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The Florida Forest Steward
A Quarterly Newsletter for Florida Landowners and Resource Professionals
Volume 8, No. 1
A Stewardship Appraisal Category?
Tax Tips for the 2000 Tax Year.
Ask. Joe Steward
Timber Price Update
* t. -t -t j
A University of Florida Cooperative Extension Service and Florida Division of Forestry joint project:
Chris Demers (editor), School of Forest Resources & Conservation, UF, P.O. Box 110410, Gainesville, FL
32611-0410, (352) 846-2375 or cdemers(a~gnv.ifas.ufl.edu
Alan Long (co-editor), School of Forest Resources & Conservation, UF, (352) 846-0891 or AJL(agnv.ifas.
Todd Groh (co-editor), Florida Division ofForestry, 3125 Conner Blvd, Tallahassee, FL 32699-1650, (850)
414-9907 or groht(ldoacs. state. fl.us
Chuck McKelvy (co-editor), Florida Fish and Wildlife Conservation Commission, 3125 Conner Blvd,
Tallahassee, FL 32699-1650, (850) 414-9911 or mckelvc()fiwc.state.fl.us
A Stewardship Appraisal Category?
By Chris Demers, Bill Clark and Bud Goldsby
The Forest Stewardship Program was started in 1990 to provide landowners with technical
assistance and recognition for actively managing their property for timber, wildlife habitat, soil
and water conservation, recreation and aesthetics. In most counties, acres managed for pine
production are appraised under an agricultural classification and taxed accordingly. However,
acres managed for other values are currently appraised and taxed as though the land is under no
management at all. Since these non-timber benefits also require active management and benefit
both the landowner and the people of the State, it has been suggested that acres of certified
Stewardship properties managed for benefits other than timber be valued under a new appraisal
category so that landowners in the Program receive at least a modest level of property tax relief for
actively managing productive habitats. Division of Forestry county foresters Bill Clark (Gilchrist
County) and Bud Goldsby (formerly in Levy County) have done some research in their counties to
see if such a "Stewardship" assessment category could be established.
Some Background on the Process
Individual property assessments are conducted at the county level by the county property
appraiser. The State Department of Revenue (DOR) provides appraisal guidelines to aid county
officials and reviews these assessments for fairness and consistency. Under the Greenbelt Law,
forest land is valued based on its current use value (CUV). The current value of the land and its
potential to produce income is calculated for the property based on the site's "productive value" (i.
e., site index).
Within Gilchrist and Levy Counties, and in most other counties, acres in the Stewardship Program
under timber management generally have been permitted an agricultural pine forest or timber
classification for property tax purposes because for most of these properties:
A/, UNIVERSITY OF
Cooperative Extension Service
Institute of Food and Agriculturel sciences
* management has been or will be continuous;
* a bona fide effort by the landowner to sufficiently and adequately care for the land is evident
* there is effort to have the property contribute to the agricultural economy of the county on a long
term basis; and
* guidelines for minimum trees per acre, operation levels and land rentals for various agricultural
operations in these counties are met.
A Multiple Use Incentive?
Depending on your objectives and the number of trees you plant per acre your property (or part of
it) may not qualify for your county's timber CUV and is therefore appraised as though it is under
no management at all. Land under no management is taxed on its fair market value, the highest
level of CUV taxation possible. Those of you in the Stewardship Program know that acres
managed for wildlife, recreation, or soil and water conservation often require as much time,
planning and effort as those managed for timber. To distinguish acres actively managed for these
benefits from acres under no management, we propose a new CUV category "Stewardship". This
new category would receive property tax treatment similar to timberlands.
Although the benefits provided by non-timber areas of certified Stewardship properties are not
"agricultural," other potential economic and environmental benefits to the county may justify a
specific Stewardship appraisal category. For example, depending on the landowner's objectives,
Stewardship properties may generate revenue for the county by way of nature based recreation.
Money may be spent in the county by people from outside the county visiting Stewardship
properties to observe wildlife, use hunting camps and other outdoor recreation facilities, or
conduct research. According to a recent statewide study by the Florida Fish and Wildlife
Conservation Commission, hunting, wildlife viewing and fishing annually generate approximately
$5.5 billion in retail sales resulting in an overall economic impact of $7.8 billion. Non-timber
areas also provide important ecological values such as soil and water conservation, which have
direct and indirect economic impacts on the county.
The underlying premise of this Stewardship classification idea is
that since certified Stewardship Forests are under active
management for multiple uses, acres managed for uses other thantew
timber should be valued in a category that reflects a deliberate
effort by the landowner to manage the land as a productive unit. If
adopted this classification would be for acres of certified
Stewardship Forests on which timber management is not the sole
objective, but instead, one of several objectives described in the
Stewardship management plan. In this way, landowners can get
timber classification for acres in pine production and the
Stewardship classification for acres actively managed for other
values as specified in the management plan. FO R E ST
This type of classification would require a constitutional amendment and legislative processing.
With some persistent work through the DOF's Administrative Section and property appraisers'
professional associations this idea could get on the table in Tallahassee. We encourage you to talk
to your county forester and property appraiser about the possibility of a Stewardship appraisal
classification in your county.
1Egbert, A.L, V.J. Heller, and D.B. Harding. 2000. Monetary value of nature: an economic impact
assessment of three lakes wildlife management area. Florida Fish and Wildlife Conservation Commission.
by Chris Demers and Dr. Alan Long
The sunny, cool days of winter and spring are ideal for walking in the woods, enjoying the
outdoors with friends, and learning about getting the most out of your land. In early December,
landowners and natural resource professionals gathered on properties in Volusia and Gadsden
Counties to share experiences and information and see examples of long-term, multiple use land
management. The tours highlighted completely different forest ecosystems on opposite sides of
the state: upland pine and mixed hardwoods in Gadsden county, and flatwoods pine and pasture
Leffler Farm and LeFils Ranch, Volusia County
This tour was organized by the Volusia County Extension Office and the Tree Farm program. It
featured two adjacent landowners who received Florida Tree Farmer of the Year awards in the
last ten years. The Leffler Farm features many types of resources, including timber, cattle, and
fertile fields. Vince Leffler, manager of the 5,000 acre tract and Tree Farmer of the Year in 2000,
takes pride in his land and his stewardship philosophy. His family's mission is to coexist in
harmony with nature while realizing a maximum return on their investment. This is accomplished
through regular annual harvests of timber, livestock management, and several provisions for
wildlife, including food plots, openings, stream corridors, and wetlands.
Pine plantations range from two years old (replanted in a comer of the property that was burned
in the 1998 fires) to over 40 years old. Older pine stands have been thinned at least once as their
target for timber production is large diameter sawtimber. Hardwoods scattered throughout the
pine, or in small hardwood stands, provide additional food and cover resources for various
wildlife species. Much of the property is part of a hunting lease.
Along with timber and wildlife objectives, the Lefflers raise cattle, primarily in improved
pastures spread across the property. Sandhill cranes were observed in one of those pastures during
the tour. Although the Lefflers use both prescribed burning and mowing to reduce understory fuel
loads, they have not been able to use these operations as often as they would like. During the tour
they pointed out the limitations of relying on burning and mowing for vegetation control as a
comparison with the adjacent LeFils ranch.
The LeFils ranch received the 1991 Tree Farmer of the Year Award. Although wildlife are
important on their property, their primary objectives are timber and cattle production. In fact, they
generally allow the cattle to browse throughout their plantations from the time they are planted.
Whereas cattle and new plantations can be a difficult combination, they have been successful
with this practice for two major reasons: they only control vegetation along the planted rows
(either by bedding or bedding/herbicide treatments), and they maintain cattle stocking (cows per
acre) at low levels. Enough vegetation grows up between beds to provide forage and to keep
cattle away from the planted trees on top of the beds. Cattle continue to graze through plantations
as they grow older. Consequently, many of their pine stands have a much lower understory shrub
and fuel accumulation than on adjacent properties.
Carnes Lake House and Hunt Camp, Gadsden County
Bob Carnes, Stewardship Landowner of the Year for northwest Florida in 1996, works hard to
provide habitat for quail, turkey, deer, and hogs while maximizing timber growth on his 335-acre
property in Gadsden County. His property also features two fish ponds which are used by a
diverse array of birds and mammals.
Most stops on the tour illustrated the
effectiveness of wildlife openings.
Approximately 5-10% of Bob's
property is maintained as open
habitat, portions of which have been
planted with small grains and
legumes to serve as supplemental
food sources. Plum trees and other
fruit and nut producers were
maintained to provide additional
A loblolly pine stand, planted at 12 x
6 foot spacing, is simultaneously
providing an exceptional timber resource and habitat for many species of wildlife. Permanent
openings and perimeter and interior firebreaks have been established, and every third row has
been mowed to promote early succession food for deer, rabbits, songbirds, and quail. Groups of
existing mast-producing species such as oaks, persimmon, hawthorn, sparkleberry, holly and wild
plum have been retained to maintain habitat diversity.
The last stop on the tour featured an 80-acre upland hardwood stand. Pines were removed from
the stand in 1992 but most snags were left standing for wildlife habitat. While not ideal for timber
production, hardwood stands provide excellent habitat for deer, turkey and birds and add to the
natural aesthetics of a property. This year's exceptional fall colors provided an excellent example
of their natural beauty and an incentive for retaining this type of woodlands.
iTax Tips for the 2000 Tax Year
This information is from the USDA Forest Service's December 2000 Cooperative
Forestry Technology Update, Tax Tips for Forest Landowners for the 2000 Year, and
is meant to give you a heads-up on some timber related items to pay attention to when
you prepare your tax return for 2000. You should consult other sources for a more
comprehensive treatment of tax issues and questions.
Your Basis and Tax Records
Part of the price you receive from a timber sale is taxable income and part is your investment, or
basis, in the timber sold. The total cost of purchased timberland, or the value of inherited land,
should be divided into land, timber, or other capital accounts. In each account, the basis is
adjusted up for new purchases or investments and down for sales or disposals. Keep good
records, including a written management plan, map, and documents supporting all costs and
income. The basis and timber depletion should be reported on IRS Form T (timber), Schedule B.
Passive Loss Rules
Under passive loss rules you can be classified in 1 of 3 categories: (1) investor, (2) passive
participant in a trade or business, or (3) active participant (materially participating) in a trade or
business. You are materially participating if your involvement is regular, continuous, and
substantial. Generally, active participants get the best tax treatment of deductible expenses, but
you must support this 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 meetings, canceled checks for registration fees, and copies of
meeting agendas are some examples of documentation of meeting attendance.
If you are an active participant in a timber business you must dispose of your timber under the
provisions of Section 631 to qualify for capital gains. This means that timber must be sold on a
pay-as-cut or "cut and convert" basis rather than lump sum. If you have considerable passive
income, such as Conservation Reserve Program annual payments, it may be to your advantage to
be considered a passive participant.
Reforestation Tax Credit and Amortization
The reforestation tax credit and 7-year amortization is among the best tax advantages for forest
landowners. If you reforested during 2000 you can claim a 10% investment tax credit for the first
$10,000 spent for reforestation. You can also deduct (amortize) all of your 2000 reforestation
costs (up to $10,000) minus half the tax credit taken, over the next 7 years (8 tax years). You can
amortize reforestation expenses on Form 4562, but the election to amortize must be made on a
timely tax return for the year in which the reforestation expenses were incurred. Passive owners
may not be eligible for this credit and amortization.
Caution: the credit and amortization are subject to recapture if you dispose of your trees within 5
years of planting for the credit; and within 10 years of planting for the amortization.
Capital gains and Self-employment Taxes
You could pay significantly more in taxes if you report timber sale income as ordinary income
rather than as a capital gain. Also, capital gains are not subject to the self-employment tax, as is
Conservation Reserve Program (CRP)
If you planted trees during 2000 under CRP you must report your annual payment as ordinary
income. All other CRP cost-share assistance must also be reported as ordinary income, but
payments used to establish trees can be claimed as part of the reforestation expenses reported for
the reforestation tax credit/7-year amortization.
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). Your claim for casualty
losses cannot exceed the adjusted basis minus any insurance or other compensation. Note that the
IRS has ruled that losses resulting from drought or beetles generally do not qualify for a casualty
loss deduction because they are not sudden, but they may qualify for a business- or investment-
Your annual expenses for the management of an existing timber stand can be itemized during the
tax year they are incurred, although the amounts that can be deducted depend on your tax
category (investor, active, passive). If it is not to your advantage to itemize deductions for 2000
you should capitalize these expenses.
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.
You can access Tax Tips for Forest Landowners for the 2000 Year and other publications online
at the bottom of the Southern Region Forestry Extension page at www.soforext.net/. Also check
out Purdue University's National Timber Tax Website for a comprehensive treatment of
timber taxes. Finally, Agriculture Handbook 718, titled, Forest Landowners' Guide to the
Federal Income Tax, is available on-line.
'Ask Joe Steward
This Ask Joe Steward column deals with an important issue in Florida and the rest of the
southeast invasive exotic plants.
Q: I have recently moved to Panama City Beach and bought a house with a "popcorn" tree in my
front yard. No one seems to know the name of this tree except "popcorn". I guess it is considered
a tough, exotic tree, not liked by some people. I happen to like it but cannot find out anything
about it. If you have any information, please email. It is called popcorn because it has little white
seeds all over that look like popcorn, and when they fall off and get stepped on, they pop like
A: Despite its attractive foliage, the popcorn tree is one in a long list of invasive exotic plants that
is threatening to displace the native flora of some Florida ecosystems. Here's some background
on the problem:
The Chinese tallow, a.k.a. popcorn tree (Sapium sebiferum), was introduced from China in the
early 1900s and has since invaded most of the southeastern states. It is a small tree whose seeds
are widely dispersed by birds and water runoff. The tree's attractive light green, heart-shaped
leaves that yield bright fall colors have rendered it an attractive ornamental and its flowers are
sometimes used by beekeepers for honey production.
However, this tree is threatening to become the prominent component of the marshes, river
margins, and dry uplands of its expanding range displacing native flora and therefore important
wildlife habitat. It is prohibited by the Florida Department of Environmental Protection (DEP)
and is listed as a noxious weed by Florida Department of Agriculture and Consumer Services
(FDACS), U.S. Department of Agriculture (USDA), and the Exotic Pest Plant Council (EPPC).
We are currently working on a publication about controlling invasive exotic plants, including the
Chinese tallow. Spread the word about this tree before it spreads itself too thick. Invasive exotic
plants are a significant threat to Florida's ecosystems today.
Visit the Florida Exotic Pest Plant Council's web site to learn more about this and other exotic
plants that are threatening Florida's ecosystems: www.fleppc.org/
Write, call or email the editor of the Florida Forest Steward with your questions and we will
print responses in the next issue. We welcome questions about articles in this or back issues of
the Steward, specific management practices, economic or financial issues, forest policy issues, or
anything else relating to resource management.
Timber Price Update
Stumpage price ranges reported across
Florida in the 4th quarter 2000 ,.
TimberMart-South (TMS) report were:
$14-$29/cord for pine pulpwood, $53-
$98/cord for pine C-N-S, $75-$105/cord
for pine sawtimber, and $96-$127/cord
for pine plylogs. On average, prices
were the same, down, down, and up for -
the four products, respectively,
compared to 3rd quarter prices. -.
Hardwood pulpwood prices ranged from
$8-$19/cord, which was about the same -.. *"
as that from the previous quarter. A more complete summary of 4th quarter 2000 stumpage prices
is available at your County Extension Office.
Timber Market Conditions
This summary was derived from the annual TMS report. There is little good news to report. Pine
pulpwood markets in the south vary across the region, with average prices down 24% from last
year. Sawtimber is also in a slump. Many mills are "full" across the southeast, with average
sawtimber stumpage prices down 11% from last year. Hardwood prices seem to be experiencing a
modest improvement but vary widely across the region.
The low timber prices in our region are a reflection of excess production in other regions, namely
Canada and Europe, where softwood lumber production has reached record levels, exceeding
domestic demand. To add to the surplus, U.S. imports from other countries jumped from next to
nothing to 907 million board feet in 1999, and increased another 34% in the first half of 2000.
The current Canadian quota on exports to the U.S. expires next April, which may mean more
softwood lumber imports from our neighbor to the north if there are no further trade limits.
A critical part the domestic market is housing. Residential construction accounts for 35% of U.S.
lumber demand, which is expected to reach about 18 billion board feet in 2001. This estimate is
lower than 2000 demand by about 5%. The hope is for consumer confidence to remain relatively
strong during the current economic slowdown so that housing starts and remodeling can pick up
as interest rates change. The key is for the lumber industry to avoid a drastic increase in
production to meet the improved demand (if and when it comes to pass).
In August 2000 we began sending out new Stewardship Binders to
landowners with newly completed and approved Stewardship
Management Plans. The binder contains sections for your plan,
property map, newsletters, workshop notes, and extension
publications. If you have a complete, approved Stewardship
Management Plan and have not received this or the previous tan-
colored binder but would like to, please contact Chris Demers at 352-
846-2375, or cdemers(&anv.ifas.ufl.edu.