Title: Florida forest steward
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Title: Florida forest steward
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Language: English
Publication Date: Spring 2010
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Volume ID: VID00055
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The Florida Forest Steward

A Quarterly Newsletter for Florida Landowners and Resource Professionals


Volume 16, No. 4 Spring 2010

In this issue: New Tax Incentives for Land
In this issue:
in Conservation
New Tax Incentives for Land in Conservation By Chris Wynn and Chris Demers
Florida's Outstanding Tree Farmers of 2009:
Harvey & Jeanette Sweeney Florida House Bill 7157 went into
Florida Tree Farm Inspector of 2009: Greg effect in January 2010 under 196.26
Marshall
and 193.501, Florida Statutes (F.S.).
Recent Study Quantifies Economic Impact of and 193501 Florda statutes (F
Private, Working Forests This law provides property tax
New Longleaf Book for Landowners and exemption for real property dedicated
Foresters in perpetuity for conservation purposes
Get Email Updates (form DR-418C) and a current use tax
2009 Timber Tax Tips assessment of land used for
Congratulations Certified Forest Stewards and conservation (form DR-482C).
conservation (form DR-482C).
Tree Farmers
Timber Price Update
Events Calendar Section 196.26(2), F.S. states that:
"Land that is dedicated in perpetuity
for conservation purposes and that is
used exclusively for conservation
purposes is exempt from ad valorem
taxation." 'Dedicated in perpetuity' is
defined as 'land encumbered by an
irrevocable, perpetual conservation
easement.'

The criteria for qualification for
conservation assessment are lengthy
and available in a Property Tax
Oversight Bulletin at:

New Conservation https://taxlaw. state.fl.us/wordfiles/PTO
Tax Assessments Now in Effect %20BUL%2009-23.pdf
Photo courtesy of Craig Gillikin and Joanne Duffy



U UNIVERSITY opf Ql

W AS









Landowners who meet the criteria and
wish to apply for this exemption or
assessment would need to submit the
proper application and all supporting
documents to their county property
appraiser's office before March 1st of
each year. The applications are located on
the Department of Revenue website under
the "Ad Valorem Tax" subheading. Links
to forms:
http://dor.myflorida.com/dor/forms/2009/d
r418cfillable.pdf
http://dor.myflorida.com/dor/forms/2009/d
r482cfillable.pdf

Contact your county property appraiser's
office with specific questions about this
new ad valorem tax law.

Florida's Outstanding Tree
Farmers of 2009: Harvey &
Jeanette Sweeney
By Phil Gornicki, Florida Forestry
Association

Harvey Sweeney and his wife, Jeanette are
the owners of a 277-acre Tree Farm in


i I i ,'


Gadsden County. The property was
entered into the American Tree Farm
System in 2007. The Sweeney family
takes an active role in most of the day-
to-day work involved in the proper
management of their Tree Farm. This
includes tree planting, prescribed
burning, trail maintenance, pond
restoration and managing food plots.
Perhaps above all, the Sweeneys are
both interested in learning how to do
things better, and sharing their
experiences with others. Anyone who
has had the privilege of visiting this
property can easily see why Harvey &
Jeanette Sweeney have earned the
Florida 2009 Tree Farmer of the Year
Award.

Florida Tree Farm Inspector of
2009: Greg Marshall
By Phil Gomicki, Florida Forestry
Association


Greg Marshal (R) with Barry Hartley

It only took three short years of
working with the Tree Farm program
for Greg Marshall to become the top
Tree Farm Inspector in Florida. From
the time Greg began working for the
Florida Division of Forestry, he felt a
special connection to Tree Farm and
its commitment to forest conservation,
management and sustainability.
During the year leading up to his
selection as Tree Farm Inspector of the
Year Greg conducted 32 Tree Farm









inspections, including 13 "initial"
inspections aimed at certifying private
woodland as new Tree Farm properties
and, as if his job as Senior Forester for
Gilchrist County doesn't keep him busy
enough, Greg has recently accepted the
role as Florida Tree Farm District Three
Chairman, giving him primary
responsibility for Tree Farm activities in
the northeastern part of the state.

Recent Study Quantifies the
Economic Impact of Private,
Working Forests
Forest2Market and National Alliance of
Forest Owners

A recent study, commissioned by the
National Alliance of Forest Owners
(NAFO) and conducted by
Forest2Market, quantified the economic
impact of private, working forests on the
U.S. economy. The study concluded that
every 1,000 acres of private, working
forest creates on average of 8 jobs,
$270,000 in annual payroll, $9,850 in
annual state taxes (income and severance
taxes only) and $733,000 in annual sales.

Results of the study are available using the
interactive map on NAFO's website
(http://nafoalliance.org/economic-impact-
report/).

Editors' note: The sales numbers used in
this report cover all sales generated from
wood products flowing from private forest
lands in addition to landowner stumpage
values. Wood products included mill
output (lumber, paper, etc), electricity
generation and wood furniture.

NAFO Contact:
Dan Whiting, Director of Communications,
National Alliance of Forest Owners, 2025 M Street
NW, Suite 800, Washington, DC 20036,
dwhiting@nafoalliance.org, (202) 367-1222


Forest2Market Contact: Suz-Anne Kinney:
(704) 357-0110 x21 or
suz-anne.kinneviforest2market.com


New Longleaf Book
for Landowners
and Foresters
University of Georgia
Release


1r


Leon Neel's personal
history of the
development and
practice of the Stoddard-
Neel approach, The Art
ofManaging Longleaf ,.""t.
is now available from
the University of Georgia Press. The
book deals extensively with the
longleaf pine ecosystem and also
describes the founding of Tall Timbers
Research Station near Tallahassee. It is
also a capstone to Neel's extraordinary
life and achievements as a forester,
working in both Florida and Georgia.

Neel, with environmental historians
Paul Sutter and Albert Way, will
launch the book in Thomasville,
Georgia at the Thomasville Historical
Society on February 28 at 3:00 pm.
Neel will speak, followed by a book
signing and a reception. The event is
free and open to the public.

Get E-mail Updates

E-mail is the best way to stay current
on upcoming programs, news and
opportunities for landowners across
the state. If you don't receive email
updates yet and are interested, simply
send your email address to Chris
Demers at cdemers@ufl.edu. We
usually don't send notifications out
more than once or twice a week and
we don't share email addresses with
anyone.







COOPERATIVE FORESTRY
TECHNOLOGY UPDATE
1720 Peachtree Road NW, Atlanta, GA 30309


ORESTE

p.J4S I


U.S. Department of Agriculture
Forest Service
Southern Region


Tax Tips for Forest Landownersfor the 2009 Tax Year
by Linda Wang, Forest Taxation Specialist
and John L. Greene, Research Forester, Sotnlhern Research Station


This bulletin summarizes federal income tax information use-
ful to woodland owners in preparing their 2009 tax returns. It
is current as of October 1, 2009, and supersedes Management
Bulletin R8-MB 132. It should not be construed as legal or
accounting advice; consult your legal and tax professionals for
advice on your particular tax situation.

IRS Property Categories

Standing timber may be held as personal use property, invest-
ment property, or business property. The tax provisions differ
for each category. If you hold timber to produce income but do
not actively manage it, you may be an investor. If you actively
manage your timber for the regular production of income, you
likely hold it for use in a business. It is not difficult to qualify
for business use; the characteristics are regularity of activity
and production of income (under the passive loss rules, partici-
pation in a business may be active or passive; not all of the
provisions summarized here apply to passive participants).
Holding timber or forest property for personal use-without a
profit motive-is a disadvantage tax-wise, because of the limits
on deductions. One of the best ways to document that you have
a profit motive is in a written management plan.

Selling Timber

Effective after May 28, 2009, purchasers of timber in a lump-
sum sale must report the sale on a Form 1099-S (or equiva-
lent). Pay-as-cut timber sales already were subject to this re-
quirement. In most cases your gain from a sale or disposal of
standing timber can qualify as a capital gain, under IRC sec.
1221 (timber held as an investment) or sec. 631(b) (timber held
for use in a business).

Example 1: In 2009, you sold standing timber for $20,000,
lump-sum, with $2,000 in sale expenses. Your basis in the tim-
ber was $0, because you had recovered it under the reforesta-
tion provisions (see below). Your net gain of $18,000 ($20,000
- 2,000) is a capital gain. If you hold your woodland as an in-
vestment, report the gain on Form 1040, Sched. D; if you hold
it for use in a business, report the gain on Form 4797.

In some cases owners who hold timber for use in a business
will harvest-or have a contractor harvest- standing timber and
sell the cut products. In these cases, only gain from the appre-
ciation in value of the standing timber is a capital gain (sec.
631(a); make the election on Form T, Part II). The difference
between the value of the standing timber and the value of the
cut products is ordinary income.

Example 2: In 2009, you hired a contractor to harvest standing


timber from your woodland and sold the cut sawlogs to a mill for
$30,000. You paid $2,000 in logging costs. You had owned the
timber for 10 years for use in a timber-growing business. Your
basis in the harvested timber was $1,000 and its stumpage value
was $23,000 as of Jan. 1, 2009. If you elect to treat the sale as a
disposal under sec. 631(a), report the $22,000 ($23,000 1,000)
gain from the appreciation in value of the standing timber as a
capital gain on Form 4797, and the $6,000 ($30,000 22,000 -
2,000) gain from the sale of cut products as ordinary income on
Form 1040, Sched. C.

Long-term capital gains ordinarily are taxed to individuals at a
rate of 15%, although a 0% rate applies to amounts which, when
added to a taxpayer's ordinary income, fit under the ceiling for
the 15% bracket for ordinary income ($33,950 for single taxpay-
ers, $67,900 for married taxpayers filing jointly). The 15% capi-
tal gains rate also is available for 1 year, beginning May 22,
2008, to C corporations that held the timber sold or harvested for
over 15 years. If you claim a depletion deduction for timber sold
or harvested (see below), or if you sold timber lump-sum under
sec. 63 l(b), you must file Form T, Part II.

Installment Sales

An installment sale involves receiving one or more payments
after the year of sale. Installment sales permit the seller to defer
taxes or spread gains and taxes over 2 or more years. Timber
proceeds remain a capital gain, but real or imputed interest on
deferred payments is ordinary income.

Example 3: In 2009 you sold timber for $10,000 ($8,000 after
sale expenses). The buyer paid you $5,000 in 2009 and $5,000,
plus interest, in 2010. Your gross profit percentage is 80%
($8,000 / $10,000). Report $4,000 ($5,000 x 80%) in timber
capital gains for 2009, using Form 6252.

Timber Basis

Your basis in purchased timber is the purchase price, plus related
expenditures (legal fees and survey costs, for example), separate
from the basis of the associated land. For inherited timber, how-
ever, your basis is the fair market value of the timber on the do-
nor's date of death, and for timber received as a gift, it is the do-
nor's basis (or the value of the timber if that is less). Your basis
in timber sold is subtracted from the sale proceeds to determine
the taxable gain (see below), and your basis in the depletion ac-
count for damaged timber determines the maximum deduction
for a casualty or theft loss (see below). You may establish your
timber basis retroactively if you did not do so at the time of ac-
quisition. A professional forester usually can estimate the value
and volume of the timber at the time you acquired it.


October 2009 Management Bulletin R8-MB 134


October 2009


Management Bulletin R8-MB 134






Example 4: You inherited a 50-acre woodland 10 years ago, but
didn't know to establish your timber basis until you sold timber in
2009 and your tax accountant asked for it. You hired a forester,
who estimated that on the date of the donor's death, the woodland
had 1,000 cords of timber valued at $25 per cord. Therefore, your
timber basis is $25,000 ($25 x 1,000). Record your basis in the
timber and the land on Form T, Part I.

Timber Management Expenses

If you hold your woodland as an investment or for use in a busi-
ness, you can deduct ordinary and necessary management ex-
penses, such as fees paid to a professional forester, or the cost of
brush control, thinning, and protecting your timber from fire, in-
sects or disease. If you hold your woodland as an investment, you
deduct such management expenses on Form 1040, Sched. A,
where they are subject to the 2% of adjusted gross income floor.
Because of this, you may prefer to capitalize the expenses instead
of deducting them. If you hold your woodland for use in a busi-
ness, you can deduct management expenses in full on Form 1040,
Sched. C (or Sched. F if you are a farmer).

Reforestation Tax Provisions

Under sec. 194 you can fully recover the cost of establishing or
reestablishing timber on your woodland. You can deduct outright
the first $10,000 ($5,000 for married couples filing separately) per
year of such expenses per qualified timber property. Any addi-
tional amount can be amortized over 84 months (8 tax years).
Costs for both natural and artificial regeneration qualify.

Example 5: You spent $28,000 to reforest your property in 2009.
You can deduct $10,000, plus 1/14th of the remaining $18,000
($1,287) in 2009. In 2010 through 2015 you can deduct 1/7th of
$18,000 ($2,571), and in 2016 you can deduct the last 1/14th
($1,287). Take the amortization deduction on Form 4562, Part VI.

Depreciation and the Section 179 Deduction

You can take deductions for capital expenditures you make for
your woodland enterprise, for example timber equipment, machin-
ery, bridges, culverts, temporary roads, or the surfaces of perma-
nent roads. If you hold your woodland for use in a business, sec.
179 permits you to deduct up to $250,000 of the cost of qualifying
property purchased and placed in service during 2009, subject to
phase-out and taxable income limitations. Expenditures that can-
not be deducted under sec. 179-and all capital expenditures by
owners who hold their woodland as an investment-can be depreci-
ated over the property's useful life. For example, logging equip-
ment is depreciated over a 5-year period. A first-year deduction of
50% (bonus depreciation) may be taken for depreciable property
purchased and placed in service in 2009.

Cost-share Payments

If you receive payments from a government cost-share program,
you can expect to receive a Form 1099-G. But sec. 126 permits
recipients of payments from approved cost-share programs to ex-
clude a calculated part of the payments from their gross income.
Approved federal programs include the Forest Health Protection
Program (to combat Southern Pine Beetle, western bark beetle,
forest diseases, and forest invasive plants, approved August 10,
2009, retroactive to prior years), the Conservation Reserve Pro-
gram (CRP), Environmental Quality Incentives Program (EQIP),
Wildlife Habitat Incentives Program (WHIP), and Wetlands Re-
serve Program (WRP). Some state programs also qualify. The
excludable portion is the present value of the larger of $2.50 per


acre or 10% of the average annual income from the property over
the last 3 years.

Example 6: You received a 1099-G showing that you received a
$4,000 cost-share from the Southern Pine Beetle cost-share pro-
gram for your 100-acre tract in 2009. If you didn't have income
from the property in the last 3 years, your maximum exclusion is
$3,275 ($2.50 x 100 acres / 7.63%; the interest rate is from the
Farm Credit System bank). If you had $12,000 income from the
property, your maximum exclusion is $5,242 (10% x
($12,000/3) / 7.63%)). Attach a statement to your tax return de-
scribing the cost-share program and your exclusion calculations.

Timber Casualty Losses

A timber loss from a casualty-a sudden, unusual, and unexpected
event such as a fire or severe storm-can result in a tax deduction
or a taxable gain. The deduction is the lesser of the decrease in
value caused by the casualty or your basis in your timber deple-
tion account. A competent appraisal is required.

Example 7: In 2009 a fire reduced the value of the timber on
your woodland from $9,000 to $4,000. Your basis in the timber
was $2,000. Your casualty deduction is limited to $2,000 because
your basis in the timber depletion account is less than the de-
crease in its value.

File Form 4684, Section B, for the loss and adjust your timber
basis on Form T, Part II.

Example 8: A salvage sale of the damaged timber netted you
$2,000 over expenses. Since the loss deduction reduced your ba-
sis in the timber to $0, you have a gain of $2,000. But, you can
defer recognition of the gain if you use it to purchase qualifying
replacement property (including reforestation) within the allow-
able replacement period (2 years for a casualty).

Timber Depletion

Timber depletion is a measure of your investment in timber sold.
Calculate the taxable amount of income from a timber sale by
subtracting the timber depletion deduction and sale expenses
from the gross sale proceeds. Calculate your depletion deduction
by dividing the total basis in the depletion account by the total
volume of timber (the depletion unit) then multiplying by the
number of units sold.

Example 9: Your woodland carries 300 tons of sawtimber with
an adjusted basis of $9,000. You sold 150 tons of the sawtimber
in 2009. Your depletion unit is $30 per ton ($9,000 / 300 tons)
and your depletion deduction is $4,500 ($30 x 150 tons). Report
the adjustment in your timber basis in Form T, Part II.


The U.S. Department of Agriculture (USDA) prohibits discrimination in
all its programs and activities on the basis of race, color, national origin,
age, disability, and where applicable, sex, marital status, familial status,
parental status, religion, sexual orientation, genetic information, political
beliefs, reprisal, or because all or a part of an individual's income is
derived from any public assistance program. (Not all prohibited bases
apply to allprograms.) Persons with disabilities who require alternative
means for communication of program information (Braille, large print,
audiotape, etc.) should contact USDA's TARGET Center at (202) 720-
2600 (voice and TDD). To file a complaint of discrimination write to
USDA, Director, Office of Civil Rights, 1400 Independence Avenue,
S.W., Washington, D.C. 20250-9410 or call (800) 795-3272 (voice) or
(202) 720-6382 (TDD). USDA is an equal opportunity provider and
employer.







Congratulations Certified Forest Stewards and Tree Farmers!


Henry and Celesta Hagin (center) with
Joe Gocsik (L) and Carrie Kotal (R),
Hillsborough County


David Walls, Tree Farmer, Baker
County


The Begue Family, Holmes County

Not Shown:

Freddie Anderson
Tree Farmer, Nassau County

Sandra Boyett
Tree Farmer, Nassau County

Maynard Nighbert
Tree Farmer, Nassau County


Clifford S. Varnadore (L) with
Geoff Cummings, Bay County


Certified Stewards and neighbors, Duty
Roesh and Ray Thornton (R) with Mark
Asleson, Ray Holzaepfel and John
Holzaepfel (L), Sumter County


Hatcher Farms, Jackson County


Cold\\ni LL( iL-R) N\i Sccn\\2iic%
Iris Bell, Sofia Ritter, Michael Ritter
(holding Sofia), Natalia Ritter, and
Jeremy Hebb; Santa Rosa County


For more information about becoming a Certified Forest Steward or Tree Farmer,
call your County Forester or learn about these programs at:
http://www.fl-dof.com/forest management/cfa steward index.html
http://www.floridaforest.org/tree farm.php









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 also included.

Stumpage price ranges reported across Florida in the 4th Quarter 2009 Timber Mart-
South (TMS) report were:

* Pine pulpwood: $21 $29/cord ($8 $1 1/ton), T (from average 3rd Quarter 2009 prices)
* Pine C-N-S: $32 $48/cord ($12 $18/ton), same
* Pine sawtimber: $57 $82/cord ($21 $31/ton), {
* Pine plylogs: $63 $130/cord ($23 $49/ton), T
* Pine power poles: $118 $148/cord ($47 $55/ton), {
* Hardwood pulpwood: $14 $27/cord ($5 $9/ton), "

Trend Report

Have we hit bottom yet? Yes and no. On the up side, paper and paperboard prices have been
recovering, hence slightly improved pulpwood prices as of late. Growing biomass demand has
somewhat improved chip-n-saw prices, which, on average across the Southern region, were up
slightly this quarter. Indicators for pine sawtimber, however, remain dismal. On top of the
already poor housing construction and related demand, holiday curtailments compounded the
problems for sawtimber prices this quarter.


Average Pine Stumpage Prices for Florida
4th Qtr 1999 through 4th Qtr 2009

140

120

100 -

80



2 0 0
0


94 02 04 12 14 22 24 32 34 42 44 52 54 62 64 72 74 82 84 92 94
Year/Quarter (beginning fourth quarter 1999)


I -- pulpwood --chip-n-saw -U-sawtimber







University of Florida
School of Forest Resources and Conservation
PO Box 110410
Gainesville, FL 32611-0410


Non Profit Org.
US Postage
PAID
Florida
Gainesville
Permit No. 94


Date Event, Location, Contacts
Forest Stewardship Workshop, Diversify Income from Your Land, 9:00 am 3 pm ET, UF-IFAS
March 11 Hillsborough County Extension Office, \. ni,. -, FL. Contact Rob Northrop at (813) 744-5519 x.106 to
register.
Florida "Working Forests Work!" Awareness Legislative Event, 10:00 am evening, Tallahassee,
March 16
FL. Details at http://www.floridaforest.org/legislative updates.php

Forest Stewardship Workshop, Diversify Income from Your Land, 9:00 am 3 pm ET, UF-IFAS Clay
March 23 County Extension Office, Green Cove Springs, FL. Contact the Extension Office at ('" 14) 284-6355 to
register.
UF-IFAS Pesticide Applicator CEUDay, 8:30 am 4:00pm EST, broadcast via Polycom to UF-
IFAS Extension Offices across Florida. See http://pested.ifas.ufl.edu/index.html for details.

UF-IFAS Aquatic Weed Control Short Course, Coral Springs, FL. The Aquatic Weed Control Short
Course is designed to benefit those new to the industry and experienced professionals seeking a
comprehensive update on all things related to aquatic weed control. See
http://www.conference.ifas.ufl.edu/aw/ for details


May 4


Forest Stewardship Workshop, Diversify Income from Your Land, 9:00 am 3 pm CT, UF-IFAS
Walton Countv Extension Office. DeFuniak Springs. FL. Call (850) 892-8172 to register.


The Florida Forest Steward is a University of Florida Cooperative Extension Service, Florida Division of Forestry and
Florida Tree Farm joint project:

Chris Demers (editor), School of Forest Resources & Conservation, UF, P.O. Box 110410, Gainesville, FL 32611-0410,
(352) 846-2375, cdemers(iiufl.edu
Dr. Alan Long (co-editor), School of Forest Resources & Conservation, UF, (352) 846-0891, ail2(iiufl.edu
Tony Grossman (co-editor), Florida Division of Forestry, 3125 Conner Blvd, Room R2, Tallahassee, FL 32699-1650,
(850) 414-9907, grossma(5idoacs.statefl. us
Chris Wynn (co-editor), Florida Fish and Wildlife Conservation Commission, 620 South Meridian Street, Farris Bryant Building,
Tallahassee, FL 32399-1600, (850) 488-3831, Chris. Wvnn(5MvFWC.com
Jon Gould (co-editor), Florida Tree Farm Committee, 4923 Windwood Circle, Birmingham, AL 35242, (205) 991-9435,
gouldjh(iibellsouth.net




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