Tax Type
Individual Income Tax
Description
Land Preservation Tax Credit
Topic
Land Preservation Tax Credit
Date Issued
02-18-2011
February 18, 2011
Re: Request for Ruling: Individual Income Tax
Dear *****:
This will reply to your letter in which you request a ruling as to whether ***** (the "Taxpayer") may transfer Land Preservation Tax Credits (the "Credit") as the beneficiary of the estate of the credit holder. I apologize for the delay in the Department's response.
FACTS
***** and her daughter ***** (the "Donors") made a donation of land eligible for the Credit in December 2006. The Daughter died in February 2007 and the mother died in May 2008.
The Taxpayer qualified as the personal representative on behalf of the estates of both donors. In his capacity as personal representative, the Taxpayer submitted an application for the Credit. Simultaneously, the Taxpayer filed a ruling request with the Commissioner asking that he qualify to receive the Credits.
RULING
In general, a taxpayer does not have a right to any tax credit. "Credits, deductions or exemptions allowed in the computation of an income tax are privileges accorded as a matter of legislative grace and not as a matter of taxpayer right." Public Document (P.D.) 02-108 (7/1/2002). See also Deputy v. duPont, 308 U.S. 488 (1940). Because of this, in most instances tax credits are personal to the taxpayer and do not survive him or her.
Unlike most other credits, the Land Preservation Tax Credit is transferable. Virginia Code § 58.1-513 C provides that:
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- Any taxpayer holding a credit under this article may transfer unused but otherwise allowable credit for use by another taxpayer on Virginia income tax returns. A taxpayer who transfers any amount of credit under this article shall file a notification of such transfer to the Department in accordance with procedures and forms prescribed by the Tax Commissioner.
Thus, any taxpayer holding Land Preservation Tax Credits may transfer unused but otherwise allowable credits to another taxpayer for use on that taxpayer's Virginia income tax return. The transferring taxpayer is then required to file a notification with the Department.
In this case, because the donation was made by the Donors before their deaths, the Credit would be claimed on the final income tax returns of the Donors. Any amount of the Credit that was not usable on that return would have been available for carryover, had the Donors lived.
This carryover amount may not be transferred by the Taxpayer. This is because Va. Code § 58.1-513 C requires lifetime acts on the part of a taxpayer who wishes to transfer a Credit. It is the taxpayer holding the Credit who must transfer it, and it is that transferring taxpayer who is required to file a notification with the Department after the transfer is completed. See P.D. 05-170 (12/5/2005). In this case, because the Donors are deceased, they cannot perform either of these acts. Thus, any carryover amounts of the Credit were extinguished at the death of the Donors.
The Code of Virginia sections and public documents cited are available on-line at www.tax.virginia.gov in the Tax Policy Library section of the Department's web site. If you have any questions regarding this ruling, you may contact ***** in the Office of Tax Policy, Appeals and Rulings, at *****.
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- Sincerely,
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Craig M. Burns
Tax Commissioner
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AR/1-45267357739.B
Rulings of the Tax Commissioner