ORIGIN OF RESOLUTION:

Southern Group of State Foresters

ISSUE OF CONCERN:
Full Deduction of Casualty Losses to Timber During Natural Disasters

BACKGROUND:
Current law does not provide for adequate tax loss deductions for timber damaged due to natural disasters. Losses incurred by private landowners from natural disasters often discourage continued investment or reinvestment in forest management and will likely encourage conversion of forest land to other uses that provide high rates of return and offer tax sheltered protection. The cost basis of timber is generally less than its fair market value resulting in a deductible loss that is typically zero.

Because of the many public values that are derived from private forest lands, such as clean water, clean air, renewable resources and recreation, the general public should help share in the responsibility of encouraging restoration of these lands impacted by natural disasters. The risks involved with being a steward of private forest land, including wildfires, ice storms, insect and disease outbreaks, tornados, mudslides and hurricanes, can place an undue financial burden on private forest landowners, resulting in loss of forest land and associated public values.

The latest natural disasters impacting forest land – hurricanes Katrina and Rita – have the potential for negatively impacting the long-term landscape and greatly reducing public benefits derived from forested lands across the Gulf Coast region. By amending the Internal Revenue Code of 1986 to allow for the full deduction of casualty losses to timber due to natural disasters now and in the future, private forest landowners should be able to continue being stewards of the land while producing multiple public benefits.

RESOLUTION:
Congress should amend the Internal Revenue Code of 1986 to allow the full deduction of casualty losses to timber due to natural disasters.

NASF ACTION

( X ) Approved

DATE OF ACTION:
October 5, 2005