October 2009 May 2010 Page 1 of 3 Page 1 of 3 A Product of the Forest Utilization Department May 2010 In This Issue... Tax increases likely for 2011 timber sales Tax increases likely for 1 Under existing tax law, income from timber 2011 sales conducted during 2011 will be taxed Forests and carbon meeting on May 20th 1 higher than current rates. Biofuels to require management records Upcoming Events 2 The Jobs and Growth Tax Relief Reconciliation Act of 2003 set the current long-term capital gains rates at 15% for most individuals and 2 down to 0% for low income citizens. The rates set by the 2003 Act are set to expire on De- Forests and Carbon 3 cember 31, 2010. The President's budget pro- Meeting Announcement posal for next year includes a recommendation to allow those rates to expire for 2011 and afterwards. Forest Utilization Staff Nathan McClure Department Chief 478.951.4548 nmcclure@gfc.state.ga.us Risher Willard Forest Products Marketing 912.739.4734 rwillard@gfc.state.ga.us Joshua Love Carbon/Ecosystem Services 706.437.6961 joshl@gfc.state.ga.us Dru Preston Carbon/Forest Product Certification 478.751.1746 dpreston@gfc.state.ga.us The result of the reversion to pre-2003 capital gains provisions on landowners selling timber will be that most individuals will see the capital gain tax rate rise from 15% to 20% for 2011. The increase is highest for lower-income families. Currently, those families that file income tax as "married filing jointly" and with a combined taxable ordinary income of less than $68,000 have a 0% capital gains tax rate. This rate is expected to increase to 10% in 2011. The tax on a timber sale that yields a gain of $50,000 will be $7,500 in 2010 and $10,000 in 2011. For low income families, the tax would be $0 in 2010 and $5,000 in 2011. Every taxpayer should consult with a qualified tax professional to determine the actual impacts in their own situation. However, landowners who are considering a timber sale within the next couple of years should be aware of the impact of this potential tax increase, just as they should consider the status of the timber markets and the biological condition of their timber stands. Source: Tax Policy Center, http:// www.taxpolicycenter.org/taxtopics/2010Budget-impose-20-percent-rate.cfm Forests and carbon meeting to be hosted by GFC on May 20th The Climate Action Reserve (CAR), a national carbon offsets program that now commands over 60% of the domestic voluntary carbon market, will conduct an informational half-day meeting on May 20th, 2010 at the GFC headquarters located in Macon. CAR representatives will provide an overview of the program, and explain how a forest property can effectively generate carbon credits. All interested stakeholders are encouraged to attend this free event. CFE credits will be available and lunch will be provided at the conclusion of the meeting. Attendance is free, but registration is required for planning purposes. Please refer to the attached meeting announcement for complete details and instructions for registering online. For additional information, please contact Josh Love (contact information on this page of the newsletter). October 2009 May 2010 Page 2 of 3 Biofuels markets to require land management records Landowners who wish to sell wood from their pine plantations to the liquid biofuels market must maintain records showing active management of their land. The Energy and Independence Act of 2007 restricted the definition of "renewable biomass" for liquid fuel production to trees from actively managed forest plantations, logging slash, and "pre-commercial" thinnings. The biomass from logging slash and "pre-commercial" thinning can be removed from any area except old-growth forests and rare and endangered ecological communities. However, wood chips from merchantable-sized trees can only be harvested from forest plantations that were actively managed in December 2007. In February of this year, the US Environmental Protection Agency released the specific rules for biomass sourcing for liquid fuels under this Act. Of most impact for forest landowners is the provision that stipulates how documentation can be made to show that the land was actively managed as a plantation in December of 2007. The EPA provides a list of alternative documents that are acceptable, including: 1. Sales and/or purchase records for planted trees, fertilizer, weed control, or seedlings. 2. A written silvicultural management plan. 3. Documents that show participation in a Federal, state, or local silvicultural program. 4. Documents that show participation in a forest certification program. 5. An agreement for land management by a professional for- ester that indicates the land in question Wood suppliers who sell timber to biofuels producers such as Range Fuels will be required to provide copies of at least one of the above-listed documents to the biofuels producer from each landowner where whole trees are harvested. Landowners should expect to receive requests for this information. Similar documents are required for other agricultural crops harvested for biofuels. In addition to the documentation for actively managed plantations, wood suppliers will also record the locations of biomass harvests for all types of biomass, including logging slash and any pre-commercial thinnings. The EPA suggests that electronic maps created using GPS technology be used by the wood suppliers and provided to the biofuels producers. Federal law requires that biofuels producers maintain the documentation described above. Landowners, loggers, and wood suppliers involved in biofuels markets should be prepared to provide this information. This rule only applies to biomass being used for liquid transportation fuels. Details on the EPA rule can be found at http://www.epa.gov/ otaq/fuels/renewablefuels/regulations.htm. UPCOMING FORESTRY EVENTS JUNE Timber & Biomass Expo Southeast http://timberexpo.com June 11-12, 2010 Valdosta, GA JULY 2010 Georgia Forestry Association Annual Meeting http://www.gfagrow.org/annualmeeting.asp July 11-13, 2010 Amelia Island, GA AUGUST Southeast Bioenergy Conference http://www.sebionergy.org August 3-5, 2010 Tifton, GA BioProExpo http://www.bioproexpo.com August 24-26, 2010 Atlanta, GA International Woodworking Fair 2010 http://www.iwfatlanta.com August 25-28, 2010 Atlanta, GA May 2010 Page 3 of 3