Chapter 6 Evergreens Intended For Use As Christmas Trees 1

Size Requirement Evergreens intended for use as Christmas trees are part of the horticultural classification. Therefore, the minimum acreage for classification is 5 acres of land actively engaged in the commercial production of evergreens. 2

Income Requirements Instead of the standard income requirement for other horticultural land, the General Assembly requires that the North Carolina Department of Revenue establish an “in lieu of gross income” requirement until the evergreens are harvested. 3

Income Requirements NCDOR is also required to establish a gross income requirement for this type of horticultural land that differs from other horticultural land. This separate gross income requirement will be applied when the evergreens are harvested from the land. Until that time, the property must meet the standards established in the “in lieu of gross income” requirement. 4

In Lieu of Gross Income Requirement While Christmas tree farms are generally associated with the mountains, there are a number of Christmas tree farms located throughout the state. NCDOR establishes one “in lieu of gross income” requirement and one gross income requirement for the mountains (Major Land Resource Area 130). NCDOR also establishes a second “in lieu of gross income” requirement and a second gross income requirement for the rest of the state (Major Land Resource Areas 133A, 136, 137, 153A, and 153B). 5

In Lieu of Gross Income Requirement The “in lieu of gross income” requirement is that the trees must be managed under a sound management program until they are harvested. While the recommended numbers (spacing, harvest cycle, etc.) differ between the two regions, the principles of the sound management program are the same: 6

In Lieu of Gross Income Requirement Sound Management Practices 1.Proper site preparation, controlling problem weeds and saplings, taking soil samples, and applying fertilizer and lime as appropriate. 2.Proper tree spacing. 3.A program for insect and weed control. 4.An appropriate harvest cycle. 7

Gross Income Requirement At the date of this publication, the gross income requirement for acres undergoing Christmas tree harvest is $2,000 per acre for the mountains (MLRA 130) and $1,500 per acre for the rest of the state (all other MLRAs). Once the specific acres are harvested, the acres revert to the “in lieu of gross income” requirement until it is time to harvest once more. 8

UVAB Use-Value Manual The Christmas tree requirements are published annually by NCDOR in the UVAB Use-Value Manual. 9

Christmas Tree Examples 10

1-Q Owner applies for horticultural PUV on an 8-acre tract recently planted in Christmas trees. The owner has no income to report for the tract. 11

1-A There is no gross income requirement for this tract until the trees are being harvested. Instead the tract must meet the “in lieu of gross income” requirement for the years preceding the harvest years, which basically details the sound management practices for Christmas tree production in the geographic region. 12

A 9-acre tract planted in Christmas trees is currently receiving present-use value. The trees are entering the harvest cycle and it will take 3 years to harvest the entire tract. There are 4 acres undergoing harvest this year. The tract is located in MLRA 130 Mountains. 2-Q 13

2-A The gross income requirement for acres undergoing Christmas tree harvest in MLRA 130 Mountains is $2,000 per acre. Since 4 acres are undergoing harvest this year, the tract needs to produce a minimum of $8,000 gross income for the year. Once the harvest is completed on the 4 acres, the requirement for those acres will revert to the “in- lieu of income” requirement. 14

A 9-acre tract planted in Christmas trees is currently receiving present-use value. The trees are entering the harvest cycle and it will take 3 years to harvest the entire tract. There are 4 acres undergoing harvest this year. The tract is located in MLRA 136 Piedmont. 3-Q 15

3-A The gross income requirement for acres undergoing Christmas tree harvest in MLRA 136 Piedmont is $1,500 per acre. Since 4 acres are undergoing harvest this year, the tract must produce a minimum of $6,000 gross income for the year. Once the harvest is completed on the 4 acres, the requirement for those acres will revert to the “in- lieu of income” requirement. 16