Form 05-76 - Rulings Of The Tax Commissioner

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Rulings of the Tax Commissioner
Document Number:
05-76
Tax Type:
Individual Income Tax
Brief Description:
Land Preservation Tax Credits
Topics:
Credits
Date Issued:
05/19/2005
Superseded by 05-122
May 19, 2005
Re: Ruling Request: Individual Income Tax
Virginia Outdoors Foundation
Dear ****************:
You requested a ruling on Land Preservation Tax Credits authorized under the Virginia
Land Conservation Incentives Act of 1999 (the "Act"). You wish to know whether a ruling
by the Internal Revenue Service that, for federal income tax purposes, a donation of a
particular land conservation easement does not qualify as a deductible charitable
donation under Internal Revenue Code ("IRC") § 170(h) would necessarily render the
donation ineligible for tax credits under the Act.
FACTS
From 2002 through 2004, easements were donated to the Virginia Outdoors Foundation
("VOF"). On the basis of these easements, Land Preservation Tax Credits were granted
to the donors. These easements lacked certain technical language that is required under
IRC § 170(h) and the Treasury Regulations promulgated thereunder. Specifically, the
easements from 2002:
1. Do not contain an extinguishment paragraph as required under Treasury
Regulation § 1.170A-14(g)(6); and
2. The provisions providing for enforcement of the easement do not comply with
Treasury Regulation § 1.170A-14(g)(5)(ii).
In addition, the easements from 2002 through 2004 fail to comply with Treasury
Regulation § 1.170A-14(g)(5)(ii) because:
1. Under most of the VOF easements, the landowner retained the right to build one
or more dwellings on the protected property;
2. Those retained rights may impair the conservation interests associated with the
property; and
3. Those rights generally are exercisable without prior notice to VOF.

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