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Second Regular Session

Sixty-first General Assembly

LLS NO. 98­0488.01 BJA HOUSE BILL 98­1180

STATE OF COLORADO

BY REPRESENTATIVE Udall

FINANCE

A BILL FOR AN ACT

CONCERNING THE CREATION OF AN INCOME TAX CREDIT FOR TAXPAYERS WHO DONATE REAL PROPERTY INTERESTS FOR CONSERVATION PURPOSES.

Bill Summary

(Note: This summary applies to this bill as introduced and does not necessarily reflect any amendments that may be subsequently adopted.)

For income tax years commencing on and after January 1, 1999, establishes an income tax credit for taxpayers who:

Requires the taxpayer to obtain certification from the executive director of the department of natural resources or the executive director's designee that the real property subject to a conservation easement in gross or donated is suitable for conservation purposes.

Establishes an amount for the income tax credit equal to 25% of the fair market value of the conservation easement in gross or other real property interest donated but sets a cap on the credit of $50,000 for a resident individual and $100,000 for a domestic or foreign corporation. Allows the income tax credit to be carried forward for 5 succeeding income tax years. Allows a taxpayer to claim one tax credit per income tax year but does not allow a taxpayer to claim an additional tax credit for any income tax year in which the taxpayer has carried forward part of the tax credit from a previous income tax year.

Requires the executive director of the department of natural resources or the executive director's designee to certify whether the donated real property or the real property subject to a conservation easement in gross is suitable for one or more of certain conservation purposes.


Be it enacted by the General Assembly of the State of Colorado:

SECTION 1.  Part 5 of article 22 of title 39, Colorado Revised Statutes, is amended BY THE ADDITION OF A NEW SECTION to read:

39­22­522.  Credit against tax ­ conservation easements. (1)  FOR PURPOSES OF THIS SECTION, "TAXPAYER" MEANS A RESIDENT INDIVIDUAL OR A DOMESTIC OR FOREIGN CORPORATION SUBJECT TO THE PROVISIONS OF PART 3 OF THIS ARTICLE.

(2)  FOR INCOME TAX YEARS COMMENCING ON AND AFTER JANUARY 1, 1999, SUBJECT TO THE PROVISIONS OF SUBSECTION (6) OF THIS SECTION, THERE SHALL BE ALLOWED A CREDIT WITH RESPECT TO THE INCOME TAXES IMPOSED BY THIS ARTICLE TO EACH TAXPAYER WHO:

(a)  CREATES DURING THE TAXABLE YEAR A CONSERVATION EASEMENT IN GROSS IN ACCORDANCE WITH ARTICLE 30.5 OF TITLE 38, C.R.S., UPON REAL PROPERTY THE TAXPAYER OWNS; OR

(b)  DONATES DURING THE TAXABLE YEAR ANY OTHER REAL PROPERTY INTEREST THE TAXPAYER OWNS TO A GOVERNMENTAL ENTITY OR TO A CHARITABLE ORGANIZATION EXEMPT UNDER SECTION 501 (c) (3) OF THE INTERNAL REVENUE CODE, WHICH ORGANIZATION WAS CREATED AT LEAST TWO YEARS PRIOR TO RECEIPT OF THE DONATION FOR ONE OR MORE OF THE PURPOSES SET FORTH IN SUBSECTION (3) OF THIS SECTION.

(3)  IN ORDER FOR ANY TAXPAYER TO QUALIFY FOR THE CREDIT PROVIDED FOR IN SUBSECTION (2) OF THIS SECTION, THE TAXPAYER SHALL:

(a)  OBTAIN CERTIFICATION FROM THE EXECUTIVE DIRECTOR OF THE DEPARTMENT OF NATURAL RESOURCES OR THE EXECUTIVE DIRECTOR'S DESIGNEE THAT THE DONATED REAL PROPERTY OR THE REAL PROPERTY SUBJECT TO A CONSERVATION EASEMENT IN GROSS IS SUITABLE FOR ONE OR MORE OF THE FOLLOWING PURPOSES:

(I)  RETAINING OR MAINTAINING LAND, WATER, OR AIRSPACE, INCLUDING IMPROVEMENTS, PREDOMINANTLY IN A NATURAL, SCENIC, OR OPEN CONDITION;

(II)  WILDLIFE HABITAT;

(III)  AGRICULTURAL, HORTICULTURAL, RECREATIONAL, FOREST, OR OTHER USE OR CONDITION CONSISTENT WITH THE PROTECTION OF OPEN LAND HAVING WHOLESOME ENVIRONMENTAL QUALITY OR LIFE­SUSTAINING ECOLOGICAL DIVERSITY; OR

(IV)  APPROPRIATE TO THE CONSERVATION AND PRESERVATION OF BUILDINGS, SITES, OR STRUCTURES HAVING HISTORICAL, ARCHITECTURAL, OR CULTURAL INTEREST OR VALUE; AND

(b)  FILE SUCH CERTIFICATION WITH THE DEPARTMENT OF REVENUE AT THE SAME TIME AS THE TAXPAYER FILES A RETURN FOR THE TAXABLE YEAR IN WHICH THE CREDIT IS CLAIMED.

(4) (a)  FOR A CONSERVATION EASEMENT IN GROSS CREATED IN ACCORDANCE WITH ARTICLE 30.5 OF TITLE 38, C.R.S., THE CREDIT PROVIDED FOR IN SUBSECTION (2) OF THIS SECTION SHALL BE AN AMOUNT EQUAL TO TWENTY­FIVE PERCENT OF THE FAIR MARKET VALUE OF SUCH CONSERVATION EASEMENT IN GROSS BUT SHALL NOT EXCEED FIFTY THOUSAND DOLLARS FOR A RESIDENT INDIVIDUAL OR ONE HUNDRED THOUSAND DOLLARS FOR A DOMESTIC OR FOREIGN CORPORATION SUBJECT TO THE PROVISIONS OF PART 3 OF THIS ARTICLE.

(b)  FOR ANY OTHER REAL PROPERTY INTEREST DONATED FOR ANY OF THE PURPOSES SET OUT IN SUBSECTION (3) OF THIS SECTION, THE CREDIT PROVIDED FOR IN SUBSECTION (2) OF THIS SECTION SHALL BE AN AMOUNT EQUAL TO TWENTY­FIVE PERCENT OF THE FAIR MARKET VALUE OF THE PROPERTY DONATED BUT SHALL NOT EXCEED FIFTY THOUSAND DOLLARS FOR A RESIDENT INDIVIDUAL OR ONE HUNDRED THOUSAND DOLLARS FOR A DOMESTIC OR FOREIGN CORPORATION SUBJECT TO THE PROVISIONS OF PART 3 OF THIS ARTICLE.

(5)  IF THE TAX CREDIT PROVIDED IN THIS SECTION EXCEEDS THE AMOUNT OF INCOME TAX DUE ON THE INCOME OF THE TAXPAYER FOR THE TAXABLE YEAR, THE AMOUNT OF THE CREDIT NOT USED AS AN OFFSET AGAINST INCOME TAXES IN SAID INCOME TAX YEAR MAY BE CARRIED FORWARD AND APPLIED AGAINST THE INCOME TAX DUE IN EACH OF THE FIVE SUCCEEDING INCOME TAX YEARS BUT SHALL BE FIRST APPLIED AGAINST THE INCOME TAX DUE FOR THE EARLIEST OF THE INCOME TAX YEARS POSSIBLE. ANY AMOUNT OF THE CREDIT THAT IS NOT USED AFTER SAID PERIOD SHALL NOT BE REFUNDABLE.

(6)  A TAXPAYER MAY CLAIM ONLY ONE TAX CREDIT UNDER THIS SECTION PER INCOME TAX YEAR. A TAXPAYER WHO HAS CARRIED FORWARD PART OF THE TAX CREDIT IN ACCORDANCE WITH SUBSECTION (5) OF THIS SECTION SHALL NOT CLAIM AN ADDITIONAL TAX CREDIT UNDER THIS SECTION FOR ANY INCOME TAX YEAR IN WHICH THE TAXPAYER APPLIES THE AMOUNT CARRIED FORWARD AGAINST INCOME TAX DUE.

SECTION 2.  24­33­102, Colorado Revised Statutes, is amended BY THE ADDITION OF A NEW SUBSECTION to read:

24­33­102.  Powers and duties of the executive director and deputy director. (8)  UPON APPLICATION BY A TAXPAYER WHO EITHER CREATES A CONSERVATION EASEMENT IN GROSS IN ACCORDANCE WITH ARTICLE 30.5 OF TITLE 38, C.R.S., OR WHO DONATES ANY OTHER REAL PROPERTY INTEREST THE TAXPAYER OWNS IN ACCORDANCE WITH SECTION 39­22­522 (2) (b), C.R.S., THE EXECUTIVE DIRECTOR OR THE EXECUTIVE DIRECTOR'S DESIGNEE SHALL DETERMINE WHETHER THE REAL PROPERTY SO DONATED OR UPON WHICH A CONSERVATION EASEMENT IN GROSS WAS CREATED IS SUITABLE FOR ONE OR MORE OF THE PURPOSES SET FORTH IN SECTION 39­22­522 (3) (a), C.R.S. IF THE EXECUTIVE DIRECTOR OR THE EXECUTIVE DIRECTOR'S DESIGNEE DETERMINES THAT THE REAL PROPERTY SO DONATED OR UPON WHICH A CONSERVATION EASEMENT IN GROSS WAS CREATED IS SUITABLE FOR SUCH PURPOSES, THE EXECUTIVE DIRECTOR OR THE EXECUTIVE DIRECTOR'S DESIGNEE SHALL ISSUE A WRITTEN CERTIFICATION TO THE TAXPAYER.

SECTION 3.  Effective date.  This act shall take effect at 12:01 a.m. on the day following the expiration of the ninety­day period after final adjournment of the general assembly that is allowed for submitting a referendum petition pursuant to article V, section 1 (3) of the state constitution; except that, if a referendum petition is filed against this act or an item, section, or part of this act within such period, then the act, item, section, or part, if approved by the people, shall take effect on the date of the official declaration of the vote thereon by proclamation of the governor.