Forest Taxation and Estate Planning
Landowners need to be familiar with the tax implications and incentives associated with forestland ownership, especially related to reforestation expenses and timber harvest income. The federal government recognizes that growing timber is a long-term, often high-risk investment, and these tax incentives are offered to small private landowners to encourage them to grow timber and reforest their lands after timber harvest.
Landowners who are not aware of the reforestation tax credit and amortization provisions are missing out on one of the few long-term incentives available to them for growing trees. The publication contains an example of how these incentives work, and how landowners may claim them when filing federal income tax forms. It also contains a brief overview of capital gains tax treatment of timber income, and how to handle cost-share payments.
An excellent website created solely for the purposes of making landowners aware of forest taxation issues is the National Timber Tax Website. More detailed information and assistance should be obtained from a competent tax adviser familiar with timber tax treatments.