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Volume 9, No. 4 Winter 2003
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 firstname.lastname@example.org
|Tax Tips for 2002|
Hard to believe it’s already time to start thinking about tax time again, but here we are at the beginning of 2003. The following is a summary of “Tax Tips for Forest Landowners for the 2002 Tax Year” by Larry Bishop, Forest Taxation Specialist with the U.S. Forest Service. This is intended to inform you of some of the things to keep in mind when preparing your Federal income tax return for the 2002 tax year, particularly if you incurred any costs, revenues or cost-share payments associated with timberland management. This is by no means exhaustive and we strongly recommend consulting other sources for a more comprehensive treatment of this topic. Some useful on-line resources are provided at the end.
Your Basis and Tax Records
Passive Loss Rules
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.
Caution: the credit and 7-year 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
1 - Include the payments as income and then recover the part that you pay plus the cost-share payment through the amortization and reforestation tax credit described above.
2 - Exclude the “excludable portion” from income if certain
conditions are met:
Cost-share programs approved for exclusion by the IRS are the Forestry Incentives Program, Forest Stewardship Incentive Program, Wetlands Reserve Program, the Environmental Quality Incentive Program, and the Wildlife Habitat Incentive Program. 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.
Conservation Reserve Program (CRP)
Management and Maintenance 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.
Timber Tax Resources on the Internet:
“The Forest Landowners Guide to the Federal Income Tax” (Ag. Handbook No. 718) provides a thorough overview of timber taxes. You can access this, “Tax Tips for Forest Landowners for the 2002 Year”, and other publications on-line at the bottom of the Southern Region Forestry Extension page at www.soforext.net/
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.
Findings by Longleaf Alliance
Production of container-grown longleaf seedlings has almost doubled since 1996 (data collected by the Longleaf Alliance). As container production increased across the Southeast, planting guidelines for container-grown longleaf appear to have been adapted from bareroot longleaf planting guidelines. Many tree planters, experienced in planting bareroot loblolly and slash pine, believe that “deeper is better” regardless of the pine species being planted. Planting guidelines for longleaf typically emphasize a narrow planting window with a major concern with “shallow planting” that will expose the plug. The prevailing theory is that an exposed plug will act as a “wick”, drying out the plug and increasing the chances of seedling mortality. Furthermore, most guidelines allow for the terminal bud to be covered with soil at the time of planting, assuming that erosion will uncover the bud and allow unrestricted growth. Consequently, these planting guidelines tend to encourage “deep planting”.
To test the validity of these long-accepted guidelines, The Longleaf Alliance installed four separate planting depth studies with container-grown longleaf pine seedlings in 1998, 2000, and 2002. The findings of these studies are summarized in the tables below. The silvopasture and Godwin sites are well-drained upland soils, the orchard site has moderately-drained soils, and the Monroeville Experimental Field site is poorly drained and wet. Very shallow planting depths were tested at the Monroeville site, the most shallow testing with half of the plug out of the soil.
Results from these studies indicate that, on some sites, deep planting may reduce seedling survival and growth. Results also indicate that containerized longleaf seedlings may be more tolerant of shallow planting than previously thought, thus possibly discrediting the “wick” theory. Surprisingly, plugs only half-planted at the Monroeville site showed the best survival there. Guidelines for other states may be adjusted but further studies are required before “shallow planting” is universally adopted.
For more information about these planting depth studies, contact Mark
J. Hainds at 334-427-1029, or email@example.com
Wildlife Plant Feature: greenbriars (Smilax spp.)
Armed with thorns and rich with succulent shoots, smilax vines are
important wildlife plants across their broad range. About fourteen species
are native to the southeastern U.S. and most are important food plants
for a variety of animals.
Leaves: Alternate, deciduous or evergreen, usually with 3 main veins and netted interveins.
Flowers: Small, trumpet-shaped flowers in small clusters,
greenish, yellowish or brownish;
Wildlife value: The fruits of greenbriars are consumed by ruffed grouse, wild turkey, northern bobwhite quail, and more than 40 species of songbirds. The foliage and young shoots are an important food source for white-tailed deer, ruffed grouse, swamp rabbits, marsh rabbits, eastern cottontails. Beavers enjoy the underground tubers.
For more information on wildlife food plants see the reference above
or the University of Florida's 4-H Companion Plant page at www.sfrc.ufl.edu/4h/Trees_Plants/Plants/plants.html
|Timber Price Update|
is useful for observing trends over time, but does not necessarily reflect
current conditions at a particular location. Landowners considering a
timber sale would be wise to let a consulting forester help them obtain
the best current prices.
Click on the link to see the graph - use the "Back" function to return here.
|Stewardship Mailing List Emergency - We Still Need Your Help|
|We’re still looking for updated addresses. U.S. Post Offices in some parts of the state are no longer delivering to route-box addresses (example: RR 1 Box 234). They will only deliver to 911 addresses: a house number followed by a road, street, drive, lane, circle, place, etc. (example:123 Hound Dog Rd). PO Box addresses are good too. If you currently have a route-box address and know your 911 address, please take a moment to send your 911 address to Chris Demers at University of Florida, PO Box 110410, Gainesville, FL 32611; or firstname.lastname@example.org. If you don’t know your 911 address, ask your local post office. If your 911 address is not yet available, simply send it to us when it is. Thanks very much in advance for your help!|