Lehmann, Ullman and Barclay LLP Certified Public Accountants
Forestry Org Tax Letter
July 18, 2013

Dear Senator: 

In response to the letter from Senate Finance Committee Chairman Max Baucus and Ranking Member Orrin Hatch seeking input regarding specific tax expenditures in the Internal Revenue Code, we wish to highlight the importance of retaining timber tax provisions that grow the economy, make the tax code fairer and effectively promote other important policy objectives. 

Presently individuals, families and businesses that own and manage timber rely on three provisions in the tax code to help keep timber management economically viable: 

  • Deducting the costs of forest management, including prevention measures (fire, pest and disease), thinning, fertilization, interest, taxes, protection of wetlands and endangered species, and forestry activities. (Sections 162 and 263A(c)(5));
  • Receiving capital gains treatment for the harvest of timber or sales of standing trees. (Sections 1231(b)(2) and 631(a)&(b)); and
  • Deducting up to $10,000 of reforestation costs per stand, with the remainder amortized over 7 years. (Section 194). 

We respectfully request that you include these provisions in your highest priority recommendations to the Finance Committee as they meet the three criteria established by the Committee for inclusion in the code.

Growing the economy and jobs.  The provisions support over 2.4 million American jobs located primarily in rural communities across the country while providing the raw materials for key sectors of our economy, such as manufacturing and home building.  A recent study shows that eliminating these provisions could result in the loss of as much as $34 billion in annual sales and 140,000 U.S. jobs.

Making the tax code fairer.  By aligning the tax code with the economic realities of forest management, these provisions keep forest ownership economically viable.  They do so by allowing forest owners to deduct the substantial costs of forest management incurred each year while recognizing that taxable returns on these investments will not come for 20 to 80 years in the future.

Serving important policy objectives.  The tax code makes reforestation affordable, preventing forest conversion to other land uses and enabling forest owners to make investments which provide a broad array of public benefits, including protecting soil, creating wildlife habitat, maintaining water quality, providing open space for recreation and reducing carbon in the atmosphere.

The tax code works for trees.  Since the 1950’s, timber volume in the U.S. has increased by about 50% on approximately the same amount of forested acres. Two-thirds of that increase has occurred on private forestland.

As you develop proposals for provisions to include in the Code, we encourage you to consider that timber is a long-term investment, decisions to invest in timber were made decades ago, and that keeping the current tax treatment will ensure that working forests continue to make substantial contributions to our quality of life and the livelihoods of the hardworking people who own and manage them. 




National Alliance of Forest Owners

Alabama Forestry Association

Allegheny Hardwood Utilization Group

American Farm Bureau Federation©

American Forest Foundation

American Loggers Council

Arkansas Forestry Association

Associated Logging Contractors of Idaho

Associated Oregon Loggers, Inc.

Association of Consulting Foresters

California Forestry Association

Empire State Forest Products Association

Family Forest Foundation

Florida Forestry Association

Forest Landowners Association

Forest Landowners Tax Council

Forest Resources Association

Georgia Forestry Association

Great Lakes Timber Professionals Assn.

Hardwood Federation

Idaho Forest Owners Association

Kentucky Forest Industries Association

Louisiana Forestry Association

Louisiana-Pacific Corporation

Maine Forest Products Council

Michigan Forest Product Council

Minnesota Forest Industries

Minnesota Timber Producers Association

Mississippi Forestry Association

Missouri Forest Products Association

Montana Wood Products Association 

National Association of Conservation Districts

National Association of State Foresters

National Woodland Owners Association

New Hampshire Timberland Owners Assn.

North Carolina Association of Professional Loggers

North Carolina Forestry Association

Ohio Forestry Association

Oklahoma Forestry Association

Oregon Forest Industries Council

Oregon Small Woodlands Association

Oregon Women in Timber

Pennsylvania Forest Products Association

Society of American Foresters

South Carolina Forestry Association

Southeastern Lumber Manufacturers Assn.

Tennessee Forestry Association

Texas Forestry Association

Virginia Forest Products Association

Virginia Forestry Association

Washington Farm Forestry Association

Washington Forest Protection Association

Wisconsin Paper Council

Wisconsin Woodland Owners Association

West Virginia Forestry Association