"Income Tax Deduction for Timber Casualty Loss", 2008. Dr. Linda Wang, Timber Tax Specialist, US Forest Service. Recent storms in the South has many landowners asking the questions on taking casualty loss deductions on downed trees in their timber property. Although the tax law allows a casualty loss deduction to the damaged timber, the amount of deduction may be small or even none in certain cases, to the surprise of these owners. The difference between the real economic loss and the tax loss can be large depending on the tax basis.