Landowners whose timber has been destroyed may be eligible to deduct the loss on their federal income tax returns. There are two types of losses from natural events.
Casualty losses are sudden, unexpected, and unusual as from a fire, storm, or earthquake.
Non-casualty losses are unexpected and unusual, but not sudden as from an insect attack, drought, or disease. Casualty and non-casualty loss deductions are available to all owners who hold timber to produce income, whether as a business or an investment. The loss must be physical in nature and caused by an identifiable event or combination of events that has run its course. A deduction is allowed only if the damage renders the timber unfit for use. Normal levels of losses are a cost of doing business and cannot be deducted.