Proposed Tax Strategies for Forestland Conservation

2  Forest Service Tax Team is not only involved in tax education Last FY we recommended to the Forest Service Management Team several tax strategies for conservation of private forestland

3 Proposed Tax Strategies for Forestland Conservation Two recommendations already have been acted upon: 1.Make permanent the Pension Preservation Act of 2006 (PPA; P.L ) incentives for donation of conservation easements (PPA increased deduction for qualifying donations of conservation easements to 100 percent of AGI for farmers and …

4 Proposed Tax Strategies for Forestland Conservation … ranchers or 50 percent of AGI for other individual taxpayers, and extended the carryover period from 5 to 15 years, from Dec through Dec. 31, 2007) Food, Conservation, and Energy Act of 2008 (FCEA; P.L ) extended incentives through Dec. 31, 2009

5 Proposed Tax Strategies for Forestland Conservation 2.Enact tax incentives for producers of biofuel feedstocks FCEA created Biomass Crop Assistance Program – administered by FSA – which authorizes cost-shares up to 75 percent for site preparation and planting of trees for woody biomass, plus up to 15 years of annual payments

6 Proposed Tax Strategies for Forestland Conservation Other recommendations include: 3.Allow the creation of tax exempt bonds to purchase forestland for conservation purposes  Increase availability of funding to acquire forestland for conservation purposes  Minimal

7 Proposed Tax Strategies for Forestland Conservation 4.Develop a form of Family Limited Partnership or Limited Liability Company specifically for family farms and forests  Ensure that working lands qualify for business-oriented tax provisions and facilitate their transfer from one generation to another  Minimal

8 Proposed Tax Strategies for Forestland Conservation 5.Extend tax incentives for farmers, ranchers, and fishermen – e.g., income averaging, and enhanced exclusion provisions for cost-share payments – to forest owners  Income tax parity for owners of all types of working lands  Minimal

9 Proposed Tax Strategies for Forestland Conservation 6.Extend tax incentives for production of commercial forest products to ecosystem services for which no markets currently exist  Acknowledge the value of ecosystem services and relieve the financial burden on owners engaged their production  Large – Traditionally, a profit motive is required to qualify for tax incentives