What annual cap applied to Virginia Land Preservation Income Tax Credits for calendar year 2010?

Subject

2010 Land Preservation Income Tax Credit cap

Plain-English summary

Virginia set the calendar-year 2010 Land Preservation Income Tax Credit cap at $106,845,000. This was historical program-wide guidance, not a ruling on one donation or taxpayer.

Legislation had established a $100 million annual cap and required an inflation adjustment beginning in 2008. The calculation multiplied $100 million by the percentage that the average CPI-U for the 12 months ending August 31 of the preceding year exceeded the average for the 12 months ending August 31, 2006.

For the 2010 cap, the Department reported approximately 6.8% growth through the 12-month period ending August 31, 2009. The bulletin's table also listed $100 million for 2007, $102,287,000 for 2008, and $106,647,000 for 2009.

What this means for you

• The $106,845,000 figure was the total statewide 2010 credit-issuance cap.
• It was an inflation-adjusted limit, not an individual taxpayer's credit amount.
• The calculation used the CPI-U and a 2006 base period.
• Current land-preservation credit limits require current guidance.

Common questions

What was the 2010 cap?

$106,845,000.

What inflation measure applied?

The consumer price index for all urban consumers, or CPI-U.

Was the cap always $100 million?

That was the statutory base, but the bulletin describes annual inflation adjustments beginning in 2008.

Citations and references

• Va. Code § 58.1-512(D)(4)(b).
• House Bill 5019, Chapter 4, 2006 Special Session I.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 10-13

Original ruling text

TAX BULLETIN 10-2

Virginia Department of Taxation

IMPORTANT INFORMATION REGARDING

THE LAND PRESERVATION INCOME TAX CREDIT
February 19, 2010

New Cap Amount

House Bill 5019 (Chapter 4, Special Session I of 2006) made several changes to the Land Preservation Tax Credit. One of these changes established a $100 million cap on the amount of total credits that may be issued by the Department of Taxation (“TAX”) during a calendar year.

In addition, the legislation provided a mechanism by which this cap may be increased because of inflation. Under Va. Code § 58.1-512 D 4b, beginning with calendar year 2008, the $100 million cap must be increased by an amount equal to $100 million multiplied by the percentage by which the consumer price index for all-urban consumers published by the United States Department of Labor (CPI-U) for the 12-month period ending August 31 of the preceding year exceeds the CPI-U for the 12-month period ending August 31, 2006.

For Calendar Year 2009, the average CPI-U for the 12-month period ending August 31, 2008 increased by approximately 6.6 percent over the average for the 12-month period ending August 31, 2006. Therefore, for calendar year 2009, the cap was $106,647,000.

Using information obtained from United States Bureau of Labor Statistics, the average CPI-U for the 12-month period ending August 31, 2009 increased by approximately 6.8 percent over the average for the 12-month period ending August 31, 2006. As a result, the cap for the Land Preservation Income Tax Credit will be increased to $106,845,000 for calendar year 2010.

The following chart depicts the growth in the CPI-U from 2006 through the applicable year for each year that the $100,000,000 has been increased. It also shows the amount of the cap for each applicable year.

Year
CPI-U

Amount Over 2006 Base Year
Cap Amount

2007

$100,000,000

2008
2.29%
$102,287,000

2009
6.6%
$106,647,000

2010
6.8%
$106,845,000

If you have additional questions, please visit our website at www.tax.virginia.gov , or contact the Tax Credit Unit at (804) 786-2992.