Taxation / Estate Planning
The widespread effect of taxation on timberland management and reforestation decisions can never be overemphasized. The nature of forestry operations entails costly tree planting, half-a-generation of care and nurturing, and prolonged risk exposure from fire, storm, tree disease and insect damage. Yet the impact of taxing any gain from the eventual timber sales income can be very powerful: at capital gain tax rates, a landowner is required to pay 15% (2004) from the timber sales gains in taxes. Furthermore, timberland owners must annually pay another tax bill — property taxes. This tax can be a major expense without annual income to offset the cost.
Although tax laws provide special incentives for timber growers, many forest landowners are not aware of and are confused by the tax treatment on timber. Adding to this frustration is the fact that there are relatively few professional tax services offered in the timber tax area.
To serve the need and gap in timber tax assistance, Texas A&M Forest Service provides timber tax education and training, conducts timber tax research and assesses the implications of timber tax laws and policies. Timber tax assistance, including timber income tax, timberland property tax and timber-related sales tax, is essential to ensure the healthy and sustainable development of timber resources in the state.
2012 Texas Timber Tax Workshop Presentation Slides
I. Federal Timber Income Tax Issues – Dr. Deborah Gaddis Gunter
Dr. Gaddis Gunter is a retired Mississippi State University Extension Tax Specialist in Forestry. A former industrial forester, Debbie has been teaching landowners, tax preparers and foresters about forest taxation since 1999. She is the author of the Timber Tax Fundamentals Short Course and numerous tax articles and publications. She has lectured across the United States on the subject of forest taxation. Currently she is Visiting Assistant Professor at Southern Illinois University at Carbondale, Department of Forestry.
1. Getting Started: Timber Tax Fundamentals
It provides an excellent overview of fundamentals related to federal timber income tax, including IRS classification of ownership categories and recordkeeping. Your category of forest ownership has significant impacts on your timber tax treatment. The determining factors for your category depend on why you own the property, your use of it, and your activities on it.
2. Timber Basis
Timber basis is used to determine the taxable gain or loss when you sell timber or dispose of it involuntarily, such as by a casualty, theft, or condemnation.
3. Recovery of Expenses
Recoverable costs associated with timberland management include operating expenses, capital investment, and carrying costs.
4. Reforestation Expense and Taxes
This discusses tax treatment of your out-of-pocket expenses to establish a timber stand and cost-share payments for reforestation.
5. Timber Sales
This discusses how you treat and report the income from various types of timber sales.
6. Casualty Loss
If you suffered timber loss due to a casualty which happened in a sudden, unexpected, or unusual manner (such as a hurricane, fire, earthquake, storm, flood, etc.), you may recoup some of your loss as a casualty loss. This also discusses timber loss due to theft, trespass, or condemnation.
7. Estate Tax Basics
This provides an overview of basics related to estate tax and planning for forest owners. It also discusses some of the general estate tax strategies and strategies specifically for forest owners.
Timber basis is used to determine the taxable gain or loss when you sell timber or dispose of it involuntarily, such as by a casualty, theft, or condemnation.Recoverable costs associated with timberland management include operating expenses, capital investment, and carrying costs.This discusses tax treatment of your out-of-pocket expenses to establish a timber stand and cost-share payments for reforestation.This discusses how you treat and report the income from various types of timber sales.If you suffered timber loss due to a casualty which happened in a sudden, unexpected, or unusual manner (such as a hurricane, fire, earthquake, storm, flood, etc.), you may recoup some of your loss as a casualty loss. This also discusses timber loss due to theft, trespass, or condemnation.This provides an overview of basics related to estate tax and planning for forest owners. It also discusses some of the general estate tax strategies and strategies specifically for forest owners.
II. Texas Timberland Property Tax – Dr. Yanshu Li
Dr. Li is the Forest Economist of the Texas A&M Forest Service, College Station, TX.
Timberland Property Tax 2012
This discusses issues related to timberland property tax in Texas. It covers how the tax is determined, what kinds of state incentives are available for landowners, and updates on Texas tax laws related to timber management.
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