FLORIDAForests - Spring/Summer 2017 - 18

John with grandson Bryan Alter 10 years ago. His proud
grandfather reports that Bryan is now a student at Marist
College, graduating in May 2018.

CAPITAL GAINS
Capital gains are the profits made on
the sale or exchange of capital assets. To
encourage investments, these profits are
taxed at a lower rate than ordinary income.
Treating the sale of timber as a longterm capital gain recognizes the large initial capital investment in planting forests,
low liquidity and long waiting periods
before realizing returns similar to other
long-term investments. It also reflects
the reality that this asset appreciates
over time, unlike other merchandise or
inventory.
"When it comes to insurance against
loss due to fire, wind damage, pests or disease, forests are virtually uninsurable for
landowners," Alter explained. "Everyone
knows 2017 has brought a very active wildfire season. If our trees go up in flames,
our investment will go up with the smoke.
"When you invest in stocks or bonds
you can diversify and lower your risks if you
want. When you invest in trees, you are putting all your eggs in one giant wooden basket," he said. "Considering the long-term
financial risks tree farmers are taking, and
the environmental benefits we are providing, I think the lower rate is appropriate."
REAL PROPERTY FOR REIT RULES
The current tax code provides for the
treatment of timber as real property for
purposes of the real estate investment
trust (REIT) rules. Over the last 20-30
years, virtually all publicly traded forest
products companies have either sold
most or all of their timberlands to institutional investors or converted themselves
to timberland REITs. Under a verticallyintegrated C-Corporation structure,
investments in timber endured double

John with one of his and Elizabeth's two sons,
Mark Bevis Alter.

taxation. It was widely recognized that
a single level of taxation was essential to
keep private and public capital investing
in productive timberlands. Today, REITs
are a common ownership form chosen by
many public and private institutional owners and investors. These typically include
pension funds, endowments, foundations
and insurance firms that value diversified
investment portfolios that include timber.
The public timberland REITs provide the
only readily available investment vehicle
for ordinary investors to invest in commercial, diversified and professionally managed timberlands. In fact, a close look at
the annual reports of publicly traded timberland REITs reveals that most are held by
institutional investors on behalf of 401(k)
plans and mutual funds. These public and
private REITs have issued many billions of
dollars in dividends to their shareholders.
ESTATE TAX
The federal government has levied a
tax on the value of estates for more than
a century. Despite provisions in the current tax code designed to help decrease
the amount owed, the weight of the estate
tax can force heirs of forestland owners to
harvest timber prematurely or sell the land
in order to pay the taxes.
Less severely, but still detrimentally, the
costs and consequences of estate taxes can
also interrupt longstanding forest management plans.
"We need to kill the 'death tax,' "Alter
said. "The estate tax is well known to have
been the financial death of small family
farms for decades.
"We chose to establish an LLC as the
vehicle best suited to our situation," he
offered. "But each Tree Farmer has to pick

Florida Forests 18 Spring/Summer 2017

John and Elizabeth were honored as the 2015 Outstanding
Tree Farmers of the Year in Florida.

the best tool for his or her condition. The
best solution, of course, would be to do
away with the death tax altogether.
"Overall, we need tax policies that
encourage sustainable management of
forests and that recognize the important
benefits that working forests provide,"
said Alter. "I believe that tax policies, like
regulatory policies, should facilitate the
forest industry's ability to keep working
forests working and providing clean air
and water, wildlife habitat, green spaces
and jobs.
"Repealing the timber tax provisions
as part of broader objectives to simplify
the tax code would be a big mistake,"
he said, "and it will not raise revenue
for the federal government. We need
a simpler and fairer tax code, but these
changes would discourage investments
in U.S. timberlands and reduce the overall productivity of our lands. This, in turn,
would lead to higher wood procurement
costs on domestic manufacturers, more
foreign imports and higher prices for
consumers of many products, including increased home construction costs.
Eventually, it would lead to the off-shoring of U.S. timber and manufacturing
jobs. Many rural Florida communities are
critically dependent upon what we do.
"We need tax policies that allow Tree
Farmers to continue growing trees and
maintaining this most beneficial land use.
This will sustain our rural communities
and way of life. It's more than a business
for us. It's a passion and, in many cases,
it's a family tradition as well.
"If we want everyone to enjoy the
multitude of benefits from trees in the
future," Alter said, "we need to help Tree
Farmers keep growing them today." *



Table of Contents for the Digital Edition of FLORIDAForests - Spring/Summer 2017

Executive Outlook
President’s Message
Wildland Fires on the Rise
William Cook Inducted Into AG Hall of Fame
2017 Legislative Report
Forestry Day at the Capitol
Putting the Action in Political Action
Taxing Matters
An Audience With the President
2017 Florida Southern Pine Beetle Forecast
UF Sfrc Welcomes Terrell Baker
Snapshots
Products & Services Marketplace
Index of Advertisers/ advertisers.com
FLORIDAForests - Spring/Summer 2017 - Intro
FLORIDAForests - Spring/Summer 2017 - cover1
FLORIDAForests - Spring/Summer 2017 - cover2
FLORIDAForests - Spring/Summer 2017 - 3
FLORIDAForests - Spring/Summer 2017 - 4
FLORIDAForests - Spring/Summer 2017 - 5
FLORIDAForests - Spring/Summer 2017 - Executive Outlook
FLORIDAForests - Spring/Summer 2017 - President’s Message
FLORIDAForests - Spring/Summer 2017 - 8
FLORIDAForests - Spring/Summer 2017 - Wildland Fires on the Rise
FLORIDAForests - Spring/Summer 2017 - William Cook Inducted Into AG Hall of Fame
FLORIDAForests - Spring/Summer 2017 - 11
FLORIDAForests - Spring/Summer 2017 - 2017 Legislative Report
FLORIDAForests - Spring/Summer 2017 - 13
FLORIDAForests - Spring/Summer 2017 - Forestry Day at the Capitol
FLORIDAForests - Spring/Summer 2017 - Putting the Action in Political Action
FLORIDAForests - Spring/Summer 2017 - 16
FLORIDAForests - Spring/Summer 2017 - Taxing Matters
FLORIDAForests - Spring/Summer 2017 - 18
FLORIDAForests - Spring/Summer 2017 - An Audience With the President
FLORIDAForests - Spring/Summer 2017 - 20
FLORIDAForests - Spring/Summer 2017 - 2017 Florida Southern Pine Beetle Forecast
FLORIDAForests - Spring/Summer 2017 - 22
FLORIDAForests - Spring/Summer 2017 - UF Sfrc Welcomes Terrell Baker
FLORIDAForests - Spring/Summer 2017 - Snapshots
FLORIDAForests - Spring/Summer 2017 - 25
FLORIDAForests - Spring/Summer 2017 - 26
FLORIDAForests - Spring/Summer 2017 - 27
FLORIDAForests - Spring/Summer 2017 - Products & Services Marketplace
FLORIDAForests - Spring/Summer 2017 - 29
FLORIDAForests - Spring/Summer 2017 - Index of Advertisers/ advertisers.com
FLORIDAForests - Spring/Summer 2017 - cover3
FLORIDAForests - Spring/Summer 2017 - cover4
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