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Meridian Institute Dialogue on Forested Lands and Taxation

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No. 3 Sale of Easements to Land Trusts or Government Agencies ... No. 10 Conservation Easement (IRC 2031(c)) No. 11 Conservation Easement (IRC 2031(c) ... – PowerPoint PPT presentation

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Title: Meridian Institute Dialogue on Forested Lands and Taxation


1
Meridian InstituteDialogue on Forested Lands and
Taxation
18 October 2006 Todd Barker Partner Meridian
Institute
2
Meridian Institute is a non-profit organization
that helps people solve problems and make
informed decisions about complex and
controversial societal problems
Services Multi-Party Problem Solving Strategy
Assessment and Planning Leadership in the Theory
and Practice of Collaboration Issues Environment
, Natural Resources, Agriculture, Food Security,
Science and Technology, Security, and
Health Scale Local, national and international
levels
3
Meridian Institute Selected Forestry Projects
  • Millennium Ecosystem Assessment (MA)
  • First and Second International Dialogue on Forest
    Certification
  • Comparative Analysis of the Forest Stewardship
    Council (FSC) and Sustainable Forestry Initiative
    (SFI)
  • Collaborative Adaptive Management Network
    (CAMNet)
  • Workshop Series on Implementation of ESA
    Provisions for Private Landowners
  • Multi-Stakeholder Dialogue on Roadless Area
    Conservation
  • Roundtable on Sustainable Forests
  • Workshop on Assessing the Environmental Outcomes
    of Community-Based Collaboratives (CBCs)
  • Wyoming Landowner Sportsmen Forum
  • Loblolly Pine Genome Funding Principal
    Investigators Meeting

4
Meridian DialogueForested Lands and Taxation
  • Goal
  • Outline federal tax-related strategies to
    eliminate disincentives and promote incentives
    for private landowners, both industrial and
    non-industrial, to maintain forests as forests
    and to prevent further fragmentation in this
    country.
  • 2 Meetings
  • Consensus building process
  • 30 individuals from national and regional
    environmental organizations industrial forest
    landowners non-industrial forest landowners
    state foresters the U.S. Forest Service and
    experts in forest and tax policy and management

5
Dialogue Topics Covered
  • CAPITAL GAINS
  • CONSERVATION EASEMENTS
  • COST RECOVERY
  • ESTATE TAXES
  • MARKET FORCES AND LAND USE POLICIES

6
Recommendations
  • CONSERVATION EASEMENTS
  • No. 1 Income Tax Deduction
  • No. 2 Income Tax Deduction
  • No. 3 Sale of Easements to Land Trusts or
    Government Agencies
  • COST RECOVERY
  • No. 4 Material Participation
  • No. 5 Stewardship, Restoration, and
    Reforestation
  • No. 6 Wilderness Tax Credit
  • ESTATE TAXES
  • No. 7 Estate Tax Deferral An Agreement in
    Principle
  • No. 8 Special Use Valuation
  • No. 9 Section 6166, Business Requirement
  • No. 10 Conservation Easement (IRC 2031(c))
  • No. 11 Conservation Easement (IRC 2031(c))
  • No. 12 Estate Planning
  • TASK FORCE and INDEPENDENT STUDY

7
Implementation
  • Recommendations 1 and 2
  • Increase tax deduction for donation of a
    conservation easement from 30 of income to 50
    of income, and provide unlimited carryover of
    these deductions.
  • Increased the carryover of these deductions from
    5 to 15 years.
  • Congress recently enacted changes that increase
    the tax deduction for donation of a conservation
    easement from 30 of income to 50 and, for
    landowners whose income is more than 50 from
    agriculture including the growing and harvesting
    of trees, 100 of income.
  • Expires for donations made after December 31,
    2007.
  • Recommendation 10
  • Remove the geographic limitations on estate tax
    benefits available through IRC 2031(c) (for
    easement protected lands).
  • Enacted by Congress in 2001

8
Implementation
  • Recommendation 12
  • Integrate estate planning into both public and
    private sector education, extension, and
    cooperative forestry programs designed for
    non-industrial private landowners.
  • Establishment of a National Timber Tax Website by
    Purdue University with funding from USFS.
  • Http//www.timbertax.org/estate/estate.asp

9
Property Taxes
  • Cost Recovery Section
  • Recommendation No. 4 Material Participation
  • Eliminate the requirement of material
    participation for forest landowners and
    eliminate the distinction between businesses and
    investors in order to allow all owners to fully
    deduct management expenses and property taxes
    related to their forestland as they occur.
  • Recommendation No. 6 Wilderness Tax Credit
  • Provide a tax credit for the property taxes paid
    on properties for which an easement has been
    enacted that requires land to be used in a manner
    consistent with lands designated as federal
    wilderness areas (Dialogue members discussed a
    number in the range of a 100 percent tax credit).

10
Property Taxes
  • Recommendation No. 13 Presidential Task Force
    and the Need for an Independent Study
  • Issue (2b) The feasibility and effectiveness of
    reforming any state property taxes for
    forestlands that are still based on highest and
    best use valuation instead of current use
    valuation, and improving conversion protections
    on lands receiving preferential tax treatment.
  • Discussion (2b) A number of forested states
    have recognized that taxing forestlands based on
    their development potential (or highest and best
    use) can force landowners to sell off and
    develop their property

11
Property Taxes
  • Item (2c) Some local governments and regional
    planning entities have been experimenting with
    mechanisms that may encourage more land-efficient
    development patterns, or smart growth. TDR
    programs provide a means for landowners in areas
    planned for maintenance as forestlands to sell
    their development rights to landowners in areas
    planned for development. Clustering programs
    encourage owners of larger properties to
    cluster development in one portion of the
    property and protect the remainder, instead of
    dispersing the development across the property.

12
Meridian Institute
Todd Barker E-mail tbarker_at_merid.org Telephone
1-802-899-2625
Additional Resources
  • Http//www.merid.org/pdf/9044FINAL.pdf
  • Meridian Institute Dialogue on Forested Lands and
    Taxation
  • Http//www.merid.org
  • Meridian Institute
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