Title: Florida forest steward
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 Material Information
Title: Florida forest steward
Physical Description: Serial
Language: English
Creator: Institute of Food and Agricultural Sciences, University of Florida
Publisher: Institute of Food and Agricultural Sciences, University of Florida
Place of Publication: Gainesville, Fla.
Publication Date: Spring 2007
 Record Information
Bibliographic ID: UF00090040
Volume ID: VID00043
Source Institution: University of Florida
Holding Location: University of Florida
Rights Management: All rights reserved by the source institution and holding location.

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The Florida Forest Steward

A Quarterly Newsletter for Florida Landowners and Resource Professionals


Volume 13, No. 4


Spring 2007


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Tour Announce


Florida Forest Stewardship
Program and Cost-share Update

The number of landowners receiving
technical and educational services
through Florida's Forest Stewardship
Program continues to grow. As of
January 1 there are about 2,386
landowners, owning a total of about
673,760 acres. About 350 of these
ownerships (161,250 acres) are certified
Forest Stewardship properties, meaning
they have implemented many of the
practices recommended in their Forest
Stewardship Management plans and
have received a plaque and sign to
display.


Division of Forestry foresters and Fish
and Wildlife Conservation Commission
biologists are now using GIS technology
to map Stewardship properties in the
development of management plans. This
technology greatly improves the
timeliness and quality of service to
E S T landowners and the ability of the
agencies to manage the data, identify
trends and provide information to the
USDA Forest Service regarding
'ments Inside federally sponsored programs.


fUF UNIVERSITY of

UF FLORIDA

IFAS









Welcome David Smith, new DOF
Conservation Programs Manager

We welcome David Smith, Division of
Forestry Conservation Programs
Manager, to Florida's Forest
Stewardship team. His forest
management experience over the last 20
years or so has been in both the private
and public sectors. He managed
timberlands for Georgia Pacific
Corporation, Packaging Corporation of
America and Bowater Corporation in
Florida, Alabama, Tennessee and
Georgia. He was also employed by the
Florida Division of Forestry as the
Conservation Reserve Program Forester
in the western Panhandle of Florida in
1988. David was born and raised in the
Pensacola area of Florida and is glad to
return to his native state. His family
roots run deep in the farm and forest
lands of northern Escambia County.
Both parents grew up on farms near
Byrneville, FL raising cotton, grain,
livestock, pecans and other crops.
Talking about his return to Florida from
other positions in the region he said,
"Some of my fondest childhood
memories are of hunting, fishing and
exploring the woods, streams and rivers
of the Florida Panhandle. With that
background, pursuing a career in forest
land management and returning to
Florida was in my blood (in spite of my
ramblings throughout the South!)".

Cost-share program update

FLEP and FLRP: Sign-ups for the Forest
Land Enhancement and Forest Land
Recovery Programs have ended and
requests for cost-share funds exceeded
available funding in both programs.
FLEP cost share requests were almost 3
times greater than available funds.
FLRP requests slightly exceeded funds.


CRP: There is a continuous
Conservation Reserve Program (CRP)
signup underway for the Longleaf Pine
Initiative. The initiative covers cost
sharing for planting seedlings and an
annual rent agreement. To be eligible,
land must be located in the National
Longleaf Pine Conservation Priority
Area (historic range of longleaf pine
forests, which includes most of Florida)
and must be capable of being restored to
a viable ecosystem. Sign-up began Dec.
1, 2006 at local FSA offices and runs
continuously until the 250,000-acre goal
is met, or Dec. 31, 2007, whichever
comes first. Refer to the USDA Farm
Service Agency website for more details
at:
http://www.nrcs.usda.gov/programs/crp/.

Emergency Forestry CRP (EFCRP)
signup has ended. This program only
applied to damage from the 2005
hurricane season (for Florida -- Wilma,
Dennis & Katrina). Only Escambia,
Santa Rosa & Walton counties had
offers. Offers are being processed by the
Farm Service Agency.

EOIP: The Environmental Quality
Incentives Program (EQIP) provides a
voluntary conservation program for
farmers and ranchers that promotes
agricultural production and
environmental quality as compatible
goals. EQIP offers financial and
technical help to assist eligible
participants install or implement
structural and management practices on
eligible agricultural land. These
practices and initiatives are new for
2007:

Tree Planting: A minimum of 20
acres and maximum of 200 acres per
contract will be allowed under this
practice. Cost share assistance for









this practice is available under the
following criteria:

The applicant is willing to plant
longleaf pine seedlings on an 8 x
12 spacing or wider (in approved
counties) AND agree to prescribe
burn same acres on a 2 to 3 year
rotation to benefit wildlife and
improve diversity.

All Class III or greater cropland
(which require complex or
intensive cultivation practices)
will be converted to permanent
cover (trees).

The applicant is willing to plant
pine seedlings (longleaf, slash,
loblolly, etc.) in low density
(8'xl2' or wider) AND establish
permanent firebreaks around
stand AND establish 10% of
stand in openings to benefit
wildlife and improve diversity.

Invasive Plant Control: Plant species
such as cogongrass, tropical soda
apple and climbing fern can have
devastating effects on Florida's
pasture and forest land. Once these
non-native plants invade an area,
they rapidly decrease the quality and
quantity of forage and cropland
available which leads to
environmental damage and economic
loss. To conserve these important
natural resources, Florida NRCS has
made it a state priority to reduce the
presence of Category I invasive plant
species on our cropland, pasture and
forestlands through EQIP funds.

For more information about EQIP and
other USDA cost-share programs,
contact your local USDA Service


Center. Find your local number at:
http://offices.sc.egov.usda.gov/locator/app.

Timber Tax Tips for 2006

Filling the shoes of Larry Bishop, former
USDA Forest Service Taxation
Specialist, is Linda Wang. John Greene
is still in the USDA Research Forester
position and coauthors the USDA Forest
Service's Tax Tips for Forest
Landowners for the 2006 Tax Year
(Management Bulletin R8-MB 128),
from which this information is
summarized. The full version of this
bulletin is available at
sref.info/spotlight/taxtips20061ink.

This summary is not exhaustive and we
strongly recommend consulting other
sources for a more comprehensive
treatment of topics that may be
particularly important to you. This
information is current as of December 1,
2006, and supersedes USDA Forest
Service Management Bulletin R8-MB
126. Some useful on-line resources are
provided at the end.

Your Basis and Tax Records

Your basis is your investment in timber
and forest land. The original cost of
purchased timberland, or the value of
inherited land, should be allocated
proportionally to land, timber, and other
capital assets. The fair market value of
inherited forest land should be allocated
similarly but keep in mind that the fair
market value of inherited property is
usually higher than the descendant's
basis in it resulting in a step-up in basis.
Adjust the basis up for new purchases or
investments and down for sales or
disposals. Keep good records, including
a written management plan with a
statement that you are growing timber









for profit, a map of your property, and
documents supporting current
deductions six years beyond the date the
return is due.

Reforestation Tax Incentives

You can deduct outright the first
$10,000 spent on qualifying
reforestation expenses and amortize all
additional amounts over 84 months (8
years due to accounting convention).
The reforestation provisions apply to
both the cost of establishing a plantation
and practices which promote natural
regeneration. They also apply to
reforestation expenses reimbursed under
an approved cost-share program if you
included the payment in your gross
income (more details on this under
"Cost-share Payments" below). To
qualify, the reforested tract must be at
least one acre in size, located in the U.S.
and held to produce commercial timber
products. Individual taxpayers, estates,
partnerships and corporations are
eligible for both the deduction and
amortization provisions.

Cost-share Payments

All of the cost-share payments received
in 2006 under any of the Federal or State
cost-share programs must be reported. If
the program qualifies for exclusion you
can either include the payment in your
gross income and make full use of
beneficial tax provisions or calculate and
exclude the excludable amount.

The excludable amount of a qualifying
cost-share payment is the present value
of the greater of $2.50 times the number
of affected acres or 10% of the average
annual income from the affected acres
over the last 3 years. The process for
calculating this amount is described in


detail in the full version of the Tax Tips
bulletin linked above. If you decide to
exclude, you must attach a statement to
your return that states specifically what
cost-share payments you received, that
you choose to exclude some or all of
them, and how you determined the
excludable amount. Cost-share
programs approved for exclusion by the
IRS include the Conservation Reserve
Program, Forest Land Enhancement
Program, Wetlands Reserve Program,
Environmental Quality Incentive
Program, and the Wildlife Habitat
Incentive Program.

The only way to determine whether it
benefits you more to include a cost-share
payment as gross income or exclude the
excludable amount is to figure your tax
both ways.

Timber Management Expenses

You can choose either to deduct the
annual expenses for maintaining and
managing your timber or capitalize
them. In most cases you are better off to
deduct management expenses on your
return for the tax year they are incurred.

The passive loss rules determine what
expenses you can deduct and where you
take the deduction. Under the rules you
can be classified in 1 of 3 categories:

1. Materially participating in a trade or
business: You are materially
participating if your involvement is
regular, continuous, and substantial.
If you meet this qualification, deduct
management expenses, including
property taxes and interest on debts,
on Form 1040 Schedule C against
income from any source. You must
show material participation with
thorough records. Keep records of









all business transactions related to
managing your timber stands and
other business activities such as
landowner meetings. Odometer
readings to and from landowner
meetings, canceled checks for
registration fees, and copies of
meeting agendas are some examples
of documentation of meeting
attendance.

2. Passive participant in trade or
business: If you don't meet the
qualifications for material
participation, deduct management
expenses, property tax and interest
expenses on Form 8582. These
expenses are deductible only to the
extent that their combined total does
not exceed your income from passive
activities for the year, although any
unused amount can be carried
forward to future years.

3. Investor: If you are an investor,
deduct property taxes against income
from any source, and interest on
debt.

If it is not to your advantage to itemize
deductions you should capitalize these
expenses. Keep in mind that you cannot
capitalize expenses in any year your
property is productive. Forest land is
productive in any year that it produces
income, including that from a hunting
lease or other non-timber source.

Timber Sales

Under current law, revenue from
standing timber sold lump-sum or pay-
as-cut basis generally qualify as a long-
term capital gain (if you have met the
12-month holding requirement owned
the timber for one year before it was
cut). Capital gains are not subject to the


self-employment tax, as is ordinary
income. When you sell timber you can
take a depletion deduction against the
gross sale proceeds. The deduction is
computed this way: (total basis in your
timber account / total volume just before
the sale) x number of units sold. File a
Form T in years that you claim a timber
depletion deduction, acquire land,
perform reforestation or silvicultural
activities or have changes in land
ownership.

Timber Losses

A casualty loss must result from an
event that is identifiable, damaging to
the property, and sudden or unexpected
or unusual in nature (e.g., wildfires and
storms). Losses resulting from drought
or beetles do not qualify for a casualty
loss deduction but may qualify for a
non-casualty loss. Your claim for
casualty and non-casualty losses cannot
exceed the adjusted basis minus any
insurance or other compensation.

Hurricane Relief Provisions

Cost-share payments from the 2005
agricultural disaster recovery programs -
- Emergency Watershed Protection,
Emergency Conservation and
Emergency Forestry Conservation
Reserve Programs -- are approved for
exclusion from gross income.

Congress passed laws establishing Gulf
Opportunity Zones for the
counties/parishes on the Gulf Coast
affected by the 2005 Hurricanes.
Provisions for these Zones in Florida
include an increase in the reforestation
deduction and enhanced deductions for
net operating losses. See the GO Zone
Guide Web site at
www.gozoneguide.com for details.









Conclusion


Proper tax planning is a tedious but
important part of timberland
management. We strongly recommend
contacting a professional tax advisor to
help you with this task if you are
uncertain of the procedures.

Timber Tax Resources on the Internet

See the National Timber Tax Web Site
for a comprehensive treatment of timber
taxes at www.timbertax.org.

IRS publications and forms are available
at www.irs.gov.

New Tax Benefits for
Landowners Donating
Conservation Easements in 2007

On August 17, 2006 the President signed
the Pension Protection Act which
increased the tax benefits to landowners
donating conservation easements. The
legislation allows:

* A conservation agreement donor to
deduct up to 50% of their adjusted
gross income in any year;
* Qualifying farmers and ranchers to
deduct up to 100% of their adjusted
gross income; and
* Donors can take deductions for their
contribution over as many as 16
years.

These changes allow many landowners
to deduct much more than they could
under the old rules. A "qualified farmer
or rancher" is a defined term that means
a taxpayer whose gross income from the
business of farming (as defined under
Section 2032A(e)(5) of the tax code) is
greater than 50% of the taxpayer's gross


income for the taxable year in which the
conservation easement is donated.

For example, the fair market value of a
landowner's donated conservation
easement is $500,000 and the terms of
the easement assure that the land will
remain available for agriculture use. If
the landowner qualifies as a farmer and
has an adjusted gross income of $80,000,
then the charitable deduction for the year
of the transfer is $80,000 (100% of
$80,000). This leaves $420,000
($500,000 $80,000) to carry over for
about the next 6 years (5 years x
$80,000/year = $400,000; in the 6th
year, $20,000 can be deducted). Thus, in
this example, the taxpayer will have zero
federal taxable income for six years plus
$20,000 deducted from the seventh year.

If a charitable deduction limitation
exists, taxpayers can make donations
over several years to overcome this
limitation. However, the outlined tax
incentives will only apply for land
donated in 2006 and 2007, unless the
law is extended. For more resources on
these new tax incentives, see the Land
Trust Alliance Web site at
http://www.lta.org/publicpolicy/tax since
ntives updates.htm.

References

Anon. 2006. New Federal Law Gives Better Tax
Break for Conservation Agreements to Save
Farms and Other Rural Lands. Fact Sheet,
Conservation Trust for Florida, Inc. Gainesville,
FL.

Main, M., K. Annisa and M. Hostetler. 2006
(rev). Conservation Options for Private
Landowners in Florida. CIR 1441. Coop. Ext.
Serv., IFAS, University of Florida, Gainesville,
FL. 26p.









Timber Price Update

The timber pricing information below is
useful for observing trends over time,
but does not necessarily reflect current
conditions at a particular location.
Landowners considering a timber sale
are advised to solicit the services of a
consulting forester to obtain current
local market conditions. Note that price
ranges per ton for each product are
included in parentheses after the price
per cord.

Stumpage price ranges reported across
Florida in the 4th Quarter 2006 Timber
Mart-South (TMS) report were:

* Pine pulpwood: $14 -
$29/cord ($5 $11/ton), 1 (on
average from 3rd Quarter
2006)
* Pine C-N-S: $52 $66/cord
($19 $25/ton), $
* Pine sawtimber: $76 -
$113/cord ($28 $42/ton), $
* Pine plylogs: $83 $119/cord
($31 $44/ton), $
* Pine power poles: $138 -
$192/cord ($51 $72/ton) 1
* Hardwood pulpwood: $6 -
$26/cord ($2 $9/ton), $

Trend Report

With the exception of those for
pulpwood and power poles, average
stumpage prices for most of the major
wood products were down in the 4t
Quarter 2006 in Florida. The continuing
price slump for pine sawtimber is
conspicuous. Across the Southeast
region, the average pine sawtimber
stumpage price was down more than one
dollar per ton from 3rd Quarter 2006 and
down more than two dollars per ton from
4th Quarter 2005. Market indicators for


lumber remained weak in the last quarter
of 2006 but strengthened slightly in the
final weeks of the year.

Order Containerized Longleaf
Seedlings Now for the 2007-2008
Planting Season

If you are planning on planting
containerized longleafpine seedlings
during the winter planting season of
2007-2008, place your order now.
Supplies are short and some nurseries
will be sold out soon. Your DOF
County Forester can help you determine
how many seedlings you'll need.



Average Pine Stumpage Prices for Florida
4th Qtr 1996 through 4th Qtr 2006


64 72 74 82 84 92 94 02 04 12 14 22 24 32 34 42 44 52 54 62 64
Year/Quarter (beginning fourth quarter 1996)
---pulpwood ---chip-n-saw --sawtimber




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