Forestry Tax Planning:Using A Cost Benefit Analysis To Compare The After Tax Affects Of Industrial And Non-Industrial Private Forest Owners In The USA

The purpose of this thesis is to do a comparative analysis of the forestry tax system in the USA between industrial (Corporate) and Non-Industrial Private Forest Owners (NIPF). Due to the change in the tax laws of 1986 large companies lost the advantage to declare long-term capital gains tax status which is a lower tax rate than ordinary income. This caused a massive shift in the ownership of industrial forestland from large corporations into the hands of smaller private land owners. Additionally financial institution who were familiar with the US tax code took advantage of the benefits of ERISA (Employee Retirement Investment Savings Accounts) and long term capital gains taxation to create investments in forests with lower tax rates than traditional corporate owners. The shift shows how private land ownership development and control can be accomplished through modification of the tax system to promote ownership by some individuals while controlling others. The research compares how the tax systems taxes corporate owners and short-term interests at much higher rates which greatly reduces their profitability while long-term private investors are rewarded with better tax rates. This research could be applied to systems who are seeking to establish a market economy for real estate and forestry products that promotes private individual ownership but some drawbacks in the US tax code have been identified. The conclusion is that the framework of the proposed legislation is sound, however the complexity of the system creates many problems that are hard for the average individual land owner and forester who is not a tax professional to solve.