Ga. Comp. R. & Regs. R. 560-7-8-.50 - Conservation Tax Credit
(1)
Purpose. This regulation provides guidance concerning the
implementation and administration of the tax credit under O.C.G.A. §
48-7-29.12.
(2)
Coordination of Agencies.
The Department of Natural Resources (DNR) is the state agency responsible for
determining that the qualified donation under O.C.G.A. §
48-7-29.12 is suitable for two
conservation purposes and meets the additional requirements provided by
O.C.G.A. §
48-7-29.12(c).
The State Properties Commission is the state agency responsible for approving
the appraisal amount submitted or for recommending a lower appraisal amount
based on its review.
(3)
Definition. "Tax parcel" means adjacent or contiguous real
property with common ownership valued as a unit by the county tax
assessor.
(4)
Credit
Amount. Except as otherwise provided in this regulation, a taxpayer
shall be granted a tax credit for each qualified donation under O.C.G.A. §
48-7-29.12 in an amount not to
exceed the lesser of: $500,000, or 25 percent of the fair market value of the
donated real property as fair market value is established for the year in which
the donation occurred, or 25 percent of the difference between the fair market
value and the amount paid to the donor if the donation is effected by a sale of
property for less than fair market value as established for the year in which
the donation occurred.
(a) Credit Amount for a
Partnership. If the taxpayer is a partnership, the partnership shall be granted
a tax credit for each qualified donation of real property for conservation
purposes in an amount not to exceed the lesser of: $500,000, or 25 percent of
the fair market value of the donated real property as fair market value is
established for the year in which the donation occurred, or 25 percent of the
difference between the fair market value and the amount paid to the donor if
the donation is effected by a sale of property for less than fair market value
as established for the year in which the donation occurred.
(5)
Per Taxpayer Credit
Limitation. The credit amount allowed under paragraph (4) of this
regulation shall be further limited for each taxpayer for a taxable year and
shall not exceed the following amounts:
(a)
Entity Limit. $500,000 for an entity with respect to tax liability determined
under O.C.G.A. §
48-7-21. This limit applies to a
return filed by a C-Corporation, S-Corporation with an entity level income tax
liability, and to each return filed by partners in a partnership where such
partners are C-Corporations or S-Corporations with an entity level income tax
liability.
(b) Other Limit.
$250,000 with respect to tax liability determined under O.C.G.A. §
48-7-20. This limit applies to a
return filed by an individual or a married couple filing a joint return, a
return filed by a trust or an estate, and each return filed by partners in a
partnership, members of a limited liability company, and shareholders of an
S-Corporation where such partners, members, or shareholders are individuals,
trusts, or estates.
1. Example 1 of Credit
Amount and Per Taxpayer Credit Limitations. A taxpayer donates real property
for conservation purposes. The taxpayer is a partnership composed of two
partners: Partner A owns 60% and is an S-Corporation (with no entity level
income tax liability) composed of one individual shareholder, shareholder C;
Partner B owns 40% and is an individual taxpayer. The fair market value of the
donated property, which is not effected by a sale of property for less than
fair market value, is $5 million. The credit amount for the partnership is
$500,000 (because $500,000 is less than $1,250,000, which is 25 percent of the
fair market value). Partner A's (an S-Corporation) credit amount is $300,000.
Shareholder C's credit amount is $250,000 (due to an individual credit limit of
$250,000). Partner B's (individual taxpayer) credit amount is
$200,000.
2. Example 2 of Credit
Amount and Per Taxpayer Credit Limitations. A taxpayer donates real property
for conservation purposes. The taxpayer is a limited liability company treated
as a partnership for tax purposes, composed of three individual members: Member
A owns 80 percent, members B and C each own 10 percent. The fair market value
of the donated property, which is not effected by a sale of property for less
than fair market value, is $3 million. The credit amount for the limited
liability company is $500,000 (because $500,000 is less than $750,000, which is
25 percent of the fair market value). Member A's credit amount is $250,000 (due
to an individual credit limit of $250,000). The credit amount for Members B and
C is $50,000.
(6)
Qualified Donation
Limitation. Only one qualified donation may be made with respect to any
real property that was, in the five years prior to the year of the donation,
within the same tax parcel of record, except that a subsequent donation may be
made by a person who is not a related person with respect to any prior eligible
donors of any portion of such tax parcel. There must be five years between each
donation year in the case of a phased easement. For example, a donation is made
in year 1. The five intervening years are years two through six. A donation
would be allowed in year seven. This is allowed even when the evidence of the
easement might remain as part of the same deed filing because once the easement
is contributed its value is removed and it then is not part of the same tax
parcel of record.
(7)
Credit
Cap. Beginning with qualified donations occurring on or after January 1,
2016, the total amount of tax credits preapproved under O.C.G.A. §
48-7-29.12 and this regulation
shall not exceed $30 million per calendar year. Beginning with qualified
donations occurring on or after June 1, 2022, and ending on December 31, 2026,
the total amount of tax credits preapproved under O.C.G.A. §
48-7-29.12 and this regulation
shall not exceed $4 million per calendar year.
(8)
Preapproval of the Credit.
Any taxpayer seeking preapproval to claim a tax credit under O.C.G.A. §
48-7-29.12 for a qualified
donation that occurs on or after January 1, 2016, must submit the appropriate
forms to the Department through the Georgia Tax Center as provided in this
paragraph. Before submitting an application to the Department of Revenue, the
taxpayer shall have completed the donation, received the State Property
Commission's determination, and certification from DNR. The taxpayer must apply
for preapproval for the calendar year for which the qualified donation
occurred.
(a) Application. A taxpayer seeking
preapproval to claim the tax credit under O.C.G.A. §
48-7-29.12 must electronically
submit Form IT-CONSV-AP, the appraisal of the donated property, certification
from DNR, and the State Property Commission's determination for approval
through the Georgia Tax Center.
(b)
Notification. The Department will notify each taxpayer of the tax credits
preapproved and allocated to such taxpayer.
(c) Allocation of Tax Credit. The
Commissioner shall allow the tax credit under O.C.G.A. §
48-7-29.12 on a first-come,
first-served basis. The date the Form IT-CONSV-AP is electronically submitted
shall be used to determine such first-come, first-served basis.
(d) Applications received on the day the
maximum credit amount is reached. In the event that the credit amounts on
applications received by the Commissioner exceed the maximum aggregate limit in
paragraph (7) of this regulation, then the tax credits shall be allocated among
the taxpayers who submitted Form IT-CONSV-AP on the day the maximum aggregate
limit was exceeded on a pro rata basis based upon amounts otherwise allowed
under O.C.G.A. §
48-7-29.12 and this regulation.
Only credit amounts on applications received on the day the maximum aggregate
limit was exceeded will be allocated on a pro rata basis.
(e) Once the calendar year preapproval limit
is reached for a calendar year, taxpayers shall no longer be eligible for a
credit under O.C.G.A. §
48-7-29.12 for a qualified
donation that occurred during such calendar year. If any Form IT-CONSV-AP is
received after the calendar year limit has been reached, then it shall be
denied and not be reconsidered for preapproval at any later date.
(f) Any amount preapproved under this
paragraph is subject to the limitations of paragraph (5) of this
regulation.
(g) In the event it is
determined that the taxpayer has not met all the requirements of O.C.G.A.
§
48-7-29.12 and this regulation,
then the amount of credits shall not be preapproved or the preapproved credits
shall be retroactively denied. With respect to such denied credits, tax,
interest, and penalties shall be due if the credits have already been
claimed.
(9)
Claiming the conservation tax credit. Any taxpayer claiming the
conservation tax credit for a qualified donation that occurred before January
1, 2016, must submit Form IT-CONSV, certification(s) from DNR, the State
Property Commission's determination, and the appraisal of the donated property
with the taxpayer's Georgia income tax return in the tax year in which the
qualified donation occurred; Form IT-CONSV must be submitted with the Georgia
income tax return each year the credit is claimed. Any taxpayer claiming the
conservation tax credit for a qualified donation that occurs on or after
January 1, 2016, must submit Form IT-CONSV with the taxpayer's Georgia income
tax return each year the conservation tax credit is claimed.
(10)
Carryforward. Any credit
which is claimed but not used in a taxable year shall be allowed to be carried
forward for the number of years authorized under O.C.G.A. §
48-7-29.12. However, the amount in
excess of the annual dollar limits specified in paragraph (5) of this
regulation shall not be eligible for carryover to the taxpayer's succeeding
years' tax liability nor shall such excess amount be claimed by, reallocated
to, or transferred or sold to any other taxpayer.
(11)
Joint Tenancy, Tenancy in Common,
and Similar Groups. When owners of real property included in a joint
tenancy, tenancy in common, or similar group make a qualified donation, the tax
credits will be allocated to each owner based on that owner's ownership
percentage of the donated real property.
(12)
Add Back Federal Deduction.
For qualified donations made in taxable years beginning on or after January 1,
2013, no credit shall be allowed under O.C.G.A. §
48-7-29.12 with respect to any
amount deducted from taxable net income by the taxpayer as a charitable
contribution.
(a) Example 1. A taxpayer claims
a $100,000 charitable deduction on their federal return. The taxpayer is
allowed a $25,000 state tax credit ($100,000 x 25%). The taxpayer must add back
$100,000 of the charitable contribution deduction on their Georgia
return.
(b) Example 2. A taxpayer
claims a $100,000 charitable deduction on their federal return in year 1 but
due to federal limitations is only allowed to deduct $25,000 in year 1 and
$75,000 in year 2. The taxpayer is allowed a $25,000 state tax credit ($100,000
x 25%). The taxpayer must add back $25,000 in year 1 and $75,000 in year 2 of
the charitable contribution deduction on their Georgia returns.
(c) Example 3. A taxpayer claims a $2,000,000
charitable deduction on their federal return. The taxpayer computes a $500,000
state tax credit ($2,000,000 x 25%) before considering the per taxpayer credit
limitation. After considering the per taxpayer credit limitation, the taxpayer
is allowed a $250,000 state tax credit. The taxpayer must add back $1,000,000
of the charitable contribution deduction on their Georgia return ($250,000 /
25%).
(d) Example 4. A taxpayer
claims a $2,000,000 charitable deduction on their federal return in year 1 but
due to federal limitations is allowed to deduct $750,000 in year 1 and
$1,250,000 in year 2. The taxpayer computes a $500,000 state tax credit
($2,000,000 x 25%) before considering the per taxpayer credit limitation. After
considering the per taxpayer credit limitation, the taxpayer is allowed a
$250,000 state tax credit. The taxpayer must add back a total of $1,000,000 of
the charitable contribution deduction on their Georgia returns ($250,000 /
25%). The taxpayer must add back $750,000 in year 1 and $250,000 in year 2 on
their Georgia returns.
(13)
Pass-Through Entities. When
the taxpayer is a pass-through entity, and has no income tax liability of its
own, the tax credits will pass to its members, shareholders, or partners based
on the year ending profit/loss percentage and the limitations of this
regulation. The credit forms will initially be filed with the tax return of the
taxpayer to establish the amount of the credit available for pass through. The
credit will then pass through to its shareholders, members, or partners to be
applied against the tax liability on their income tax returns. The credits are
available for use as a credit by the shareholders, members, or partners for
their tax year in which the income tax year of the pass-through entity ends.
For example: A partnership earns the credit for its tax year ending January 31,
2014. The partnership passes the credit to a calendar year partner. The credit
is available for use by the partner beginning with the calendar 2014 tax
year.
(14)
Selling or
Transferring the Conservation Tax Credit. Beginning on January 1, 2012,
a taxpayer may sell or transfer in whole or in part any conservation tax
credit, previously claimed but not used by such taxpayer against its income
tax, to another Georgia taxpayer subject to the following conditions:
(a) For qualified donations made in taxable
years beginning on or after January 1, 2013, the taxpayer may only make a
one-time sale or transfer of conservation tax credits earned in each taxable
year. However, the sale or transfer may involve more than one transferee. For
example, taxpayer 1 earns a $50,000 credit in year 1. In year 2 they sell
$20,000 of the credit to taxpayer 2. In year 3 they are allowed to sell the
remaining $30,000 of the credit to taxpayer 3. However, both taxpayer 2 and
taxpayer 3 are not allowed to resell the credit since the credit can only be
sold one-time.
(b) The conservation
tax credit may be transferred before the tax return is filed by the taxpayer.
However, the amount transferred cannot exceed the amount of the credit which
will be claimed and not used on the income tax return of the
transferor.
(c) The taxpayer must
file Form IT-TRANS "Notice of Tax Credit Transfer" with the Department of
Revenue within 30 days of the transfer or sale of the conservation tax credit.
With respect to any taxpayer which sells the credit on or after January 1,
2017, Form IT-TRANS must be submitted electronically to the Department of
Revenue through the Georgia Tax Center or alternatively as provided in
subparagraph (14)(c)1. With respect to such taxpayer, the Department of Revenue
will not process any Form IT-TRANS submitted or filed in any other manner. If
the taxpayer is a disregarded entity then Form IT-TRANS should be filed in the
name of the owner of the disregarded entity but the certification from the
Department of Natural Resources and Form IT-CONSV should be in the name of the
disregarded entity.
1. The web-based portal on
the Georgia Tax Center. The taxpayer may provide selective information to a
representative for the purpose of allowing the representative to submit Form
IT-TRANS on their behalf on the Georgia Tax Center outside of a login. The
provision of such information shall authorize the representative to submit such
Form IT-TRANS. The representative must provide all information required by the
web-based portal on the Georgia Tax Center to submit Form IT-TRANS.
(d) The taxpayer must provide all
required conservation tax credit detail and transfer information to the
Department of Revenue. Failure to do so will result in the conservation tax
credit being disallowed until the taxpayer complies with such
requirements.
(e) The carryforward
period of the conservation tax credit for the transferee will be the same as it
was for the taxpayer. This credit may be carried forward for the number of
years authorized under O.C.G.A. §
48-7-29.12. For example: The
taxpayer sells a conservation tax credit on May 15, 2025. This credit is based
on a donation from calendar 2025 tax year. The credit may be claimed by the
transferee on the 2025, 2026, 2027, 2028, 2029, or 2030 return and the
carryforward period for this credit will expire on December 31, 2030. This
carryforward treatment applies regardless of whether it is being claimed by the
taxpayer or the transferee.
(f) A
transferee shall have only such rights to claim and use the conservation tax
credit that were available to the taxpayer at the time of the transfer. Thus, a
transferee shall not have the right to subsequently transfer such credit since
that right has been utilized by the transferor.
(15)
How to sell or transfer the tax
credit.
(a) The taxpayer may sell or
transfer the conservation tax credit directly to a Georgia taxpayer. A
pass-through entity may make an election to sell or transfer the unused
conservation tax credit earned in a taxable year at the entity level. However,
the amount of the credit that may be sold by a pass-through entity cannot
exceed the amount that the shareholders, members, or partners would be allowed
pursuant to paragraph (5) of this regulation for the year the qualified
donation is made. To the extent the pass-through entity makes the election to
sell the conservation tax credit at the entity level, the credit does not pass
through to the shareholders, members, or partners. The elected amount is then
subtracted proportionally from the amount each shareholder, member, or partner
would receive.
1. Example: A taxpayer donates
real property for conservation purposes. The taxpayer is a partnership composed
of two partners: Partner A owns 75% and is an S-Corporation (with no entity
level income tax liability) composed of two individual shareholders,
shareholder C (75% ownership) and shareholder D (25% ownership); Partner B owns
25% and is an individual taxpayer. The fair market value of the donated
property, which is not effected by a sale of property for less than fair market
value, is $5 million. The credit amount for the partnership is $500,000
(because $500,000 is less than $1,250,000, which is 25 percent of the fair
market value). Partner A's (an S-Corporation) credit amount is $375,000.
Shareholder C's credit amount is $250,000 (reduced from the $281,250 by the per
taxpayer credit limitation), and Shareholder D's credit amount is $93,750.
Partner B's (individual taxpayer) credit amount is $125,000. The taxpayer sells
$225,000 of the credit at the partnership level which leaves $243,750 that will
flow though. Shareholder C's credit is reduced by $120,000 ($250,000/$468,750 x
$225,000) and therefore is entitled to a credit of $130,000. Shareholder D's
credit is reduced by $45,000 ($93,750/$468,750 x $225,000) and therefore is
entitled to a credit of $48,750. Partner B's credit is reduced by $60,000
($125,000/$468,750 x $225,000) and therefore is entitled to a credit of
$65,000.
(b) In all
cases, the effect of the sale of the credit on the income of the seller and
buyer of the credit will be the same as provided in the Internal Revenue
Code.
(c) Pass-Through Entity. The
taxpayer may be structured as a pass-through entity. To the extent the
pass-through entity does not make an election to sell or transfer the tax
credit at the entity level as provided in paragraph (15) of this regulation,
the tax credit will pass through to the shareholders, partners, or members of
the entity based on their year ending profit/loss percentage and as provided in
this regulation. The shareholders, members, or partners may then sell their
respective conservation tax credit to a Georgia taxpayer.
(d) Transferee Pass-through Entity. The
taxpayer, or its shareholders, members, or partners, may sell or transfer the
credit to a pass-through entity. The pass-through entity shall elect on behalf
of its shareholders, members or partners which year the credit shall be passed
through to its shareholders, members or partners (as provided in subparagraph
(15)(e) of this regulation). If the pass-through entity has no income tax
liability of its own, the pass-through entity may then pass the credit through
to its shareholders, members, or partners based on the pass-through entity's
year ending profit/loss percentage for such elected year. For example, if a
calendar year partnership is buying the credit earned by a taxpayer in the
calendar year 2013 tax year and elects to use the credit in such year, then all
of the partners receiving the credit must have been a partner in the
partnership no later than the end of the 2013 tax year in which the credit was
established. Only partners who have a profit/loss percentage as of the end of
the applicable tax year may receive their respective amount of the conservation
tax credit.
(e) The credits are
available for use by the transferee provided the time has not expired for
filing a claim for refund of a tax or fee erroneously or illegally assessed and
collected pursuant to O.C.G.A. §
48-2-35 as provided in
subparagraphs 1. through 3. below, and provided that unused conservation tax
credits earned in taxable years beginning before January 1, 2012 can only be
claimed by the transferee in a taxable year beginning on or after January 1,
2012:
1. In the transferee's tax year in
which the income tax year of the taxpayer, which generates and claims the
conservation tax credit for the qualified donation associated with the credit
being sold, ends; or
2. During any
later tax year before the carryforward period associated with the tax credit
ends.
(i) Example: A taxpayer makes a
qualified donation and claims the conservation tax credit in calendar year
2025. The taxpayer sells the conservation tax credit to a Georgia taxpayer in
calendar 2026 tax year. The transferee Georgia taxpayer may claim the purchased
conservation tax credit on either their 2025 return (transferee's tax year in
which the income tax year of the taxpayer transferor ends) or their 2026, 2027,
2028, 2029, or 2030 return (during any later tax year before the carryforward
period associated with the tax credit ends).
3. The transferee's tax credit amount cannot
exceed the limits in paragraph (5) of this regulation in the year in which the
qualified donation was made. Any tax credit amount that exceeds the limits in
paragraph (5) of this regulation for the year in which the qualified donation
was made cannot be claimed or transferred by the transferee in any tax year.
(i) Example: In 2025, an individual taxpayer
makes a qualified donation. After applying the limits in paragraph (5) of this
regulation, the taxpayer claims the conservation tax
credit for $250,000 on their joint tax return. In 2027, this taxpayer purchases
$100,000 conservation tax credit from a qualified donation made in 2025. Since
this taxpayer has already met the limits in paragraph (5) of this regulation
for 2025, the taxpayer cannot claim the $100,000 conservation tax credit in any
tax year.
(16)
Sunset Date. The Department
of Natural Resources shall accept no new applications for tax credits after
December 31, 2026.
(17)
Effective Date. This rule is applicable to taxable years beginning
on or after January 1, 2025. Taxable years beginning before January 1, 2025
will be governed by the regulations of Chapter 560-7 as they existed before
January 1, 2025 in the same manner as if the amendments thereto set forth in
this regulation had not been promulgated.
Notes
State regulations are updated quarterly; we currently have two versions available. Below is a comparison between our most recent version and the prior quarterly release. More comparison features will be added as we have more versions to compare.
(1) Purpose. This regulation provides guidance concerning the implementation and administration of the tax credit under O.C.G.A. § 48-7-29.12.
(2) Coordination of Agencies. The Department of Natural Resources (DNR) is the state agency responsible for determining that the qualified donation under O.C.G.A. § 48-7-29.12 is suitable for two conservation purposes and meets the additional requirements provided by O.C.G.A. § 48-7-29.12(c). The State Properties Commission is the state agency responsible for approving the appraisal amount submitted or for recommending a lower appraisal amount based on its review.
(3) Definition. "Tax parcel" means adjacent or contiguous real property with common ownership valued as a unit by the county tax assessor.
(4) Credit Amount. Except as otherwise provided in this regulation, a taxpayer shall be granted a tax credit for each qualified donation under O.C.G.A. § 48-7-29.12 in an amount not to exceed the lesser of: $500,000, or 25 percent of the fair market value of the donated real property as fair market value is established for the year in which the donation occurred, or 25 percent of the difference between the fair market value and the amount paid to the donor if the donation is effected by a sale of property for less than fair market value as established for the year in which the donation occurred.
(a) Credit Amount for a Partnership. If the taxpayer is a partnership, the partnership shall be granted a tax credit for each qualified donation of real property for conservation purposes in an amount not to exceed the lesser of: $500,000, or 25 percent of the fair market value of the donated real property as fair market value is established for the year in which the donation occurred, or 25 percent of the difference between the fair market value and the amount paid to the donor if the donation is effected by a sale of property for less than fair market value as established for the year in which the donation occurred.
(5) Per Taxpayer Credit Limitation . The credit amount allowed under paragraph (4) of this regulation shall be further limited for each taxpayer for a taxable year and shall not exceed the following amounts:
(a) Entity Limit. $500,000 for an entity with respect to tax liability determined under O.C.G.A. § 48-7-21. This limit applies to a return filed by a C-Corporation , S-Corporation with an entity level income tax liability, and to each return filed by partners in a partnership where such partners are C-Corporations or S-Corporations with an entity level income tax liability.
(b) Other Limit. $250,000 with respect to tax liability determined under O.C.G.A. § 48-7-20. This limit applies to a return filed by an individual or a married couple filing a joint return, a return filed by a trust or an estate, and each return filed by partners in a partnership, members of a limited liability company, and shareholders of an S-Corporation where such partners, members, or shareholders are individuals, trusts, or estates.
1. Example 1 of Credit Amount and Per Taxpayer Credit Limitations. A taxpayer donates real property for conservation purposes. The taxpayer is a partnership composed of two partners: Partner A owns 60% and is an S-Corporation (with no entity level income tax liability) composed of one individual shareholder, shareholder C; Partner B owns 40% and is an individual taxpayer . The fair market value of the donated property, which is not effected by a sale of property for less than fair market value, is $5 million. The credit amount for the partnership is $500,000 (because $500,000 is less than $1,250,000, which is 25 percent of the fair market value). Partner A's (an S-Corporation ) credit amount is $300,000. Shareholder C's credit amount is $250,000 (due to an individual credit limit of $250,000). Partner B's (individual taxpayer ) credit amount is $200,000.
2. Example 2 of Credit Amount and Per Taxpayer Credit Limitations. A taxpayer donates real property for conservation purposes. The taxpayer is a limited liability company treated as a partnership for tax purposes, composed of three individual members: Member A owns 80 percent, members B and C each own 10 percent. The fair market value of the donated property, which is not effected by a sale of property for less than fair market value, is $3 million. The credit amount for the limited liability company is $500,000 (because $500,000 is less than $750,000, which is 25 percent of the fair market value). Member A's credit amount is $250,000 (due to an individual credit limit of $250,000). The credit amount for Members B and C is $50,000.
(6) Qualified Donation Limitation . Only one qualified donation may be made with respect to any real property that was, in the five years prior to the year of the donation, within the same tax parcel of record, except that a subsequent donation may be made by a person who is not a related person with respect to any prior eligible donors of any portion of such tax parcel. There must be five years between each donation year in the case of a phased easement. For example, a donation is made in year 1. The five intervening years are years two through six . A donation would be allowed in year seven. This is allowed even when the evidence of the easement might remain as part of the same deed filing because once the easement is contributed its value is removed and it then is not part of the same tax parcel of record.
(7) Credit Cap. Beginning with qualified donations occurring on or after January 1, 2016, the total amount of tax credits preapproved under O.C.G.A. § 48-7-29.12 and this regulation shall not exceed $30 million per calendar year. Beginning with qualified donations occurring on or after June 1, 2022, and ending on December 31, 2026, the total amount of tax credits preapproved under O.C.G.A. § 48-7-29.12 and this regulation shall not exceed $4 million per calendar year.
(8) Preapproval of the Credit. Any taxpayer seeking preapproval to claim a tax credit under O.C.G.A. § 48-7-29.12 for a qualified donation that occurs on or after January 1, 2016, must submit the appropriate forms to the Department through the Georgia Tax Center as provided in this paragraph. Before submitting an application to the Department of Revenue, the taxpayer shall have completed the donation, received the State Property Commission's determination, and certification from DNR. The taxpayer must apply for preapproval for the calendar year for which the qualified donation occurred.
(a) Application. A taxpayer seeking preapproval to claim the tax credit under O.C.G.A. § 48-7-29.12 must electronically submit Form IT-CONSV-AP, the appraisal of the donated property, certification from DNR, and the State Property Commission's determination for approval through the Georgia Tax Center .
(b) Notification. The Department will notify each taxpayer of the tax credits preapproved and allocated to such taxpayer .
(c) Allocation of Tax Credit. The Commissioner shall allow the tax credit under O.C.G.A. § 48-7-29.12 on a first-come, first-served basis. The date the Form IT-CONSV-AP is electronically submitted shall be used to determine such first-come, first-served basis.
(d) Applications received on the day the maximum credit amount is reached. In the event that the credit amounts on applications received by the Commissioner exceed the maximum aggregate limit in paragraph (7) of this regulation, then the tax credits shall be allocated among the taxpayers who submitted Form IT-CONSV-AP on the day the maximum aggregate limit was exceeded on a pro rata basis based upon amounts otherwise allowed under O.C.G.A. § 48-7-29.12 and this regulation. Only credit amounts on applications received on the day the maximum aggregate limit was exceeded will be allocated on a pro rata basis.
(e) Once the calendar year preapproval limit is reached for a calendar year, taxpayers shall no longer be eligible for a credit under O.C.G.A. § 48-7-29.12 for a qualified donation that occurred during such calendar year. If any Form IT-CONSV-AP is received after the calendar year limit has been reached, then it shall be denied and not be reconsidered for preapproval at any later date.
(f) Any amount preapproved under this paragraph is subject to the limitations of paragraph (5) of this regulation.
(g) In the event it is determined that the taxpayer has not met all the requirements of O.C.G.A. § 48-7-29.12 and this regulation, then the amount of credits shall not be preapproved or the preapproved credits shall be retroactively denied. With respect to such denied credits, tax, interest, and penalties shall be due if the credits have already been claimed.
(9) Claiming the conservation tax credit. Any taxpayer claiming the conservation tax credit for a qualified donation that occurred before January 1, 2016, must submit Form IT-CONSV, certification (s) from DNR, the State Property Commission's determination, and the appraisal of the donated property with the taxpayer 's Georgia income tax return in the tax year in which the qualified donation occurred; Form IT-CONSV must be submitted with the Georgia income tax return each year the credit is claimed. Any taxpayer claiming the conservation tax credit for a qualified donation that occurs on or after January 1, 2016, must submit Form IT-CONSV with the taxpayer 's Georgia income tax return each year the conservation tax credit is claimed.
(10) Carry Forward . Any credit which is claimed but not used in a taxable year shall be allowed to be carried forward to apply to the taxpayer 's succeeding ten years' tax liability (five years' tax liability for credits earned in taxable years beginning before January 1, 2008). However, the amount in excess of the annual dollar limits specified in paragraph (5) of this regulation shall not be eligible for carryover to the taxpayer 's succeeding years' tax liability nor shall such excess amount be claimed by, reallocated to, or transferred or sold to any other taxpayer .
(11) Joint Tenancy, Tenancy in Common, and Similar Groups. When owners of real property included in a joint tenancy, tenancy in common, or similar group make a qualified donation, the tax credits will be allocated to each owner based on that owner's ownership percentage of the donated real property.
(12) Add Back Federal Deduction. For qualified donations made in taxable years beginning on or after January 1, 2013, no credit shall be allowed under O.C.G.A. § 48-7-29.12 with respect to any amount deducted from taxable net income by the taxpayer as a charitable contribution.
(a) Example 1. A taxpayer claims a $100,000 charitable deduction on their federal return. The taxpayer is allowed a $25,000 state tax credit ($100,000 x 25%). The taxpayer must add back $100,000 of the charitable contribution deduction on their Georgia return.
(b) Example 2. A taxpayer claims a $100,000 charitable deduction on their federal return in year 1 but due to federal limitations is only allowed to deduct $25,000 in year 1 and $75,000 in year 2. The taxpayer is allowed a $25,000 state tax credit ($100,000 x 25%). The taxpayer must add back $25,000 in year 1 and $75,000 in year 2 of the charitable contribution deduction on their Georgia returns.
(c) Example 3. A taxpayer claims a $2,000,000 charitable deduction on their federal return. The taxpayer computes a $500,000 state tax credit ($2,000,000 x 25%) before considering the per taxpayer credit limitation . After considering the per taxpayer credit limitation , the taxpayer is allowed a $250,000 state tax credit. The taxpayer must add back $1,000,000 of the charitable contribution deduction on their Georgia return ($250,000 / 25%).
(d) Example 4. A taxpayer claims a $2,000,000 charitable deduction on their federal return in year 1 but due to federal limitations is allowed to deduct $750,000 in year 1 and $1,250,000 in year 2. The taxpayer computes a $500,000 state tax credit ($2,000,000 x 25%) before considering the per taxpayer credit limitation . After considering the per taxpayer credit limitation , the taxpayer is allowed a $250,000 state tax credit. The taxpayer must add back a total of $1,000,000 of the charitable contribution deduction on their Georgia returns ($250,000 / 25%). The taxpayer must add back $750,000 in year 1 and $250,000 in year 2 on their Georgia returns.
(13) Pass-Through Entities . When the taxpayer is a pass-through entity, and has no income tax liability of its own, the tax credits will pass to its members, shareholders, or partners based on the year ending profit/loss percentage and the limitations of this regulation. The credit forms will initially be filed with the tax return of the taxpayer to establish the amount of the credit available for pass through. The credit will then pass through to its shareholders, members, or partners to be applied against the tax liability on their income tax returns. The credits are available for use as a credit by the shareholders, members, or partners for their tax year in which the income tax year of the pass-through entity ends. For example: A partnership earns the credit for its tax year ending January 31, 2014. The partnership passes the credit to a calendar year partner. The credit is available for use by the partner beginning with the calendar 2014 tax year.
(14) Selling or Transferring the Conservation Tax Credit. Beginning on January 1, 2012, a taxpayer may sell or transfer in whole or in part any conservation tax credit, previously claimed but not used by such taxpayer against its income tax, to another Georgia taxpayer subject to the following conditions:
(a) For qualified donations made in taxable years beginning on or after January 1, 2013, the taxpayer may only make a one-time sale or transfer of conservation tax credits earned in each taxable year. However, the sale or transfer may involve more than one transferee. For example, taxpayer 1 earns a $50,000 credit in year 1. In year 2 they sell $20,000 of the credit to taxpayer 2. In year 3 they are allowed to sell the remaining $30,000 of the credit to taxpayer 3. However, both taxpayer 2 and taxpayer 3 are not allowed to resell the credit since the credit can only be sold one-time.
(b) The conservation tax credit may be transferred before the tax return is filed by the taxpayer . However, the amount transferred cannot exceed the amount of the credit which will be claimed and not used on the income tax return of the transferor.
(c) The taxpayer must file Form IT-TRANS "Notice of Tax Credit Transfer" with the Department of Revenue within 30 days of the transfer or sale of the conservation tax credit. With respect to any taxpayer which sells the credit on or after January 1, 2017, Form IT-TRANS must be submitted electronically to the Department of Revenue through the Georgia Tax Center or alternatively as provided in subparagraph (14)(c)1. With respect to such taxpayer , the Department of Revenue will not process any Form IT-TRANS submitted or filed in any other manner. If the taxpayer is a disregarded entity then Form IT-TRANS should be filed in the name of the owner of the disregarded entity but the certification from the Department of Natural Resources and Form IT-CONSV should be in the name of the disregarded entity.
1. The web-based portal on the Georgia Tax Center . The taxpayer may provide selective information to a representative for the purpose of allowing the representative to submit Form IT-TRANS on their behalf on the Georgia Tax Center outside of a login. The provision of such information shall authorize the representative to submit such Form IT-TRANS. The representative must provide all information required by the web-based portal on the Georgia Tax Center to submit Form IT-TRANS.
(d) The taxpayer must provide all required conservation tax credit detail and transfer information to the Department of Revenue. Failure to do so will result in the conservation tax credit being disallowed until the taxpayer complies with such requirements.
(e) The carry forward period of the conservation tax credit for the transferee will be the same as it was for the taxpayer . This credit may be carried forward to apply to the taxpayer 's succeeding ten years' tax liability (five years' tax liability for credits earned in taxable years beginning before January 1, 2008). For example: The taxpayer sells a conservation tax credit on May 15, 2013. This credit is based on a donation from calendar 2013 tax year. The credit may be claimed by the transferee on the 2013, 2014, 2015, 2016, 2017, 2018, 2019, 2020, 2021, 2022, or 2023 return and the carry forward period for this credit will expire on December 31, 2023. This carry forward treatment applies regardless of whether it is being claimed by the taxpayer or the transferee.
(f) A transferee shall have only such rights to claim and use the conservation tax credit that were available to the taxpayer at the time of the transfer. Thus, a transferee shall not have the right to subsequently transfer such credit since that right has been utilized by the transferor.
(15) How to sell or transfer the tax credit.
(a) The taxpayer may sell or transfer the conservation tax credit directly to a Georgia taxpayer . A pass-through entity may make an election to sell or transfer the unused conservation tax credit earned in a taxable year at the entity level. However, the amount of the credit that may be sold by a pass-through entity cannot exceed the amount that the shareholders, members, or partners would be allowed pursuant to paragraph (5) of this regulation for the year the qualified donation is made. To the extent the pass-through entity makes the election to sell the conservation tax credit at the entity level, the credit does not pass through to the shareholders, members, or partners. The elected amount is then subtracted proportionally from the amount each shareholder, member, or partner would receive.
1. Example: A taxpayer donates real property for conservation purposes. The taxpayer is a partnership composed of two partners: Partner A owns 75% and is an S-Corporation (with no entity level income tax liability) composed of two individual shareholders, shareholder C (75% ownership) and shareholder D (25% ownership); Partner B owns 25% and is an individual taxpayer . The fair market value of the donated property, which is not effected by a sale of property for less than fair market value, is $5 million. The credit amount for the partnership is $500,000 (because $500,000 is less than $1,250,000, which is 25 percent of the fair market value). Partner A's (an S-Corporation ) credit amount is $375,000. Shareholder C's credit amount is $250,000 (reduced from the $281,250 by the per taxpayer credit limitation ), and Shareholder D's credit amount is $93,750. Partner B's (individual taxpayer ) credit amount is $125,000. The taxpayer sells $225,000 of the credit at the partnership level which leaves $243,750 that will flow though. Shareholder C's credit is reduced by $120,000 ($250,000/$468,750 x $225,000) and therefore is entitled to a credit of $130,000. Shareholder D's credit is reduced by $45,000 ($93,750/$468,750 x $225,000) and therefore is entitled to a credit of $48,750. Partner B's credit is reduced by $60,000 ($125,000/$468,750 x $225,000) and therefore is entitled to a credit of $65,000.
(b) In all cases, the effect of the sale of the credit on the income of the seller and buyer of the credit will be the same as provided in the Internal Revenue Code .
(c) Pass-Through Entity. The taxpayer may be structured as a pass-through entity. To the extent the pass-through entity does not make an election to sell or transfer the tax credit at the entity level as provided in paragraph (15) of this regulation, the tax credit will pass through to the shareholders, partners, or members of the entity based on their year ending profit/loss percentage and as provided in this regulation. The shareholders, members, or partners may then sell their respective conservation tax credit to a Georgia taxpayer .
(d) Transferee Pass-through Entity. The taxpayer , or its shareholders, members, or partners, may sell or transfer the credit to a pass-through entity. The pass-through entity shall elect on behalf of its shareholders, members or partners which year the credit shall be passed through to its shareholders, members or partners (as provided in subparagraph (15)(e) of this regulation). If the pass-through entity has no income tax liability of its own, the pass-through entity may then pass the credit through to its shareholders, members, or partners based on the pass-through entity's year ending profit/loss percentage for such elected year. For example, if a calendar year partnership is buying the credit earned by a taxpayer in the calendar year 2013 tax year and elects to use the credit in such year, then all of the partners receiving the credit must have been a partner in the partnership no later than the end of the 2013 tax year in which the credit was established. Only partners who have a profit/loss percentage as of the end of the applicable tax year may receive their respective amount of the conservation tax credit.
(e) The credits are available for use by the transferee provided the time has not expired for filing a claim for refund of a tax or fee erroneously or illegally assessed and collected pursuant to O.C.G.A. § 48-2-35 as provided in subparagraphs 1. through 3. below, and provided that unused conservation tax credits earned in taxable years beginning before January 1, 2012 can only be claimed by the transferee in a taxable year beginning on or after January 1, 2012:
1. In the transferee's tax year in which the income tax year of the taxpayer , which generates and claims the conservation tax credit for the qualified donation associated with the credit being sold, ends; or
2. During any later tax year before the ten year carry forward period (five year carry forward period for credits earned in taxable years beginning before January 1, 2008) associated with the tax credit ends.
(i) Example: A taxpayer makes a qualified donation and claims the conservation tax credit in calendar year 2013. The taxpayer sells the conservation tax credit to a Georgia taxpayer in calendar 2014 tax year. The transferee Georgia taxpayer may claim the purchased conservation tax credit on either their 2013 return (transferee's tax year in which the income tax year of the taxpayer transferor ends) or their 2014, 2015, 2016, 2017, 2018, 2019, 2020, 2021, 2022, or 2023 return (during any later tax year before the ten year carry forward associated with the tax credit ends).
3. The transferee's tax credit amount cannot exceed the limits in paragraph (5) of this regulation in the year in which the qualified donation was made. Any tax credit amount that exceeds the limits in paragraph (5) of this regulation for the year in which the qualified donation was made cannot be claimed or transferred by the transferee in any tax year.
(i) Example: In 2013, an individual taxpayer makes a qualified donation, after applying the limits in paragraph (5) of this regulation the taxpayer claims the conservation tax credit for $250,000 on their joint tax return. In 2015, this taxpayer purchases $100,000 conservation tax credit from a qualified donation made in 2013. Since this taxpayer has already met the limits in paragraph (5) of this regulation for 2013, the taxpayer cannot claim the $100,000 conservation tax credit in any tax year.
(16) Sunset Date. The Department of Natural Resources shall accept no new applications for tax credits after December 31, 2026.