- Author: Kim Ingram
“Managing your forest as a business comes with both complexity and tax benefits. Working with a tax professional and a Registered Professional Forester (RPF) who has experience in the various financial aspects of forest ownership is important for ensuring forest landowners also enjoy the financial benefits their forest offers.”
- Larry Camp, RPF, forest landowner, retired IRS forester and Forest Stewardship Workshop presenterLarry Camp knows taxes and forests. As a retired IRS tax professional and forest landowner, he acknowledges that income and expenses related to forest management have tax consequences for forest landowners, whether the forest is owned as a business or not. In California, owning forestland for investment or business purposes is cited by just under 50% of families and individuals as a main reason for owning the land, with the purpose of timber production being cited by only 10% (Butler, B., et all. 2016). Even if a forest landowner doesn't cite financial investment or consider owning forestland for revenue purposes, there are still important financial aspects to forest land ownership that every owner should be aware of and take into consideration.
Q: As a forest landowner, do you need an accountant or tax professional?
A: Yes.A tax accountant, enrolled agent, or tax attorney should be a part of your management team to address questions as they arise or in unique situations. However, there are many resources available to forest landowners to assist in tax preparation such as the Forest Landowner's Guide to the Federal Income Tax found at timbertax.org. Remember, each taxpayer's circumstances need to be considered for the appropriate application of tax law and regulations. Individuals may or may not feel confident doing this work themselves. Talk with several accountants and see if they've done timber/forestry work before you sign up with them. A Registered Professional Forester (RPF) may also have experience in tax issues.
Q: Why would I want to establish my forest as a business? How would I do that?
A: Consider that you may have a fire on your property someday. Under current law you will not be able to claim a casualty loss if your forest land is not identified as a business, unless it is covered by a federally declared disaster proclamation. Are you traveling a distance to and from your property? This travel may be a business deduction if you keep a mileage log and receipts and the travel is for a business purpose. Establishing your forestland as a business can be accomplished by filing a form Schedule C with your tax return. There may be other state and local requirements as well, so check with your tax advisor. It is very important to keep good records to support your business especially if it may be some time before you have income.
Q: Can I still be a business with only periodic income?
A: You do not necessarily need an annual stream of income to qualify as business, but expenses you claim need to be an ordinary and necessary part of your business. This issue often arises in connection with a “hobby loss” under Internal Revenue Code (IRC) section 183. Discuss the issue with a knowledgeable tax advisor and/or RPF.
Q: What if I decide to harvest timber?
A: Generally, you should prepare and file Form T with your taxes if you harvest timber. For record keeping purposes, it is recommended that you update Form T annually which will save time when you actually need to file the form. If selling timber, you will also have to pay a yield tax to the state unless you meet certain exceptions. Review the Landowner's Guide (see link above) and consult with your forester and tax advisor regarding the best tax treatment.
Q: What if I received cost-share money for forest management activities?
A: Participation in cost-share programs such as Cal Fire's California Forest Improvement Program (CFIP) and the Natural Resources Conservation Service's Environmental Quality Incentives Program (EQIP) to fund forest management activities will also have tax ramifications. Typically, money you receive through cost-share programs should be reported as income and your expenses should be reported, as they will often result in a potential deductible loss given the cost share requirements of both programs, especially if you pay a contractor to do some or all of the work. If you do the work yourself, the tax implications are more involved and you should consult with your tax advisor. The applicable federal statue and regulation are under IRC section 126. CFIP payments are currently exempt from Calif. state income tax.
Q: Is estate planning important when I own a small parcel of forestland?
A: Passing on forestland to future generations is identified by over 70% of forest landowners as an ownership goal. Yet legacy planning, including estate planning, is something often neglected. Legacy and estate planning is often important even to those owning smaller acreage because estate tax and probate issues are determined by the total value of the estate. Current Federal law states that an estate generally will not pay estate tax unless the total value of assets totals $22 million for a couple filing jointly. Note, current provisions of the law expire in 2025 unless amended by Congress. Forest landowners should also monitor California legislation regarding proposals to re-impose an inheritance tax where the estate value exceeds a certain amount.
Another benefit to estate planning is to address California probate issues. Estate planning can reduce the expenses and long timelines associated with probate in California.
DISCLAIMER - The information in this blog is for educational purposes only. It is NOT legal or accounting advice. Please consult a tax professional.
For more information on forest taxation and estate planning, please see the Forest Stewardship Series 22: Forest Taxation, Estate Planning and Conservation Easements, ANR Publication 8252.
Financial considerations are just one aspect to owning forest land. Protection of forest resources through active management is what forest stewardship is all about. To learn more about Forest Stewardship and Forest Stewardship workshops hosted by UC Cooperative Extension, please visit http://ucanr.edu/forestryworkshops
- Author: UC Berkeley Public Affairs
Reposted from the UC Berkeley College of Natural Resources News
Fire has been a central component in California's natural and human history for millennia. Native Americans' use of cultural burns in landscape management, in addition to lightning-ignited fires that burned unhindered, have long impacted most of the state's ecosystems. However in the late 1800s, California's landscape underwent an era of Euro-American fire exclusion and suppression. As the United States began suppressing fire across western ecosystems, forests became increasingly dense with fuel which easily ignites in warm weather conditions.
In a study published in Frontiers in Ecology and the Environment today, environmental science, policy, and management professor Scott Stephens and co-authors investigate the role which fire and restoration thinning could play in restoring California's forests. Stephens argues that allowing forests to burn does not necessarily conflict with the government's environmental objectives to promote carbon storage and water availability. In the long-term, fire and restoration thinning can help forests continue to provide natural services while building ecosystem resilience to climate change.
A century of fire suppression coincided with the loss of larger, more fire-resistant trees from selective logging. With the worsening impacts of climate change, wildfires have grown increasingly destructive and high-intensity in recent years, and megafires threaten the biodiversity of many native ecosystems.
Stephens argues for the return of fire in California's forest management techniques. “With climate change and continued ignitions from people and lightning, there is a great need to move decisively,” says Stephens. “The good news is rather than conflicting with other environmental objectives, fire and restoration thinning employed now will provide numerous co-benefits.”
The authors focus on two primary management strategies: burning and restoration thinning. Fire treatments include prescribed fires, in which managers intentionally burn an area in accordance with a site-specific plan. Prescribed burns reduce dead wood, leaf litter, and small trees, which act as hazardous fuel layers in seasonally dry forests. Additionally, forest managers can monitor wildfires that are ignited naturally by lightning and, where appropriate, allow such ignitions to burn—a technique that has improved the ecological resilience of several National Parks and forests in much of the United States.
Restoration thinning—activities such as chipping, shredding, and whole-tree removal—can reduce fuel and mimic the effects of burning. However, mechanical thinning practices do not aid the many native species which rely on smoke and heat to germinate or on burnt habitat to thrive.
Importantly, the study describes how such management strategies can improve overall biodiversity, water quantity, and carbon sinks. Pyrodiversity, or the degree of heterogeneity in the age and size of a burned landscape, can support more diverse bird, pollinator, and flowering plant communities. The authors describe the challenge in maintaining complex tree canopy structures for threatened species, such as the California spotted owl. In addition to increasing streamflow and enhancing long-term carbon sequestration, the proposed management strategies could lower the likelihood of high-severity fires in the future.
“Even though increasing the scale of restoration is daunting, I am optimistic,” says Stephens. “Forests are just too important to the people and wildlife of California. But we need to act or severe wildfires and drought will continue to change forests right in front of us. We can and need to do better.”
Management strategies would need to account for the difficulty in controlling hazards from smoke, as well as how volatile weather conditions can cause undesired fire outcomes. To ensure the safety of the forest and nearby communities, the study finds that prescribed burn plans must integrate information on weather, topography, fuel type, ignition patterns, and other factors. The authors call for increased collaboration between Native American tribes and forest managers, highlighting the importance of longstanding indigenous knowledge and practices.
Now the COVID-19 pandemic is expected to impact fire suppression, an activity that necessarily involves groups working in close proximity. “Firefighters train, sleep, shower, eat, and fight fire in groups, and the effectiveness of firefighters depends on the ability to deploy and work closely to extinguish fires,” says Stephens. “New protocols are being developed for this summer and fall that will work to make groups smaller and to increase fire prevention. While these measures are needed this year, they do not address the fundamental fire problems in California forests that are addressed in this paper.”
The study was conducted in collaboration with researchers from the University of California, Merced, the University of New Mexico, the University of Wisconsin, Madison, Colorado State University, and the University of Western Australia. Read the full paper in Frontiers in Ecology and the Environment website.
- Author: Kim Ingram
Private forestland landowners have a unique opportunity to enjoy the economic, ecological and social benefits forests offer. The public also benefits from private forests as they play a critical role in the connectivity and functioning of the larger forest ecosystem.
According to the National Woodland Owner Survey, California family owned forest land covers 6.3 million acres with approximately 70% of owners living or working directly on this forest land. Owners cite the values of privacy and the physical beauty of the forest as the primary reasons for ownership.
The opportunity to preserve the health and diversity of their forests contributes to why landowners take action to protect their homes and forestlands with an eye to passing it on to future generations. Protection of forest resources through active management is what forest stewardship is all about.
A forest management plan is an owners guide to the what, where, why and how of active forest management. The plan clearly describes the current and desired conditions of the forest resources, what short and/or long-term goals the landowner has for the land, what management actions can be taken to achieve those goals, and what resources are needed for implementation.
Forestry and forest ecology learning session. Photo by Kim Ingram.
A completed plan can also help the landowner meet grant requirements when collaborating with state and federal agencies for project funding. Yet for all that a forest management plan can do, less than 15% of private forest land owners have a plan. Through a contract with CalFire, and in association with Forest Landowners of California, USFS Region 5, the American Forest Foundation, California Association of Resource Conservation Districts, and the California Fire Safe Council, UC ANR is hosting a series of three-day workshops throughout northern California to help landowners develop a forest management plan to increase the resilience of their forestland and help them meet their ecological and economic management goals.
The workshops address landowner management objectives and planning, forest restoration, fuels reduction, project development, permitting, and cost-share opportunities. Participants will connect with other landowners and learn how to collect information to develop their own management plans. Participants who complete their plans will be eligible for a free visit by a Registered Professional Forester to assess its content and discuss next steps.
Workshop participants measuring tree height using Biltmore sticks. Photo by Kim Ingram.
Upcoming workshops are:
March 7, 8 and 14 at Shasta College, Redding
April 25, 26 and May 9 at Government Center, Mariposa
June 27, 28 and July 11 at Blodgett Forest, Georgetown
Registration for the workshop costs $60. Lunches and materials will be provided. To register, please go to http://ucanr.edu/forestryworskhopregistration.
- Author: Jeannette Warnert
Reposted from UC Agriculture and Natural Resources news
Although individual extreme weather events cannot yet be reliably linked to global climate change, the warming planet may be contributing to recent weather disasters in California. Across the state, 129 million trees died as a result of the drought of 2011-2016, many of them in the Sierra Nevada. Last fall, the worst wildfires in the state's history whipped through wildland areas and neighborhoods, and then were followed by a January deluge and deadly mudslide.
Climate change is also impacting agriculture. The winter chill that farmers rely on to re-boot cherry, pistachio, walnut and other important fruit and nut crops has been curbed by unseasonably warm nighttime temperatures. Sustained summertime heat waves are damaging crops and putting diminishing water resources under stress.
Climate change isn't just about the planet. Increased frequency and intensity of climate extremes impact peoples' lives by forcing evacuations and migration from fire- and flood-prone areas, reducing the availability and safety of food, and dampening emotional well-being.
How can Californians grapple with climate change?
On the front lines of climate change education, mitigation and adaptation is UC Cooperative Extension (UCCE), with its network of scientists headquartered throughout the state, living and working in communities where local climate change impacts must be addressed.
In 2015, UCCE's parent organization, UC Agriculture and Natural Resources (UC ANR), formed a Climate Change Program Team to lead a coordinated effort by UC ANR staff and academics dealing with climate change. The team surveyed UC ANR academics to find out about their current role in California climate change resilience.
“Eighty percent of respondents thought incorporating climate change impacts, mitigation and adaptation in their programs is important,” said UCCE specialist Ted Grantham, a member of the program team. “Less than half are actually doing so.”
The barriers respondents shared to working on climate change include technical complexity, lack of relevant information, and discomfort with the difficult conversations climate change can trigger. The program team brought together a diverse group of specialists, advisors and staff for a two-day workshop in February to increase capacity to raise public awareness about climate change, find practical ways to reduce the impacts of climate change, and help communities adapt to the reality of a changing planet.
Keynote speaker Michael Crimmins, a climate science extension specialist at the University of Arizona, said land-grant outreach programs have the interdisciplinary expertise and connections to provide decision support to farms and communities facing a warming world.
“Climate change is too big to tackle alone,” he said. “We have a lot of programs that can nibble at the edges. If everyone nibbled at the edge, we can make a difference.”
Resources are available for climate change extension
Myriad climate change resources were presented. UC Davis professor Arnold Bloom shared a free online college course posted at http://climatechangecourse.org. The course examines the factors responsible for climate change, the biological and social impacts, and the possible engineering, economic and legal solutions. Forty-eight mini-lectures, assignments and even exams are available to anyone willing to devote time to understanding climate change.
UCCE specialist Jeff Mitchell explained ongoing efforts to implement conservation agricultural practices on California row crop land. Research has shown the potential for climate change mitigation with precision irrigation and tillage reduction, practices that sequester carbon in the soil, reduce fertilizer needs, improve soil quality and increase yield.
Greg Ira, coordinator of the UC California Naturalist program, said a new advanced training module on climate stewardship is in development. The training will be provided to select certified California Naturalists, volunteers who work with partner organizations across the state on environmental stewardship, nature education and citizen science.
UCCE specialist Maggi Kelly introduced the website http://Cal-Adapt.org, which contains volumes of climate change projections and climate impact data from California's scientific community. Users can explore projected changes in temperature, precipitation, snowpack and sea level rise in California over this century with interactive climate data visualizations. They can download data, find peer-reviewed research and learn how to use climate projections.
Leslie Roche, UCCE rangeland management specialist, conducted rancher interviews after the 2011-2016 drought to gauge whether they consider climate change an important consideration for their ranching businesses, and whether they believe future climate will be different from the past. She found that ranchers are generally confident that they have the skills to manage for long-term drought, and that they are interested in learning about climate change and its potential impacts on their industry.
Roche has aggregated rangeland drought- and climate-management resources online at the Rangeland Drought Hub. The website includes “Voices from the Drought,” the personal stories of ranchers discussing the agonizing decisions they made during the drought – such as culling cattle, reducing staff, paying more for feed, and allocating limited water resources.
Steve Ostoja, the director of the USDA's California Climate Hub, said the program helps California farmers, ranchers, forest landowners and tribes maintain sustainable communities and ecosystems by adapting to climate variability and change. Guido Franco of the California Energy Commission said the organization recently released its fourth Climate Assessment. The assessment presents research on the impacts of climate change on the state, as well as strategies to dramatically reduce greenhouse gas emissions.
“I found the information and materials compiled by the Climate Change Program Team very useful,” Mitchell said. “I will be consciously using these in extension education when I can.”
UC California Institute for Water Resources academic coordinator Faith Kearns led a segment of the workshop on climate communication, taking into account the emotional side of climate change by practicing active listening and empathy building. She shared climate change communication strategies used by effective national advocates, such as Katherine Hayhoe, an evangelical Christian and climate scientist who recommends a soft approach that starts by establishing personal connections with individuals before diving into climate science.
Another approach is that of Sarah Myhre, a climate scientist at the University of Washington who believes scientists should speak boldly about climate change facts.
“… scientists are naturally risk-averse when it comes to public dialogue,” Myhre wrote in an essay on Guardian.com. “The verbal, argumentative skills common to professions in law, politics, or business do not come easily to most scientists. … Our job is not to objectively document the decline of Earth's biodiversity and humanity, so what does scientific leadership look like in this hot, dangerous world?”
At the meeting, UCCE advisor John Karlik pointed out that some listeners want to hear straight science, just facts.
“We're all needed,” Kearns said. “We all come with a difference set of circumstances and groups that we can connect with.”
The workshop closed with action planning and next steps. Among the needs presented during the session were:
- A climate change online portal with resources, tools and data that allow advisors and specialists to translate information into decision support.
- Simplified scientific information and case studies to personalize climate change impacts.
- Training for educators, advisors, specialists and volunteers.
- Research-based evidence on the impacts of climate change on food security and the cost of healthy food.
- A glossary of climate change terms.
In their article on the climate change survey in California Agriculture journal, the members of the UC ANR Climate Program Team said they believe UCCE is well positioned to understand and communicate the consequences of climate change to the public, and to identify strategies to mitigate negative outcomes for local economies, the environment and public health.
“UC ANR can become a powerful catalyst for climate adaptation and we should embrace a leadership role in advancing the knowledge and tools needed for a climate-resilient California,” they wrote.
- Author: Kat Kerlin
Reposted from UC Davis News
As climate change transforms California's landscape in the years to come, coastal habitats appear to be more resilient than many other places in the state. (Getty Images)
Current levels of greenhouse gas emissions are putting nearly half of California's natural vegetation at risk from climate stress, with transformative implications for the state's landscape and the people and animals that depend on it, according to a study led by the University of California, Davis. However, cutting emissions so that global temperatures increase by no more than 2 degrees Celsius (3.2 degrees Fahrenheit) could reduce those impacts by half, with about a quarter of the state's natural vegetation affected.
The study, published in the journal Ecosphere, asks: What are the implications for the state's vegetation under a business-as-usual emissions strategy, where temperatures increase up to 4.5 degrees Celsius by 2100, compared to meeting targets outlined in the Paris climate agreement that limit warming to 2 degrees Celsius?
“At current rates of emissions, about 45-56 percent of all the natural vegetation in the state is at risk, or from 61,190 to 75,866 square miles,” said lead author James Thorne, a research scientist with the Department of Environmental Science and Policy at UC Davis. “If we reduce the rate to Paris accord targets, those numbers are lowered to between 21 and 28 percent of the lands at climatic risk.”
The report notes that this is a conservative estimate because it only examines direct climate exposure. It does not include increased wildfire or insect attacks on forests, which are also intensifying and likely to increase with further warming. These secondary effects are likely to have large impacts, as well, the authors say. For example, during the recent drought, more than 127 million trees died primarily due to beetle outbreaks, and wildfires have consumed extensive amounts of natural vegetation.
68 percent of LA, San Diego regions impacted
The study features maps of the state and shows the climate risk to 30 different vegetation types under different climate scenarios. It projects that at current rates of greenhouse gas emissions, vegetation in southwestern California, the Central Valley and Sierra Nevada mountains becomes more than 50 percent impacted by 2100, including 68 percent of the lands surrounding Los Angeles and San Diego.
“This is the map of where we live,” Thorne said. “The natural landscapes that make up California provide the water, clean air and other natural benefits for all the people who live here. They provide the sanctuary for California's high biodiversity that is globally ranked. This map portrays the level of climate risk to all of those things. In some cases, the transformation may be quite dramatic and visible, as is the case with wildfire and beetle outbreaks. In other cases, it might not be dramatically visible but will have impacts, nevertheless.”
Resilient areas also identified
The study and its maps are being used by state agencies and land managers to make decisions under changing conditions. Commissioned by the California Department of Fish and Wildlife, the data is helping the agency understand not only which parts of the state are vulnerable to climate change, but also which areas are more resilient, such as some coastal areas and parts of northwestern California, so they can ensure they remain resilient.
“In California, we have good information on the vulnerability of fish and wildlife to climate change,” said Whitney Albright, a project manager with the California Department of Fish and Wildlife. “But we were missing this crucial piece of climate risks to underlying habitat. This study helped fill the information gap. We've already started to use its data in our conservation planning efforts.”
The study also provides a risk assessment for policymakers to consider the benefits to California of reaching Paris climate agreement emission targets that limit global warming to 2 degrees Celsius, and the risks to the state of remaining on the current business-as-usual level of emissions and temperature warming.
Co-authoring institutions included the California Department of Fish and Wildlife, Sequoia and Kings Canyon National Parks, and the U.S. Geological Survey.
The study was funded by the U.S. National Park Service and the California Department of Fish and Wildlife./h2>/h2>/figcaption>