From: alra@governance.net
Subject: Attention Maine Timber and Land Use Advocates

Land Rights Network
American Land Rights Association
PO Box 400 – Battle Ground, WA 98604
Phone: 360-687-3087 – Fax: 360-687-2973 
E-mail: alra@landrights.org or alra@governance.net  
Web Address: http://www.landrights.org 
Legislative Office: 507 Seward Square SE – Washington, DC 20003

Attention Maine Timber and Land Use Advocates

Mark Rey, Undersecretary of Agriculture, speaks in Bangor on Sunday.

Don’t miss this meeting.  It will be terrific.

Mark Rey, Undersecretary of Agriculture, has accepted an invitation to speak at 2:00 PM, this Sunday, October 31st at the Richard E. Dyke Center for Family Business at Husson College in Bangor.

Secretary Rey is responsible for both public (US Forest Service) and private timber issues with the Department of Agriculture as well the Natural Resources Conservation Service (NRCS).  He previously was a senior staff member for the Energy and Natural Resources Committee in the US Senate.  Before that he worked in the Forest Products industry.

Mr. Rey has a unique experience and perspective on private land and timber issues in America.  He’ll be talking about Bush Administration activities the past three and a half years as well as recent Congressional action important to private landowners and timber operators.

Included in his talk will be a subject important to non-industrial forest landowners, the Capitol Gain Treatment for Outright Sales of Timber by Landowners, part of the FSC/ETI Bill.  Many non-industrial landowners may not be familiar with this new tax provision in the law recently signed by President George Bush, but it is a real legitimate break for the landowner and at no net cost to the treasury. 

The effort to accomplish this change has been made numerous times over the last six years and for one reason or another is dropped at the last minute. This time with terrific help from Senators Trent Lott (R-MS) and Gordon Smith (R-OR) who were on the conference committee, it is now law.   Mark Rey has consistently supported the change and his knowledge of Timber sale issues was a real asset in the settling of how to treat a sale under 631(b).
Mr. Rey has worked on not only public and private forestry issues, but also used his responsibility for NRCS to allow for a great deal of creativity in working with the Agriculture community.   He has been the leader among the Natural Resource Agencies and has played a positive role on public and private cooperation relating to forestry and agriculture.

Mr. Rey brings a willingness to listen to and, when he can, act on creative new ways of approaching issues relating to forestry and agriculture.   He enjoys questions and any attendee who brings fresh ideas to the meeting will find a receptive audience.

This meeting comes at a congested time in Maine but will be well worth the trip for any Maine landowner or forest land owner to get a better idea of how to work with your government and what your government can do for you.

    Scott K Fish

    Cheryl H. Russell
    Chief Institutional Advancement Officer, Vice President
    Executive Director
    The Richard E. Dyke Center for Family Business
    Husson College
    One College Circle
    Bangor, Maine 04401
    207-973-1052 (Phone) 207-973-1020 (Fax)
    Driving Directions

    From Presque Isle, Maine (North)

    1:  Take I-95 S.

    2:  Take the ME-15/BROADWAY exit- EXIT 185- toward BANGOR/BREWER

    3:  Turn RIGHT onto BROADWAY/ME-15

    4:  Turn LEFT onto HUSSON AVE.

    5:  End at 1 COLLEGE CIR BANGOR ME

    Total Est. Time:  2 hours, 50 minutes Total Est. Distance: 150 miles

    From Portland, Maine (South)

    1: Take I-295 N (Portions toll)

    2:  I-295 N becomes I-95 N (Portions toll)

    3:  Take the ME-15/BROADWAY exit- EXIT

    4:  Turn RIGHT onto BROADWAY/ME-15

    5:  Turn LEFT onto HUSSON AVE

    6:  End at 1 COLLEGE CIR BANGOR ME 

    Total Est. Time:  2 hours, 10 minutes Total Est. Distance: 125 miles 

Timber Tax Provisions Included in FSC/ETI Bill

·	Expensing/Enhanced Amortization of Reforestation Costs (10 Year Cost: $64 million)

Individual and corporate taxpayers could expense the first $10,000 of reforestation costs and amortize the remaining costs over seven years.  Currently, these costs are essentially capitalized over the life of the trees, which can be as long as forty years in many instances.  This change in law is needed to make it more economical for individual landowners to keep their land rather than sell it to developers, which will result in additional urban sprawl.  For corporate landowners, it would help reduce their current 47% effective tax rate on a timber investment, which is significantly higher than a similar investment in countries we compete against. 

·	Revocation of Election to Treat Cutting of Timber as Sale or Exchange (10 Year Cost: $108 million)

Currently, under Section 631(a), corporations can elect to have their timber income taxed at the corporate capital gains tax rate of 35%.  The benefit of this election is the ability to offset capital gain income with capital losses incurred.  In order for forest products companies to benefit from the reduced tax on manufacturing income, they must be allowed to revoke the previous election to have timber income taxed at the corporate capital gains rate.  Otherwise, the forest products industry will be disadvantaged vis-à-vis other U.S. manufacturers solely based on the nature of the product sold.

·	Capital Gain treatment for Outright Sales of Timber by Landowners (10 Year Cost: Zero)

Currently, under Section 631(b), if a taxpayer sells timber while retaining an economic interest in the timber, they qualify for capital gain treatment.  Such beneficial tax treatment is not available for outright sales of timber.  This inequity in the law is identically addressed in both bills and has no revenue impact.

·	Modified Safe-Harbor Rule for Timber REIT’s (10 Year Cost: $23 million)

Although a REIT is generally not subject to tax to the extent it distributes income to its shareholders, it is subject to a 100% tax if it derives gain from sales of property considered to be held for sale in the ordinary course of the taxpayer’s business (“dealer property”).  It is difficult to know if a particular sale of property constitutes dealer property and is thus subject to the 100% tax.  Current law addresses this problem for rental property by having a narrow safe-harbor to avoid the 100% tax.  The provision creates a necessary, similar safe harbor for the sale of timber property.

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