Rulings of the Tax Commissioner
Document Number: 13-24
Tax Type:Individual Income Tax; Land Preservation Tax Credit
Brief Description:Land Preservation Tax Credit
Topics:Land Preservation Tax Credit; Property Subject to Tax
Date Issued:03/04/2013

March 4, 2013

Re: 58.1-1821 Application: Individual Income Tax

Dear *****:

This will reply to your letter in which you seek correction of the individual income tax assessment issued to ***** (the "Taxpayers") for the taxable year ended December 31, 2009. I note that the assessment has been paid in full.


The Taxpayers, a husband and wife, claimed $100,000 of Land Preservation Tax Credit (the "Credit") on their joint 2009 Virginia individual income tax return. The Department disallowed $50,000 of the Credit and issued an assessment of tax because the husband was the only grantor of the conservation easement. The Taxpayers paid the assessment and appealed, contending they were entitled to claim the entire $100,000 in Credit on their 2009 return because the Credit is marital property.


Land Preservation Tax Credit

Virginia Code 58.1-512 C 1 provides that the amount of "[t]he credit that may be claimed by each taxpayer . . . shall not exceed . . . $50,000 for each of the 2009, 2010, and 2011 taxable years." The Credit may only be earned by the landowner/taxpayer who made the donation. See Va. Code 58.1-512 A. Pursuant to Va. Code 58.1-513 C, the Credit may then be used only by that taxpayer or transferred to another taxpayer. Only those who actually earn or purchase the Credit may use such Credit, and are subject to the limitations of the amount of Credit that can be claimed in any one taxable year. See Public Document (P.D.) 05-136 (8/10/2005).

In this case, only the husband's name appeared on the recorded deed of gift of easement granting an easement solely for conservation purposes. Only the husband's name appears on the application of the Credit filed with the Department. Under these conditions, only the husband would be considered to be the landowner/taxpayer making a donation under Va. Code 58.1-512. Further, no evidence has been provided to show that any of the Credit was transferred to the wife.

The Taxpayers contend that, because the property subject to the easement was both acquired and maintained using marital funds, both the husband and wife should each be able to claim the maximum amount of Credit.

In general, there are three elements in the right of property. These elements include the legal title to the property, the beneficial interest in it, and the right of control over it. The Virginia Supreme Court (the "Court"), in Carnegie Trust Co. et al. v. Security Life Insurance Co. of America, 111 Va. 1, 68 S. E. 412 (1910), has confirmed Virginia's adherence to these elements.

The Court has also stated that Virginia has the right to exercise jurisdiction over all property within its boundaries. See W. H. Johnson et al. v. J. L. Merrit at al., 125 Va. 162, 99 S.E. 785 (1919). Specifically, the Court in this case stated that Virginia "may determine the extent of title to property within is limits, and the methods of transferring such title."

Further, by reason of their character as legislative grants, statutes relating to deductions and subtractions allowable in computing income and credits allowed against a tax liability must be strictly construed against the taxpayer and in favor of the taxing authority. See 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).

As stated above, Virginia statutes clearly limit the Credit to the donor of the conservation easement or the transferee. Because the husband was listed on the deed of gift of easement, he is considered to be the landowner/taxpayer making the donation. As such, only the husband was eligible to claim the Credit on the Taxpayers' joint 2009 return. Such Credit was subject to the $50,000 limitation. Accordingly, the Taxpayers' request for a refund of income tax paid for the 2009 taxable year is denied and the assessment is upheld.

The Code of Virginia sections and public documents cited are available on-line at in the Tax Policy Library section of the Department's web site. If you have any questions regarding this determination, please contact ***** in the Office of Tax Policy, Appeals and Rulings, at *****.

Craig M. Burns
Tax Commissioner