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Elsevier, Forest Policy and Economics, (38), p. 219-226, 2014

DOI: 10.1016/j.forpol.2013.10.001

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Family forest owners and federal taxes

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This paper is available in a repository.

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Abstract

Focus groups were conducted with family forest owners to investigate the effect of government tax policies on their decisions regarding their land. Two groups each were held in New Hampshire, South Carolina, Alabama, Wisconsin, and Washington, USA, one with owners enrolled in the state preferential property tax program for forested land and one with owners who were not so enrolled. Each focus group consisted of 8–10 owners and lasted approximately 2 h. Overall, only two beneficial federal income tax provisions (treatment of timber income as a long-term capital gain and timber depletion deductions) and five federal estate tax provisions (the effective exemption for estates, the annual exclusion for gifts, use of a will, the step-up in basis for inherited assets, and the effective exemption for gifts) were brought up in over half of the groups. Groups composed of tax program enrollees tended to discuss federal income tax provisions more distinct times than those composed of tax program non-enrollees, and tended to be familiar with more federal estate tax provisions; otherwise, there was little difference between them. Misconceptions about tax provisions were common. As well, groups in every region noted the negative effects of tax uncertainty and that not all professionals are knowledgeable about federal taxes as they apply to family forest owners.