Incentives Watch: When Claiming Tax Credits, the ‘Small Print Can Taketh Away’

As the old saying goes: the big print “giveth,” the fine print “taketh away.” The same holds true for state tax credits. In many cases, the tax incentives aimed at encouraging activities, such as donating land, can be significant. But, many times, they come with important limitations. Taxpayers must pay close attention to the eligibility requirements of each tax credit before claiming it on their tax return.

In a recent Ruling of the Commissioner, the Virginia Tax Commissioner advised that a husband, but not his wife, is eligible to claim the state’s land preservation tax credit because he is considered the sole taxpayer actually making the land donation, reports a Bloomberg BNA Weekly State Tax Reportarticle.

An income tax credit is available to businesses and individuals that convey land located in Virginia for agricultural and forest use; open space, natural resource, or biodiversity conservation; or land, agricultural, watershed, or historic preservation. The credit is available to the landowner who makes the donation.

The tax commissioner concluded that, since only the husband's name, and not the wife's, appears on the easement deed and the credit application, it is the husband who is deemed to be the landowner making the donation. Therefore, only the husband is eligible to claim the credit.

For more information about Virginia’s land preservation tax credit, check out Bloomberg BNA’s Credits and Incentives State Tax Portfolios.

In other developments . . .

Georgia amended the carryover provision of its qualified research expenses credit, according to a Bloomberg BNA Weekly State Tax Reportarticle.

By: Kathleen Caggiano

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