“A bill to amend the Internal Revenue Code of 1986 to provide a special rule for certain casualty losses of uncut timber.”
No CRS summary available for this bill.
This section establishes a special rule under IRC §165(b) for casualty losses (from fire, storm, other casualty, or theft) of uncut timber held for cutting and sale in a non-passive trade or business, allowing the deduction basis to equal at least the excess of the timber's appraised fair market value immediately before the loss (determined per Uniform Standards of Professional Appraisal Practice by a certified appraiser within one year after the loss) over its salvage value (including pre-merchantable timber). (As background, IRC §165 casualty losses are generally limited to a property's adjusted basis, which for standing timber is often low relative to its market value, resulting in limited deductions.) The rule permits taxpayers unable to complete the appraisal by the original tax return due date (including extensions) to claim an estimate initially and amend the return later to adjust taxable income by the difference between the appraisal and estimate; requires reforestation (via planting, seeding, or site preparation) within five years of the loss or recapture of the deduction benefit; and expands "other casualty" to include losses from wood-destroying insects, invasive species, or severe drought. The amendments apply to losses sustained in taxable years beginning after enactment.