Hi, I have 80 feet of 10-3 underground wire and would like need a light and an outlet in my shed that is 40 feet from my 200amp box. What is the simplest way to do this? (My level of experience is that I've run wiring for my Washer, Dryer, stove, microwave and bathroom.) Code wants me to buy a $15 permit and burry the cable 18" deep or 12" deep in conduit.

What breaker do I use in my box?
Must I have a subpanel box in the shed?

I believe according to codes, you don't need a sub-panel if it is under a certain amperage. If not, I would still recommend using its own breaker in your box. I generally don't follow the codes where I live, and they don't bother me much either. Safely, you would probably still want a conduit and still keep it deep enough so that the frost won't budge it.

So you already own this wire, is it direct bury rated? I would pull the permit and follow the code. If not it will bite you in the end when you try to sell. What loads will be on that outlet like a compressor, table saw or what. You can use a 30 amp breaker or lighter. Wire sizes, gauges, for breakers (http://www.greatinspector.com/faq-elec-wiresize.html)

I called the permit guy and here's what he said:

I need:
A sub panel box with a main shutoff switch in the shed. (and 30 breaker in main box in my house).
A 8' grounding rod at the shed.
To keep neutral and ground separate.
A 12" trench (which he must see)(and he recommends conduit).
GFI protected outlets.

Now I have 3 questions:

1. If I run the wire out the block wall to the outside, it will have to travel 4' down the outside wall to the ground. Does the UF cable need to be inside conduit and what keeps the top waterproof.

2. The 10-3 UF wire is about 3/4 wide, should I use 1" conduit or would 1 1/2" or even 2" be better? (the trench will only be 40' long and it costs between $1 and $2.50 per 10 feet depending on size.)

3. what does he mean by keeping the neutral and ground separate?

I agree with your permit guy.

However, I suggest you have the ditch dug to 13.5" to allow for the thickness of the conduit. Usually the inspectors measure from the top of the conduit to grade level.

The NEC code requires that ground and neutral be separated in a sub panel. The only place were Neutral and Ground are bonded together is at the Main Service Panel.

You will need a four conductor feed from the main panel to the sub. At the sub, connect the ground and the ground rod. Connect Neutral (White) to the Neutral Bus Bar, but do not use a bonding screw. If you purchase a true sub panel, the ground and neutral will be isolated from each other.

BTW - Since you are running electrical service to the shed, you must install a light outside the door.