Amends subsection (b) of 26 U.S.C. 165 to add a special rule for casualty losses of uncut timber establishing a minimum basis for the deduction equal to the appraised pre-loss value minus salvage value, sets appraisal timing and related procedures (including allowance for estimates when appraisal cannot be obtained before the return due date), excludes timber not held for cutting and sale in a non-passive trade or business, includes pre-merchantable timber, requires reforestation within 5 years with regulatory recapture, and treats certain infestations and severe drought as casualties.