I
107TH CONGRESS
1ST SESSION
H. R. 1581
To amend the Internal Revenue Code of 1986 to modify certain provisions
relating to the treatment of forestry activities.
IN THE HOUSE OF REPRESENTATIVES
APRIL 25, 2001
Ms. DUNN (for herself, Mr. BISHOP, Mr. ALLEN, Mr. BAIRD, Mr. BALDACCI,
Mr. BARTON of Texas, Mr. BLUMENAUER, Mr. BLUNT, Mr. CALLAHAN,
Mr. CAMP, Mr. COLLINS, Mr. COOKSEY, Mrs. EMERSON, Mr. ENGLISH,
Mr. HERGER, Mr. HILLIARD, Mr. HUTCHINSON, Mr. ISAKSON, Mr.
LARSEN of Washington, Mr. LEWIS of Kentucky, Mr. GREEN of Wis-
consin, Mr. MCCRERY, Mr. THOMPSON of California, Mrs. JOHNSON of
Connecticut, Mr. OBERSTAR, Mr. OTTER, Mr. PICKERING, Mr. ROSS, Mr.
SCHAFFER, Mr. SHOWS, Mr. SIMPSON, Mr. STUPAK, Mr. SMITH of
Washington, Mrs. THURMAN, Mr. WALDEN of Oregon, and Mr. WICKER)
introduced the following bill; which was referred to the Committee on
Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to modify
certain provisions relating to the treatment of forestry
activities.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Reforestation Tax Act
of 2001’’.
SEC. 2. PARTIAL INFLATION ADJUSTMENT FOR TIMBER.
(a) IN GENERAL.—Part I of subchapter P of chapter
1 of the Internal Revenue Code of 1986 (relating to treat-
ment of capital gains) is amended by adding at the end
the following new section:
‘‘SEC. 1203. PARTIAL INFLATION ADJUSTMENT FOR TIM-
BER.
‘‘(a) IN GENERAL.—At the election of any taxpayer
who has qualified timber gain for any taxable year, there
shall be allowed as a deduction from gross income an
amount equal to the qualified percentage of such gain.
‘‘(b) QUALIFIED TIMBER GAIN.—For purposes of
this section, the term ‘qualified timber gain’ means long-
term capital gain from the sale or exchange of timber.
‘‘(c) QUALIFIED PERCENTAGE.—For purposes of this
section, the term ‘qualified percentage’ means the percent-
age 
(not 
exceeding 
percent) 
determined 
by
multiplying—
‘‘(1) 3 percent, by
‘‘(2) the number of years in the holding period
of the taxpayer with respect to the timber.
‘‘(d) ESTATES AND TRUSTS.—In the case of an es-
tate or trust, the deduction under subsection (a) shall be
computed by excluding the portion of (if any) the gains
for the taxable year from sales or exchanges of capital as-
sets which, under sections 652 and 662 (relating to inclu-
sions of amounts in gross income of beneficiaries of
trusts), is includible by the income beneficiaries as gain
derived from the sale or exchange of capital assets.’’
(b) COORDINATION WITH MAXIMUM RATES OF TAX
ON NET CAPITAL GAINS.—
(1) Subsection (h)(4) of section 1 of such Code
(relating to maximum capital gains rate) is amended
by striking ‘‘and’’ at the end of subparagraph (A),
by striking the period at the end of subparagraph
(B) and inserting ‘‘, and’’, and by adding at the end
the following new subparagraph:
‘‘(C) qualified timber gain with respect to
which an election is in effect under section
1203.’’
(2) Subsection (a) of section 1201 of such Code
(relating to the alternative tax for corporations) is
amended by inserting at the end thereof the fol-
lowing new sentence:
‘‘For purposes of this section, net capital gain shall be
determined without regard to qualified timber gain (as de-
fined in section 1203) with respect to which an election
is in effect under section 1203.’’
(c) ALLOWANCE OF DEDUCTION IN COMPUTING AD-
JUSTED GROSS INCOME.—Subsection (a) of section 62 of
such Code (relating to definition of adjusted gross income)