Financial Effects of the 2017 Tax Cuts and Jobs Act on Nonindustrial Private Forest Landowners: A Comparative Study for 10 Southern States of the United States

  • Authors: Baral, Srijana; Li, Yanshu; Mei, Bin
  • Publication Year: 2020
  • Publication Series: Scientific Journal (JRNL)
  • Source: Journal of Forestry
  • DOI: 10.1093/jofore/fvaa032

Abstract

Changes in tax codes applicable to timberland investments can affect tax treatment of timber revenues and expenses. The 2017 Tax Cuts and Jobs Act (TCJA) is regarded as the most expansive overhaul of tax codes in the United States since 1986; however, our understanding of its effects on timberland investments for family forest owners has yet to be explored. Using the discounted
cash-flow method, we estimated and compared effects of TCJA on land expectation value (LEV) and net tax from managing timberland for two classifications of median-income family forest owners in 10 southern states. Results showed a decrease in LEV and net tax for both material participants and investors, with a greater effect on landowners managing timberland as investments.
Thus, owning timberland can become less beneficial under the current law for median-income family forest landowners.

  • Citation: Baral, Srijana; Li, Yanshu; Mei, Bin. 2020. Financial Effects of the 2017 Tax Cuts and Jobs Act on Nonindustrial Private Forest Landowners: A Comparative Study for 10 Southern States of the United States. Journal of Forestry. 118(6): 584-597. https://doi.org/10.1093/jofore/fvaa032.
  • Keywords: Family forest, financial analysis, forest taxation, tax reform, timberland investment
  • Posted Date: August 2, 2021
  • Modified Date: August 2, 2021
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