Quantifying the distribution of family forest ownership classifications for US federal income tax
Year: 2024
Type: article
Abstract: Taxes are frequently cited as a top concern among family forest owners in the United States (US). Family forest ownerships are classified in federal income tax law as either personal use, investment, or trade or business, and this classification determines the tax rates, deductions, credits, and filing requirements that apply. Tax classification, therefore, has implications on landowners’ overall profit potential and economic sustainability of forest management. However, the relative proportion of family forest owners in each tax classification has never been estimated before, though many studies have looked at the typologies of family forest owners based on their forest management behavior including participation in policy tools in the past. We develop a novel framework for categorizing family forest owners within discrete tax classifications. By leveraging the data from the National Woodland Owner Survey, we estimate the distribution of owners across tax classification and account for the area of forestland covered under various tax provisions. We further assess the similarities and differences in demographic characteristics of landowners belonging to different tax classifications. Additionally, we construct logit models to understand demographic and ownership variables associated with the likelihood of landowners belonging to different tax classifications. The findings of the study are expected to have implications for tax policy and sustainable forest management in the country. It will assist policymakers, land managers, and other concerned stakeholders in understanding how changes in tax law affect family forest owners and how they manage their forests. Information about tax classification criteria used in this study can also be helpful for landowner education and extension purposes. The results obtained can assist in mapping natural disasters and connecting them to the deductibility of casualty losses based on landowner’s tax classification in the future.
Source: Trees Forests and People
Language: English
Topic: Forest Management and Policy
Subfield: Forestry
Domain: Life Sciences
SDG: Life on land
Open Access status: gold
Estimated APC paid: $1,410
Award: G515206079
OpenAlex ID: W4405454633