Black walnuts are ready to be harvested when the hull can be dented with your thumb. You can also wait until the nuts start falling from the tree. Either way it is important to hull walnuts soon after harvest. If not removed, the hull will leach a stain through the nut and into the meat. The stain will not only discolor the meats but also give them an off flavor.
There are several ways to hull walnuts including running them through a corn sheller or pounding each nut through a hole in a board. The hole must be big enough for the nut but smaller than the hull. An easier way is to run over the nuts with a lawn tractor. This will break the hull but not crack the nut.
Note that walnut hulls contain a dye that will stain concrete, your hands or about anything else it touches. Wear gloves as the stain is almost impossible to remove.
Wash hulled nuts by spreading them out on the lawn or on a wire mesh and spraying them with water or placing them in a tub of water. If you place them in a tub, the good nuts should sink. Those that float are probably not well-filled with kernels. Next, dry the nuts by spreading them in layers no more than three deep in a cool, shady and dry place such as a garage or tool shed. Drying normally takes two weeks. (Ward Upham)