830 CMR, § 62.6.4

Current through Register 1536, December 6, 2024

Section 62.6.4 - Conservation Land Tax Credit

(1)Statement of Purpose, Outline of Topics, Effective Date.

(a)Statement of Purpose. 830 CMR 62.6.4 explains the calculation of the tax credit allowed for qualified donations of certified land to a public or private conservation agency, established by St. 2008, c. 509, §§1 through 4, amended by St. 2010, c. 409, §§ 4 through 13, and codified at M.G.L. c. 62, § 6(p) and M.G.L. c. 63, § 38AA. Regulations issued by the Executive Office of Energy and Environmental Affairs setting forth criteria for authorizing and certifying the credit may be found at 301 CMR 14.00: Conservation Land Tax Credit.

(b)Outline of Topics. 830 CMR 62.6.4 is organized as follows:

1. Statement of Purpose, Outline of Topics, Effective Date

2. Definitions

3. Prerequisites to Claiming the Credit

4. Amount of Credit

5. Multiple Donors

6. Credit is Refundable

7. Cumulative Annual Cap

8. No Double Benefit

9. Special Rules Applicable to Pass-Through Entities

10. Qualified Donations by Married Couples

(c)Effective Date. 830 CMR 62.6.4 takes effect on March 30, 2012 and applies to tax years beginning and to qualified donations of certified land made on or after January 1, 2011.

(2)Definitions. For purposes of 830 CMR 62.6.4, the following terms have the following meanings, unless the context requires otherwise:

Bargain Sale, the sale of an interest in real property at an amount below fair market value as evidenced by a qualified appraisal, when a portion of the value of the interest in real property is a qualified donation, as defined in 830 CMR 62.6.4(2), and which meets the requirements of IRC § 1011(b).

Certified Land, an interest in real property, the donation or bargain sale of which has been certified by the Secretary to have sufficient natural resources to qualify to be in the public interest for natural resource protection and be protected in perpetuity. Certified land includes drinking water supplies, wildlife habitats and biological diversity, agricultural and forestry production, recreational opportunities, and scenic and cultural values of statewide or regional significance. Commissioner, the Commissioner of Revenue or the Commissioner's duly authorized representative.

Department, the Department of Revenue.

Interest in Real Property, any right in real property in the Commonwealth, with or without improvements thereon, or water including a fee simple interest, life estate, restriction, easement, covenant, condition, partial interest, remainder interest, future interest, lease, license, mineral right, riparian right, or other interest or right in real property that may be conveyed pursuant to a power to transfer property.

IRC, with respect to personal income taxation under M.G.L. c. 62, the federal Internal Revenue Code, as defined in M.G.L. c. 62, § 1(c). With respect to corporate excise taxation under M.G.L. c. 63, the federal Internal Revenue Code, as amended and in effect for the taxable year, as more fully defined in M.G.L. c. 63, § 1.

Private Conservation Agency, a qualified organization as defined in 301 CMR 14.02: Definitions.

Public Conservation Agency, the Commonwealth, or any political subdivision thereof, or any municipality, with authority to hold property interests for natural resource purposes.

Qualified Appraisal, a qualified appraisal as defined in Treas. Reg. § 1.170A-13(c)(3) and 301 CMR 14.02.

Qualified Appraiser, a qualified appraiser as defined in Treas. Reg. § 1.170A-13(c)(5).

Qualified Donation, a donation, or the donated portion of a bargain sale, made in perpetuity and duly recorded in a Registry of Deeds, of a fee simple or less-than-fee simple interest in real property. A qualified donation includes a conservation, agricultural preservation, or watershed preservation restriction, as defined in M.G.L. c. 184, § 31, provided that such less-than-fee simple interest meets the requirements for a qualified conservation contribution under IRC § 170(h).

Secretary, the Secretary of the Executive Office of Energy and Environmental Affairs.

Taxpayer, any individual or entity subject to taxation under M.G.L. c. 62 or M.G.L. c. 63 and entitled to take a credit under M.G.L. c. 62, § 6(p) or M.G.L. c. 63, § 38AA, as applicable.

(3)Prerequisites to Claiming the Credit. Before a credit may be claimed:

(a) The Taxpayer must obtain a qualified appraisal prepared by a qualified appraiser that substantiates the fair market value of the qualified donation. A summary of the qualified appraisal or, if requested by the Secretary, the appraisal itself is to be filed with the Secretary as part of the certification process. The fair market value of a qualified donation is subject to review by the Commissioner. Upon request, the summary or the qualified appraisal itself and the certification is to be transferred by the Secretary to the Commissioner.

(b) The Secretary must certify that the Taxpayer made a qualified donation, in perpetuity, of certified land to a public or private conservation agency and issue a certificate to the Taxpayer that establishes that the prerequisites to claiming the credit in 830 CMR 62.6.4(3) have been met. No credit will be allowed unless the certificate number is included in the space provided on the return filed by the Taxpayer with the Department for the taxable year in which the credit is claimed or such other validation as the Commissioner may require is provided.

(4)Amount of Credit. The credit shall be equal to 50% of the fair market value of the qualified donation. The amount of the credit that may be claimed by a Taxpayer for each qualified donation shall not exceed $50,000.

(5)Multiple Donors. In the case of a qualified donation of certified land by multiple donors, the credit that may be claimed by any one donor is limited to the donor's proportionate share of the total credit allowed based on the donor's ownership interest or right in the real property donated. The total aggregate amount of the credit claimed by all donors shall not exceed $50,000.

Example. Five siblings make a qualified donation of certified land. The fair market value of the land donated is $1,000,000. Each sibling has a ¹/ interest in the land. The total aggregate amount of the credit claimed by all of the siblings shall not exceed $50,000. The maximum amount of credit each sibling can claim is $10,000.

(6)Credit is Refundable. The credit is refundable, but not transferable. The Commissioner will apply the credit against the Taxpayer's liability as reported on the Taxpayer's tax return, as first reduced by any other available credits, and then refund the balance of the credit to the Taxpayer. The provisions of M.G.L. chs. 62C and 62D including, without limitation, provisions allowing offsets of refunds for unpaid tax assessments, child support obligations, or other applicable obligations also apply to refunds under 830 CMR 62.6.4(6).

(7)Cumulative Annual Cap. The total cumulative value of all the credits authorized pursuant to M.G.L. c. 62, § 6(p) and M.G.L. c. 63, § 38AA shall not exceed $2,000,000 annually.

(8)No Double Benefit. A Taxpayer claiming a credit under M.G.L. c. 62, § 6(p) or M.G.L. c. 63, § 38AA may not claim any other credit or deduction otherwise allowable under M.G.L. c. 62 or M.G.L. c. 63 during any one tax year with respect to the same interest in certified land.

(9)Special Rules Applicable to Pass-through Entities.

(a)Pass-through Entities Not Taxed at Entity Level. In the case of a qualified donation of certified land by a pass-through entity that is not taxable at the entity level, such as a partnership, the credit allowed under M.G.L. c. 62, § 6(p) or M.G.L. c. 63, § 38AA, as applicable, shall be passed through to the entity's partners or owners in proportion to the partners' or owners' interests in such entity. The total aggregate amount of the credit passed through by such entity and claimed by its partners or owners for each qualified donation shall not exceed $50,000.

(b)Pass-through Entities Taxed at Entity Level. A trust or subchapter S corporation subject to tax at the entity level in any year may claim the credit allowed under M.G.L. c. 62, § 6(p) or M.G.L. c. 63, § 38AA, as applicable, for the taxable year. Alternatively, the credit from the taxable year may be passed through to beneficiaries or to shareholders in proportion to their interests in the entity. These alternatives are mutually exclusive. The total aggregate amount of the credit passed through by such entities and claimed by their beneficiaries or shareholders for each qualified donation shall not exceed $50,000.

(10)Qualified Donations by Married Couples. Married couples who make a qualified donation of certified land may claim the credit allowed under M.G.L. c. 62, § 6(p) as follows. If both spouses are required to file Massachusetts income tax returns, the credit allowed under M.G.L. c. 62, § 6(p) may be claimed only if the spouses file a joint return. If only one spouse is required to file a Massachusetts income tax return, that spouse may claim the credit on a separate return.

830 CMR, § 62.6.4

Amended by Mass Register Issue 1265, eff. 7/18/2014.

Amended by Mass Register Issue 1413, eff. 3/20/2020.

Amended by Mass Register Issue 1422, eff. 7/24/2020.