More than 1.2 million acres burned in Montana during this year’s wildfire season, including on family-owned forestland. We are thankful for the recent precipitation. But we all know it will take more than a wet winter to prevent another repeat wildfire season.
Hopefully there is a possibility for those whose forests were affected by these wildfires, to recover financially through tax reform. All Montana forest owners should ask that U.S. Sens. Steve Daines and Jon Tester consider a change to the tax code to allow a more equitable tax treatment for family forest owners affected by natural disasters.
Growing trees is a business venture, with annual maintenance, improvements and labor costs over the 80 years it takes to grow a commercially viable tree in Montana. Unfortunately, the tax code does not take into account the increased value of an aged forest when it is hit by a natural disaster. While forest owners can claim a loss of their timber to a wildfire under current law, they can only deduct the original cost of the planting. Ironically, if a family forest owner donated their timber to a charity the day before the disaster, they could take a much higher deduction for this donation.
I am familiar with this because our tree farm was partially burned in 2006 by the Packer Gulch fire. The fire burned more than 6,000 acres in our community, including 203 acres on our land. Fortunately, we had recently thinned and cleaned out the underbrush on 115 acres where the fire entered our property. This thinned area brought the flames down to the ground and gave the incident fire command more time to respond.
As many of you know, because of a crown fire’s extreme temperature, most of the area burned on our land was toast. Twelve years of work and investment were gone. An independent forester estimated we lost around $250,000 in timber value. In our situation, none of this loss was recoverable through a casualty loss deduction. Along with this financial loss, the soil has been so degraded, that replanting and forest recovery is far in the future.
My experience is not unique; many Montana landowners have been affected by wildfires. According to an American Forest Foundation survey, more than two-thirds of U.S. landowners who have experienced a natural disaster have been affected by this tax inequity. And unlike farmers, insurance for forest owners is cost-prohibitive.
In Montana, more than 3 million acres of forest are owned by individuals and families. Our care of these forests provides healthy watersheds and clean water, wildlife habitat, wood for products and rural jobs at little or no cost to the government.
I hope our senators, in their work on tax reform, will consider a change to casualty loss in order to help forest owners deduct the true value of their forest damaged by a natural disaster.