Iowa Administrative Code › Agency 701 - Revenue Department › Title IV - Individual Income Tax › Chapter 304 - Adjustments to Computed Tax and Tax Credits › Rule 701-304.40 - Charitable Conservation Contribution Tax Credit

Current through Register Vol. 47, No. 3, July 24, 2024
Effective for tax years beginning on or after January 1,
				  2008, a charitable conservation contribution tax credit is available for
				  individual income tax which is equal to 50 percent of the fair market value of
				  a qualified real property interest located in Iowa that is conveyed as an
				  unconditional charitable donation in perpetuity by a taxpayer to a qualified
				  organization exclusively for conservation purposes.
(1)
Definitions.
The
				following definitions are applicable to this rule:
"Conservation purpose"
means the same as
				  defined in Section 170(h)(4) of the Internal Revenue Code, with the exception
				  that a conveyance of land for open space for the purpose of fulfilling density
				  requirements to obtain subdivision or building permits is not considered a
				  conveyance for a conservation purpose.
"Qualified organization"
means the same as
				  defined in Section 170(h)(3) of the Internal Revenue Code.
"Qualified real property interest"
means the
				  same as defined in Section 170(h)(2) of the Internal Revenue Code. Conservation
				  easements and bargain sales are examples of a qualified real property
				  interest.
(2)
Computation of the credit.
The credit equals 50 percent of the
				fair market value of the qualified real property interest. There are numerous
				federal revenue regulations, rulings, court cases and other provisions relating
				to the determination of the value of a qualified real property interest, and
				these are equally applicable in determining the amount of the charitable
				conservation contribution tax credit.
The maximum amount of the tax credit is $100,000. The amount
				  of the contribution for which the tax credit is claimed shall not be claimed as
				  an itemized deduction for charitable contributions for Iowa income tax
				  purposes.
(3)
Claiming the tax credit.
The tax credit is claimed on Form IA
				148, Tax Credits Schedule. The taxpayer must include a copy of federal Form
				8283, Noncash Charitable Contributions, which reflects the calculation of the
				fair market value of the real property interest, with the Iowa return for the
				year in which the contribution is made. If a qualified appraisal of the
				property or other relevant information is required to be included with federal
				Form 8283 for federal tax purposes, the appraisal and other relevant
				information must also be included with the Iowa return.
Any credit in excess of the tax liability for the tax year
				  may be credited to the tax liability for the following 20 years or until used,
				  whichever is the earlier.
If the taxpayer claiming the credit is a partnership, limited
				  liability company, S corporation, or an estate or trust electing to have the
				  income taxed directly to the individual, an individual may claim the credit.
				  The amount claimed by an individual must be based on the individual's pro rata
				  share of the individual's earnings of the partnership, limited liability
				  company, S corporation, or estate or trust.
(4)
Examples.
The following
				noninclusive examples illustrate how this rule applies:
EXAMPLE 1: A taxpayer conveys a real property interest with a
				  fair market value of $150,000 to a qualified organization during 2008. The tax
				  credit is equal to $75,000, or 50 percent of the $150,000 fair market value of
				  the real property. The taxpayer cannot claim the $150,000 as an itemized
				  deduction for charitable contributions on the Iowa individual income tax return
				  for 2008.
EXAMPLE 2: A taxpayer conveys a real property interest with a
				  fair market value of $500,000 to a qualified organization during 2009. The tax
				  credit is limited to $100,000, which equates to $200,000 of the contribution
				  being eligible for the tax credit. The remaining amount of $300,000 ($500,000
				  less $200,000) can be claimed as an itemized deduction for charitable
				  contributions on the Iowa individual income tax return for 2009.
This rule is intended to implement Iowa Code section
				  422.11W.