I have a couple of tree appraisal scenarios that I need help thinking through.

One involves a tornado that destroyed approximately 500 mature trees on a 110 acre ranch. Some of the trees are around the house, but most surround pasture areas. The land is worth approximately $4,000/acre. Trees cover about 1/3 of the property and about 10-20% of the trees were destroyed. About 30-40% of the large trees (>24” DBH) were destroyed. I’m having trouble coming up with a reasonable appraisal for the trees for IRS casualty losses. It will cost approximately $70,000 to clean up the damage. If the landowner replants small trees (1-2” caliper) they will cost at least $100 each, which exceeds the value of the land. Is this reasonable under IRS rules?

The other scenario involves a wildfire that scorched thousands of acres of land. All of the trees on the land were killed by the fire. This land is mostly rangeland and is worth less than $2,000/acre. There is a lawsuit involving several landowners to recover lost value due to the fire. If trees are worth only $100, then their value exceeds the price of the land. Is this reasonable in this case? It seems unreasonable that the trees are worth less than that.

Any thoughts that you can provide will be very helpful.

Thanks!

Todd

Todd it sounds like the trees in the first scenariowould be intwo parts because the trees around the house would be Landscape trees, then the other trees could be cost of cure, but wouldn't that be a write off?
In the second scenario, who are they trying to get money from? It sounds like a natural forest fire.