Disaster Reforestation Act
Bill: S.2768 | Sponsor: Sen. Cassidy, Bill (R-LA)
Policy area: Taxation

Summary:
Disaster Reforestation Act
This bill sets forth a special rule for the tax deduction for casualty losses of uncut timber (including pre-merchantable timber). It provides that in losses of any uncut timber from fire, storm, wood-destroying insects or invasive species, severe drought, or from theft, the basis for determining the amount of the deduction for such loss shall not be less than the excess of the appraised value of such timber determined immediately before such loss was sustained, over the salvage value of such timber.
To be eligible for the casualty loss deduction, the uncut timber subject to the loss must be reforested not later than the close of the five-year period beginning on the date of the loss.

To amend the Internal Revenue Code of 1986 to provide a special rule 
              for certain casualty losses of uncut timber.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Disaster Reforestation Act''.

SEC. 2. CASUALTY LOSSES OF UNCUT TIMBER.

    (a) In General.--Section 165(b) of the Internal Revenue Code of 
1986 is amended--
            (1) by striking ``For purposes of subsection (a)'' and 
        inserting the following:
            ``(1) In general.--For purposes of subsection (a)'', and
            (2) by adding at the end the following new paragraph:
            ``(2) Special rule for casualty loss of uncut timber.--
                    ``(A) In general.--In the case of the loss of any 
                uncut timber from fire, storm, or other casualty, or 
                from theft, the basis for determining the amount of the 
                deduction for such loss (as otherwise determined under 
                paragraph (1)) shall not be less than the excess of--
                            ``(i) the appraised value of such uncut 
                        timber determined immediately before such loss 
                        was sustained, over
                            ``(ii) the salvage value of such timber.
                    ``(B) Appraisal methods.--
                            ``(i) In general.--With respect to the 
                        appraisal of a timber casualty loss described 
                        in subparagraph (A)--
                                    ``(I) the appraisal valuation date 
                                shall be not later than 1 year after 
                                the casualty loss, and
                                    ``(II) the appraisal shall--
                                            ``(aa) conform to the 
                                        Uniform Standards of 
                                        Professional Appraisal Practice 
                                        (USPAP),
                                            ``(bb) be limited to the 
                                        value of the lost timber, and
                                            ``(cc) be completed by a 
                                        Federal- or State-certified 
                                        appraiser.
                            ``(ii) Delay in completion of appraisal.--
                                    ``(I) In general.--In the case of 
                                any taxpayer who is unable to obtain an 
                                appraisal described in clause (i) 
                                before the due date of the return of 
                                tax (including any extension of time 
                                for filing such return) for the taxable 
                                year in which the timber casualty loss 
                                occurred, the taxpayer may elect to--
                                            ``(aa) with respect to the 
                                        return of tax for such taxable 
                                        year, include an estimate of 
                                        the value of the uncut timber 
                                        determined immediately before 
                                        the loss was sustained, and
                                            ``(bb) upon completion of 
                                        the appraisal within the period 
                                        described in clause (i)(I), 
                                        file an amended return for such 
                                        taxable year with respect to 
                                        any adjustment in taxable 
                                        income as determined pursuant 
                                        to subclause (II).
                                    ``(II) Adjustment of taxable 
                                income.--With respect to any taxpayer 
                                who elects to provide an estimate 
                                described in subclause (I)(aa) for any 
                                taxable year in which a timber casualty 
                                loss occurred, the taxable income of 
                                the taxpayer for such taxable year 
                                shall be increased or decreased, as 
                                applicable, by an amount equal to the 
                                difference between--
                                            ``(aa) the appraised value 
                                        of such uncut timber determined 
                                        immediately before such loss 
                                        was sustained, as determined 
                                        pursuant to the appraisal 
                                        described in clause (i), and
                                            ``(bb) the estimate 
                                        provided by the taxpayer under 
                                        subclause (I)(aa) with respect 
                                        to such uncut timber.
                    ``(C) Exclusion of timber not held for sale.--
                Subparagraph (A) shall not apply to any timber unless 
                such timber is held for the purpose of being cut and 
                sold in connection with a trade or business that is not 
                a passive activity within the meaning of section 469.
                    ``(D) Inclusion of pre-merchantable timber.--For 
                purposes of this paragraph, the term `uncut timber' 
                shall not fail to include pre-merchantable timber.
                    ``(E) Reforestation requirement.--
                            ``(i) In general.--Subparagraph (A) shall 
                        not apply unless the uncut timber subject to 
                        the loss is reforested (with hardwoods, 
                        softwoods, or any combination thereof) by 
                        planting, seeding, or appropriate site 
                        preparation, not later than the close of the 5-
                        year period beginning on the date of such loss.
                            ``(ii) Recapture.--The Secretary shall, by 
                        regulations, provide for recapturing the 
                        benefit of any deduction allowed under this 
                        section with respect to any uncut timber 
                        subject to loss to which subparagraph (A) 
                        applied if the taxpayer fails to comply with 
                        clause (i) during the period provided under 
                        such clause.
                    ``(F) Other casualties.--For purposes of 
                subparagraph (A), the term `other casualty' shall 
                include loss of any uncut timber from--
                            ``(i) wood-destroying insects,
                            ``(ii) wood-destroying invasive species, or
                            ``(iii) severe drought.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to losses sustained in taxable years beginning after the date of 
the enactment of this Act.
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