Document Number
Tax Type
Individual Income Tax
Land Preservation Tax Credits
Land Preservation Tax Credit
Date Issued

September 13, 2017

Re:    Request for Ruling:  Individual Income Tax

Dear *****:

This will reply to your letter in which you request a ruling as to whether the estate of ***** (the “Estate”) may transfer Land Preservation Tax Credits (the “Credit”) held by the decedent credit holder at the time of his death.


***** (the “Decedent”) had placed a conservation easement on real property and received a Credit in February 2010.  The Decedent passed away in March 2015.  At the time of his death he had a balance of unused Credit.

The co-executors of the Estate request permission to transfer the unused Credit. They contend that the Credit is personal property that passed directly to the Estate upon a Decedent's death.  The co-executors also assert that the Estate was a taxpayer and that taxpayers are statutorily entitled to transfer the Credit.


In general, a taxpayer does not have a right to any tax credit.  In Public Document (P.D.) 02-108 (7/1/2002), the Department stated that “[c]redits, 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.”  See also Deputy v. duPont, 308 U.S. 488, 60 S.Ct 363 (1940), MedChem (P.R.), Inc. v. Comm'r, 295 F.3d 118, 2002 U.S. Appeals LEXIS 13831(2002) and Howell's Motor Freight, Inc., et al. v. Virginia Department of Taxation, Circuit Court of the City of Roanoke, Law No. 82-0846 (10/27/1983).  Therefore, 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:

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 Decedent before his death, the Credit would be claimed on his final income tax return.  Any amount of the Credit that was not usable on that return would have been available for carryover, had the Decedent lived.

The Estate contends that as a general rule, legal title to personal property of the deceased passes directly to the personal representative until distributed to the heirs. See Strader v. Metropolitan Life Insurance Co., 128 Va. 238, 105 S.E. 74 (1920), Broaddus v. Broaddus, 144 Va. 727, 130 S.E. 794 (1925), and Prudential Ins. Co. v. Stephens, 498 F. Supp. 155, 1980 U.S. Dist. LEXIS 14118 (1980).  As stated above, tax credits are a privilege, not personal property. None of the three cases cited by the Estate involve tax credits, exemptions or deductions.

Moreover, 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 the Credit, and it is that transferring taxpayer who is required to file a notification with the Department after the transfer is completed.  See Public Document (P.D.) 05-170 (12/5/2005) and P.D. 11-20 (2/18/2011). In this case, because the Decedent was deceased, he could not perform either of these acts.  Thus, any carryover amounts of the Credit were extinguished at the death of the Decedent.

In addition, a credit, deduction or exemption may only be allowed if there “is clear provision therefor.”  See New Colonial Ice Co. v. Helvering, 292 U.S. 435, 54 S.Ct. 788 (1934).  The General Assembly has twice rejected a clear provision (House Bill 450 in 2006 and House Bill 1820 in 2011) that would allow for the transfer of the credit after the individual who earned the credit has passed away.

As indicated above, the Department has ruled that an income tax credits are privileges granted by the legislature and not personal property to which a taxpayer may have a right.  Accordingly, the Estate's request for permission to transfer the unused Credit of the Decedent cannot be approved.

The Code of Virginia sections and public documents cited are available on-line at in the Laws, Rules & Decisions 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 *****.



Craig M. Burns
Tax Commissioner




Last Updated 10/03/2017 12:03