending upon the

type(s) of timber activity in which the taxpayer is involved and may vary among companies involved in the same or similar activities. With smaller firms, the main emphasis may be geared toward the information needed for business management purposes. While two companies may be in the same business, their operational practices may vary widely based upon a variety of factors, including the types of equipment they have and the markets in which they operate.

(2) At the beginning of the examination of any timber-related taxpayer, it is

helpful to review the company's operations and how the accounting and record keeping apply to the operations. This will be useful in tailoring initial requests for information.

(3) Because of this potential variability, this section discusses some of the more

common practices.