Tax Type
Forest Products Tax
Property Tax
Description
Use of the Riparian Forest Buffer Protection for Waterways Credit by Trusts
Topic
Credits
Date Issued
11-30-2007
November 30, 3007
Re: Ruling Request: Use of the Riparian Forest Buffer Protection for Waterways
Credit by Trusts
Dear *****:
This is in response to your letter of July 23, 2007, in which you requested a ruling regarding the Riparian Forest Buffer Protection for Waterways Credit (the "Riparian Buffer Credit") on behalf of ***** (the "Taxpayers"). I apologize for the delay in this response.
FACTS
The Taxpayers have placed several tracts of land into a revocable trust naming themselves as trustees. The trust was established in order to allow the Taxpayers to manage certain assets during the Taxpayers' lives, as well as to provide for the disposition of these assets upon their deaths.
You are writing to inquire whether the Taxpayers' trust may qualify to earn the Riparian Buffer Credit. Please note that no information has been provided regarding the specific qualifications for this credit. Therefore, no opinion is rendered regarding whether or not any land held in the Taxpayers' trust would qualify for the credit.
RULING
The Riparian Buffer Credit allows a tax credit to certain taxpayers who own land abutting a waterway and who forbear harvesting timber on certain portions of that land. The credit is equal to twenty-five percent of the value of the timber in the portion of the land retained as a buffer, but may not exceed $17,500 or the total amount of income tax, whichever is less.
Under Va. Code § 58.1-439.12, the Riparian Buffer Credit is allowed to any corporation that owns the specified land. Virginia Code § 58.1-302 defines "corporation" to include associations, joint stock companies and insurance companies. Because a trust does not fall under the definition of a corporation, it may not qualify for the credit under Va. Code § 58.1-439.12.
The Riparian Buffer Credit is also allowed under a different section of the Code, however. Virginia Code § 58.1-339.10 allows the credit to individuals that own the specified land. Individuals are defined as "all natural persons whether married or unmarried and fiduciaries acting for natural persons, but not fiduciaries acting for trusts or estates" in Va. Code § 58.1-302. In addition, § 58.1-339.10 C states, "For purposes of this section, the amount of any credit attributable to qualified buffer protection by a partnership or electing small business corporation (S Corporation) shall be allocated to the individual partners or shareholders in proportion to their ownership or interest in the partnership or S Corporation." Accordingly, partnerships and S Corporations also would qualify to claim the credit. Because a trust is not an individual, partnership, or S Corporation, it may not qualify for the Riparian Buffer Credit under Va. Code § 58.1339.10.
Therefore, because trusts may not qualify for the Riparian Buffer Credit under either of the Code sections that establish the credit, the Taxpayers' trust may not claim the credit.
I trust that this reply answers your ruling request. The Code of Virginia sections cited and other reference documents are available on-line in the Tax Policy Library section of the Department of Taxation's web site located at www.tax.virginia.gov. If you should have any questions regarding this ruling, you may contact ***** in the Office of Policy and Administration, Policy Development, at *****.
-
-
-
-
-
-
-
- Sincerely,
Janie E. Bowen
Tax Commissioner
- Sincerely,
-
-
-
-
-
-
Rulings of the Tax Commissioner