“It is imperative that we safeguard our domestic supply of timber, provide economic security for our forest landowners, and maintain the viability of this critical aspect of our economy for the benefit of all Americans.”
Forest Landowners Association (FLA) CEO Scott Jones said, “The National Forest Product’s Week proclamation, clearly stats support for forest landowners who are the front line of the wood product economy which supports 2.4 million jobs, representing $109 billion in paychecks in the pockets American families, which are primarily in rural areas.. The forest supply chain economy all starts with the landowners’ ability to keep their land in production. FLA and our members look forward to continuing our work with the Administration and Members of Congress in supporting this critical industry; especially at a time when natural disasters are impacting privately owned forests across our country.”
Forestland destroyed by natural disasters is primarily owned by families who earn their income from growing forests for timber, use their property as an investment for retirement, send kids and grandchildren to college or to supplement their income. However, the current tax code law does not help but instead penalizes these landowners.
Federal tax laws include provisions that encourage reforestation on private forests, but one large penalty that impacts private forest owners, especially family forest owners, is the tax treatment of casualty losses following a natural disaster. In general, the deductible loss is limited to the basis or book value of the timber (any reforestation costs not yet deducted), less any timber salvage income.
Family forest owners usually deduct reforestation costs, management fees, taxes and other costs early in the timber rotation or annually and generally have a timber basis of zero dollars. This means if the timber is destroyed by wildfire, storms or another disaster, the landowner would be allowed no deduction. This is especially onerous for forestry investments, which take perhaps 30 years until final harvest in the South and easily twice that in the West.
“We call on Congress to pass the bi-partisan Forest Recovery Act (S. 1687 /H.R. 1444) which provides immediate relief to impacted forest landowners by amending the tax code to allow them to deduct the full market value of their timber prior to the loss caused by a federally declared disaster,” added Jones.
FLA is working with the legislation’s sponsors and Congressional leadership to move the bill this year, most likely during a lame duck session of Congress that addresses disaster relief.