Potlatch Corporation Announces Tax Treatments for 2006 Dividend Distributions.

SPOKANE, Wash. -- Potlatch Corporation (NYSE: PCH), a real estate investment trust (REIT), announced today the tax treatment for its dividend distributions made in 2006 on its Common Stock. In March 2006, Potlatch made a special earnings and profits distribution of $15.15 per share, the entire amount of which is classified for income tax purposes as an ordinary qualified dividend. The regular quarterly distributions of $0.65 per share paid in the first quarter of 2006 and $0.49 per share paid in each of the last three quarters of 2006 are classified for income tax purposes as capital gain distributions taxable at the 15 percent rate. Shareholders are encouraged to consult with their tax advisors regarding the specific tax treatment for their Potlatch distributions.

Potlatch is a REIT with approximately 1.5 million acres of forestland in Arkansas, Idaho, Minnesota, Wisconsin and Oregon. Through its taxable REIT subsidiary, the company also operates 13 manufacturing facilities that produce lumber and panel products and bleached pulp products, including paperboard and tissue. Potlatch, a verified forest practices leader, is committed to providing superior returns to stockholders through long-term stewardship of our resources.