Massachusetts General Laws ch. 63 sec. 38AA – Credit against taxes imposed for qualified donation of certified land to public or private conservation agency
Section 38AA. (a) As used in this section, the following words shall have the following meanings:-
Terms Used In Massachusetts General Laws ch. 63 sec. 38AA
- Appraisal: A determination of property value.
- Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. Source: OCC
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Fair market value: The price at which an asset would change hands in a transaction between a willing, informed buyer and a willing, informed seller.
- Fee simple: Absolute title to property with no limitations or restrictions regarding the person who may inherit it.
- Fiduciary: A trustee, executor, or administrator.
- Lease: A contract transferring the use of property or occupancy of land, space, structures, or equipment in consideration of a payment (e.g., rent). Source: OCC
- Life estate: A property interest limited in duration to the life of the individual holding the interest (life tenant).
- Partnership: A voluntary contract between two or more persons to pool some or all of their assets into a business, with the agreement that there will be a proportional sharing of profits and losses.
- Real property: Land, and all immovable fixtures erected on, growing on, or affixed to the land.
- Remainder: An interest in property that takes effect in the future at a specified time or after the occurrence of some event, such as the death of a life tenant.
”Bargain sale”, the sale of an interest in real property by a taxpayer at a cost below appraised market value, when a portion of the value of the interest in real property is a qualified donation, as such terms are defined herein, and which meets the requirements of section 1011(b) of the Internal Revenue Code of 1986, as amended.
”Certified land”, an interest in real property, the donation or bargain sale of which has first been determined by the secretary of energy and environmental affairs to be in the public interest for natural resource protection including, but not limited to, drinking water supplies, wildlife habitat and biological diversity, agricultural and forestry production, recreational opportunities or scenic and cultural values; provided, however, that the secretary of energy and environmental affairs shall assure that all certified lands are protected in perpetuity.
”Interest in real property”, any right in real property in the commonwealth, with or without improvements thereon, or water, including, but not limited to, fee simple, life estate, restriction, easement, covenant, condition, partial interest, remainder, future interest, lease, license, mineral right, riparian right, or other interest or right in real property that may be conveyed concerning the power to transfer property.
”Public or private conservation agency”, the commonwealth, or any subdivision thereof, or any municipality, or private nonprofit corporation organized for the purposes of land conservation, which is authorized to do business in the commonwealth, and which has tax-exempt status as a nonprofit charitable organization as described in section 501(c)(3) of the Internal Revenue Code of 1986, as amended.
”Qualified donation”, a donation, or the donated portion of a bargain sale, made in perpetuity of a fee interest in real property or a less-than-fee interest in real property, including a conservation restriction, agricultural preservation restriction or watershed preservation restriction, pursuant to chapter 184, provided that such less-than-fee interest meets the requirements of qualified conservation contributions under section 170(h) of the Internal Revenue Code of 1986.
”Taxpayer”, a taxpayer subject to an excise under this chapter.
(b) A taxpayer making a qualified donation of certified land to a public or private conservation agency shall be allowed a refundable credit against the taxes imposed by this chapter. The credit shall be equal to 50 per cent 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 $75,000.
(c) The fair market value of a qualified donation of certified land shall be substantiated by a qualified appraisal, as defined in United States Treasury Regulation section 1.170A– 13(c)(3), and shall be prepared by a qualified appraiser, as defined in United States Treasury Regulation section 1.170A–13(c)(5). For a taxpayer to qualify for the credit provided for in this section, the taxpayer shall, as part of the certification process, file with the secretary of energy and environmental affairs a summary of a qualified appraisal or, if requested by the secretary, the taxpayer shall submit the appraisal itself. The secretary shall transmit the summary of or the qualified appraisal itself and certification to the commissioner of revenue, upon request. For purposes of determining the credit under this section, the fair market value of a qualified donation shall be subject to review by the commissioner under chapter 62C.
(d) If the amount of the credit allowed under this section exceeds the taxpayer’s tax liability, the commissioner of revenue shall treat the excess as an overpayment and shall pay the taxpayer the entire amount of the excess.
(e) Any tax credits issued in accordance with this section may be in addition to any charitable deductions claimed on the taxpayer’s federal income tax return for the same qualified donations of certified lands.
(f) Any taxpayer claiming a state income tax or excise tax credit under this section may not claim an additional state income tax credit or deduction during any one tax year for costs related to the same interest in certified lands.
(g) Any tax credits which arise under this section from the qualified donation of certified land by a pass-through tax entity such as a trust, estate, partnership, corporation, limited partnership, limited liability partnership, limited liability corporation, subchapter S organization, or other fiduciary, shall be used either by such entity in the event it is the taxpayer on behalf of such entity or by the member, partner, shareholder, or beneficiary, as the case may be, in proportion to its interest in such entity in the event that income, deductions, and tax liability passes through such entity to such member, partner, shareholder, or beneficiary. Such tax credits may not be claimed by both the entity and the member, partner, shareholder, or beneficiary, for the same conveyance.
(h) The secretaries of energy and environmental affairs and administration and finance, acting jointly and in writing, shall authorize tax credits under this section together with subsection (p) of section 6 of chapter 62. The total cumulative value of the tax credits authorized pursuant to this section and said subsection (p) shall not exceed $2,000,000 annually. No credits shall be allowed under this section except to the extent authorized in this subsection. The commissioner of revenue, after consulting with the secretaries concerning, among other things, the land conservation objectives of this section, shall adopt regulations governing applications for and other administration of the tax credits.