[Federal Register Volume 60, Number 20 (Tuesday, January 31, 1995)]
[Notices]
[Pages 5895-5896]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-2356]



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 Notices
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains documents other than rules 
 or proposed rules that are applicable to the public. Notices of hearings 
 and investigations, committee meetings, agency decisions and rulings, 
 delegations of authority, filing of petitions and applications and agency 
 statements of organization and functions are examples of documents 
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  Federal Register / Vol. 60, No. 20 / Tuesday, January 31, 1995 / 
Notices  
[[Page 5895]]

DEPARTMENT OF AGRICULTURE

Office of the Secretary


Stewardship Incentive Program; Determination of Primary Purpose 
of Program Payments for Consideration as Excludable from Income Under 
Section 126 of the Internal Revenue Code

AGENCY: Office of the Secretary, USDA.

ACTION: Notice of determination.

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SUMMARY: The Secretary of Agriculture has determined that certain 
Federal cost-share payments made to individuals under the Stewardship 
Incentive Program (SIP) are made primarily for the purpose of 
conserving soil and water resources, protecting or restoring the 
environment, improving forests, and providing a habitat for wildlife. 
This determination is made in accordance with Section 126(b) of the 
Internal Revenue Code and permits recipients of these cost-share 
payments to exclude them from gross income for Federal income tax 
purposes to the extent allowed by the Internal Revenue Service.

FOR FURTHER INFORMATION CONTACT: Director, Cooperative Forestry Staff, 
Forest Service, USDA, P.O. Box 96090, Washington, D.C. 20090-6090, 
(202) 205-1389.

SUPPLEMENTARY INFORMATION: Section 126 of the Internal Revenue Code of 
1954, as amended by the Revenue Act of 1978 and the Technical 
Corrections Act of 1979, 26 U.S.C. 126, provides that certain cost-
sharing payments made to persons under certain small watershed programs 
administered by the Secretary of Agriculture which are determined by 
the Secretary of the Treasury or his delegate to be substantially 
similar to the type of programs described in Section 126(a) (1) through 
(8) may be excluded from the recipients's gross income for Federal 
income tax purposes if certain determinations are made. One such 
determination if a determination by the Secretary of Agriculture that 
payments are made ``primarily for the purpose of conserving soil and 
water resources, protecting or restoring the environment, improving 
forests, or providing a habitat for wildlife.'' To make a ``primary 
purpose'' determination, the Secretary evaluates a cost-share 
conservation program based on criteria set forth at 7 CFR Part 14. 
Following a determination by the Secretary of Agriculture, the 
Secretary of the Treasury must then determine that payments made under 
these conservation programs do not substantially increase the annual 
income derived from the property benefited by the payments.
    The Stewardship Incentive Program is a cost-sharing conservation 
program administered by the Department of Agriculture under the 
authority of Title XII of the Food, Agriculture, Conservation and Trade 
Act of 1990, Pub. L. No. 101-624, 104 Stat. 3359, 3521 (codified at 16 
U.S.C. 2103b). The Commissioner of the Internal Revenue Service issued 
Revenue Ruling 94-27 on April 11, 1994, which sets forth his 
determination that the Stewardship Incentive Program is substantially 
similar to the type of program described in Section 126(a)(1) through 
(8), so that Section 126 improvements made in connection with small 
watershed and under the Stewardship Incentive Program are within the 
scope of Section 126(a)(9).
    The Stewardship Incentive Program provides cost-share assistance to 
private nonindustrial landowners to implement approved forestry 
practices on their forest land. The conservation objectives of the 
program are referred to specifically in House Conference Report No. 
101-916 which provides the practices must include (1) management of 
forests for conservation purposes; (2) substainable timber production; 
(3) protection and management of wetlands; (4) management of native 
vegetation; (5) agroforestry; (6) forest management for energy 
conservation purposes; (7) management for fish and wildlife; (8) 
management for recreation; and (9) other activities approved by the 
Secretary.
    This program is administered by the Forest Service, Department of 
Agriculture, through state forestry agencies nationwide. Each state 
forester, in consultation with the State Forest Stewardship Committee, 
determines cost-share levels, practice priorities, and minimum acreage 
requirements. The Consolidation Farm Service Agency, Department of 
Agriculture, provides administrative assistance by accepting 
applications and arranging for disbursement of payments. Technical 
responsibilities for SIP practices may be assigned to other agencies 
and resource professionals through memoranda for understanding and 
cooperative agreements. The program regulations are set forth at 36 CFR 
part 230, State and Private Forestry Assistance; Stewardship Incentive 
Program, Interim Rule.
    The overall goal of the Stewardship Incentive Program is to enhance 
forest management on private lands through a long term commitment to 
stewardship. Under this program, eligible landowners may receive up to 
75 percent cost-sharing to install approved practices to: establish and 
manage forests for conservation and timber production; protect forested 
wetlands and riparian areas; improve water quality and soil 
productivity; enhance fish and wildlife habitat; and establish 
windbreaks. The cost-share payments may not exceed $10,000 per owner 
per fiscal year. Eligible landowners must agree to follow a Forest 
Stewardship Management Plan developed by a professional resource 
manager in accordance with the landowner's goals. Landowners are 
required to maintain and protect SIP funded practices for a minimum of 
10 years.
    Program objectives are achieved through the development and 
implementation of a forest stewardship management plan approved by a 
professional resource manager for an eligible landowner. To obtain 
approval, the plan must include forest management practices that ensure 
both forest productivity and environmental protection of the lands to 
be treated under the management plan. Program objectives are further 
achieved through the installation of approved multi-resource management 
activities aimed at enhancing management of nonindustrial private 
forest lands for economic, environmental and social benefits.
    Having carefully examined the authorizing legislation, regulations, 
and operating procedures for the Stewardship Incentive Program using 
[[Page 5896]] the criteria set forth at 7 CFR part 14, the Secretary of 
Agriculture has concluded that the cost-share payments for implementing 
approved practices under this program are made to eligible persons 
primarily for the purposes of conserving soil and water resources, 
protecting or restoring the environment, improving forests, and 
providing a habitat for wildlife.

Determination

    As required by section 126(b) of the Internal Revenue Code, the 
authorizing legislation, regulations, and operating procedures 
regarding the Stewardship Incentive Program have been examined in 
accordance with the criteria set out at 7 CFR part 14. Based on this 
examination, I hereby determine that those cost-share payments made for 
planning and installing approved practices under this program are 
primarily for the purpose of conserving soil and water resources, 
protecting or restoring the environment, improving forests, and 
providing a habitat for wildlife. Subject to further determination by 
the Secretary of the Treasury, that payments made under these 
conservation programs do not substantially increase the annual income 
derived from the property benefited by these payments, this 
determination permits payment recipients to exclude from gross income, 
for Federal income tax purposes, all or part of the cost-share payments 
made under said program to the extent allowed by the Internal Revenue 
Service.

    Dated: January 24, 1995.
Richard Rominger,
Acting Secretary of Agriculture.
[FR Doc. 95-2356 Filed 1-30-95; 8:45 am]
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