The Impact of Federal and State Income Tax Liabilities on Timber Investments in the West

Authors: Smith, Nathan R.; Bailey, Phillip; Haney, Harry; Salbador, Debra; Greene, John

Source: Western Journal of Applied Forestry, Volume 23, Number 2, April 2008 , pp. 121-126(6)

Publisher: Society of American Foresters

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Abstract:

Federal and state income taxes are calculated for hypothetical forest landowners in two income brackets across 13 states in the West 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. State income taxes range from highs of $19,693 for middle-income and $34,993 for high-income landowners in Oregon to no income tax in Alaska, Nevada, Washington and Wyoming. After-tax land expectation values for a forest landowner in Oregon are also calculated to illustrate the importance of tax planning on returns to a timber investment. The need for adequate tax accounting is supported by the results.

Keywords: investment; landowners; cost; tax planning; rate of return

Document Type: Research article

Publication date: 2008-04-01

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