Faustmann's theory of discounted cash flow analysis, developed using perpetually recurring before-tax cash flows facilitates the determination of the maximum willingness to pay (WTP) (i.e. economic) value of bare forestland and immature timber. He describes three valuation approaches: (1) compounding costs; (2) compounding/discounting annuities; and (3) discounting future cash flows. If non-recurring costs (or benefits) are incurred in any rotation or if the current stand is non-optimal with respect to future rotations, the discounting of future cash flows is the preferred approach. When after-tax cash flows are considered, four categories of tax treatment must be addressed: (1) immediately deductible expenditures; (2) capitalized expenditures which are deducted against future harvest revenue; (3) capitalized expenditures which are depreciated or amortized; and (4) non-deductible expenditures. Apart from the second case, either compounding costs or discounting future cash flows can be used to value a stand. However, discounting cash flows is the preferred approach when expenditures are capitalized and deducted against future harvest revenues. Illustrations of the consequences of the four categories of tax treatment are shown with respect to New Zealand pine plantations. Extension to the tax policies of other countries is straightforward. Keywords: Forest valuation; Forest economics; Income tax; Bare land value; Stand value; Discount rate.