Income tax considerations for forest landowners in the south: A case study on tax planning

Abstract

Federal and state income taxes are calculated for hypothetical owners of nonindustrial private forests (NIPF) across 14 southern states to illustrate the effects of differential state tax treatment. The income tax liability is calculated in a year in which the timber owners harvest $200,000 worth of timber. After-tax land expectation values for a forest landowner are also calculated to illustrate the effects of tax planning on returns to a timber investment over time. Landowners who fail to take advantage of the many tax provisions can lose a third or more of their timberland revenues to income taxes.