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

Srijana Baral; Yanshu Li; Bin Mei

doi:10.1093/jofore/fvaa032

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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

Formally Refereed

Authors:

Srijana Baral, Yanshu Li, Bin Mei

Year:

2020

Type:

Scientific Journal

Station:

Southern Research Station

DOI:

https://doi.org/10.1093/jofore/fvaa032

Source:

Journal of Forestry

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Download (PDF 4.61 MB): https://research.fs.usda.gov/download/treesearch/62803.pdf

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 discountedcash-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.

Keywords

Family forest, financial analysis, forest taxation, tax reform, timberland investment

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.