                                 CODE OF VIRGINIA

LIMITATIONS; TRANSFER OF CREDIT; GAIN OR LOSS FROM TAX CREDIT (§ 58.1-513)

A. Any taxpayer claiming a tax credit under this article shall not claim a
credit under any similar Virginia law for costs related to the same project. To
the extent a credit is taken in accordance with this article, no subtraction
allowed for the gain on the sale of (i) land dedicated to open-space use or (ii)
an easement dedicated to open-space use under subdivision 14 of &#xA7;
58.1-322.02 shall be allowed for three years following the year in which the
credit is taken. Any building which serves as the basis, in whole or in part, of
a tax credit under this article shall not serve as the basis of the tax credit
allowed under &#xA7; 58.1-339.2 for a period of five years following the
donation on which the credit is based; and any building which serves as the
basis for the tax credit allowed under &#xA7; 58.1-339.2 shall not serve as the
basis, in whole or in part, for a tax credit under this article for a period of
five years following the completion of the rehabilitation project on which the
credit is based.

B. Any tax credits that arise under this article from the donation of land or an
interest in land made by a pass-through tax entity such as a trust, estate,
partnership, limited liability company or partnership, limited partnership,
subchapter S corporation or other fiduciary shall be used either by such entity
if it is the taxpayer on behalf of such entity or by the member, manager,
partner, shareholder or beneficiary, as the case may be, in proportion to their
interest in such entity in the event that income, deductions and tax liability
pass through such entity to such member, manager, partner, shareholder or
beneficiary or as set forth in the agreement of said entity. Such tax credits
shall not be claimed by both the entity and the member, manager, partner,
shareholder or beneficiary for the same donation.

C. 1. 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.

   2. A fee of two percent of the value of the donated interest shall be imposed
   upon any transfer arising from the sale by any taxpayer of credits under this
   article and upon the distribution of a portion of credits under this article
   to a member, manager, partner, shareholder or beneficiary pursuant to
   subsection B. The two percent fee shall not apply to a distribution of credits
   to a nonresident owner of a pass-through entity when such credits are applied
   by the pass-through entity to the withholding tax pursuant to subdivision B 2
   of &#xA7; 58.1-486.2. Revenues generated by such fees first shall be used by
   the Department of Taxation and the Department of Conservation and Recreation
   for their costs in implementing this article but in no event shall such amount
   exceed 50 percent of the total revenue generated by the fee on an annual
   basis. The remainder of such revenues shall be transferred to the Virginia
   Land Conservation Fund for distribution to the public or private conservation
   agencies or organizations, excluding federal governmental entities, that are
   responsible for enforcing the conservation and preservation purposes of the
   donated interests. Distribution of such revenues shall be made annually by the
   Virginia Land Conservation Foundation proportionally based on a three-year
   average of the number of donated interests accepted by the public or private
   conservation agencies or organizations, excluding federal governmental
   entities, during the immediately preceding three-year period.

   3. If the individual taxpayer who originally earned the tax credit holds
   unused credit under this article, he may provide through a will, bequest, or
   other instrument of transfer that, upon his death, his unused credit shall be
   transferred to a designated beneficiary. If such taxpayer dies without a will,
   his unused credit shall be transferred to the next person who is eligible to
   receive according to the rules of intestate succession as described in &#xA7;
   64.2-200; however, if two or more persons are eligible to receive according to
   such rules, the administrator of the taxpayer&#8217;s estate shall choose one
   such person to whom to transfer such taxpayer&#8217;s unused credit. The two
   percent fee described in subdivision 2 shall not apply to a transfer of unused
   credits pursuant to this subdivision. The carryover period for such
   transferred credits shall not be extended; instead, such credits shall be
   subject to the original carryover period as determined pursuant to subdivision
   C 1 of &#xA7; 58.1-512.

D. To the extent included in and not otherwise subtracted from federal adjusted
gross income pursuant to &#xA7; 58.1-322.02 or federal taxable income pursuant
to &#xA7; 58.1-402, there shall be subtracted any amount of gain or income
recognized by a taxpayer on the application of a tax credit under this article
against a Virginia income tax liability.

E. The transfer of the credit and its application against a tax liability shall
not create gain or loss for the transferor or the transferee of such credit.

F. A pass-through tax entity, such as a partnership, limited liability company
or Subchapter S corporation, may appoint a tax matters representative, who shall
be a general partner, member/manager or shareholder, and register that
representative with the Tax Commissioner. The Tax Commissioner shall be entitled
to deal with the tax matters representative as representative of the taxpayers
to whom credits have been allocated or transferred by the entity under this
article with respect to those credits. In the event a pass-through tax entity
allocates or transfers tax credits arising under this article to its partners,
members or shareholders and the allocated or transferred credits shall be
disallowed, in whole or in part, such that an assessment of additional tax
against a taxpayer shall be made, the Tax Commissioner shall first make written
demand for payment of any additional tax, together with interest and penalties,
from the tax matters representative. In the event such payment demand is not
satisfied, the Tax Commissioner shall proceed to collection against the
taxpayers in accordance with the provisions of Chapter 18 (&#xA7; 58.1-1800 et
seq.).

HISTORY: 1999, cc. 968, 983; 2002, c. 347; 2004, c. 635; 2005, c. 255; 2006, Sp.
Sess. I, cc. 4, 5; 2010, cc. 229, 248; 2012, c. 232; 2017, cc. 444, 725; 2018,
c. 560.