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[greenyes] Timber firm paid no corporate taxes in 2001
Here are some interesting approaches used by at least one timber firm to
avoid paying corporate taxes. 

John Reindl
Dane County, WI 

Pioneer Press
St. Paul, MN

Posted on Sun, Jun. 01, 2003

MADISON: Timber firm paid no state corporate taxes in '01

Associated Press

A timber company with more than half a million acres in Wisconsin paid no
corporate income tax in Wisconsin in 2001, a  newspaper said.

Seattle-based Plum Creek Timber Company, Inc. owns 550,000 acres of mostly
timber land in Wisconsin, primarily in the state's northern half. The
Capital Times newspaper, citing state Department of Revenue records,
reported in Saturday's editions the  company pays no corporate income taxes
on timber or land sale revenues.

Plum Creek corporate affairs specialist Robin Wood said the company uses a
real estate investment trust structure, or REIT, which means the company
doesn't have to pay federal income tax.

Diane Hardt, administrator of the Division of Income, Sales and Excise Taxes
for the Wisconsin Revenue Department, said state law follows federal law in
regard to real estate investment trusts. Plum Creek's 165,000 shareholders
pay long-term capital gains on dividends, but not income taxes, said John
Hobbs, director of investor relations for Plum Creek.

The company does pay some taxes on business conducted in taxable REIT
subsidiaries, Hobbs said. Richard Pomp, a tax law professor at the
University of Connecticut, said REITS are usually used for commercial and
residential real estate. "This is a creative use of the real estate
investment trust," Pomp said. "This would make sense from a corporate
standpoint. It eliminates the corporate tax and passes along tax advantages
to the individual shareholders. This is a win-win for everyone except the

Plum Creek owns 8 million acres of land nationwide. It  increased its
holdings in Wisconsin by 306,000 acres after buying the land from the Stora
Enso company for $142 million in December, making it the largest private
landowner in Wisconsin. 

The company had $1.1 billion in revenues in 2002, but Hobbs wouldn't give
out Wisconsin figures. He said the company wouldn't give out information
that might help competitors. Plum Creek also benefits from a property tax
break through the state's managed forest program. Companies and individuals
who enter forest land into the program make payments instead of taxes, pay
severance fees when they get out of the program and pay a deferred tax when
they cut and sell timber - if they follow state rules for sustainable timber
management and keep the land open to the public. 

Bill Gilbert, senior resource manager for Plum Creek in Wisconsin, estimated
about 90 percent of the company's land in the state is in the managed forest
program and the state's similar forest crop program.

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