To amend the Internal Revenue Code of 1986 to encourage reforestation and preservation of our Nation's forest habitats.

Amends the Internal Revenue Code to revise the computation of the alternative tax for corporations to provide a capital gains preference for eligible sales and exchanges of timber. Revises the definition of "eligible sales and exchanges of timber" to require that the owner have in effect a qualified forest resource management plan which includes reforestation.

Allows a tax deduction for taxpayers other than corporations for capital gains on certain timber sales.

Establishes a three-year period before the assessment of a deficiency attributable to sales of timber subject to forest resource management plans.

Decreases the amortization period of reforestation expenditures from 84 months to 60 months and increases the amount which may be amortized.