shadow created when object intersects terrain

[prccowboy]

I have just started modeling with blender and I am having a problem when my objects intersect terrain. At the intersection an errant shadow plane is created. I've checked my normals are all facing correctly, UV is packed with Smart UV and I don't have double faces, etc.  What am I doing wrong?

 

note: the example below is a simple box with blue texture to demonstrate the problem. You can see the shadow that gets created at the intersection with the terrain.