Tell your clients about tax savings that make a difference in people's lives. Show them how to:

• Save this year and every year on their state income tax
• Direct their tax dollars to conservation

South Carolina Conservation tax credits have been around since 2001, but until now, there has not been an efficient market to connect sellers and buyers. The Exchange provides the expertise and service to make the buying of credits manageable and profitable for your clients.

Potential buyers fill out the forms listed under “Buyers”. We notify them when we have found a qualified seller, and they pay for the credits when we receive authorization for the transfer from the SC Department of Revenue. An Exchange transaction fee is deducted from the seller’s payment, the buyer is responsible only for the price offered the seller.

Buyers report the tax credit on Form SC 1040TC and Form TC-19.

Federal Guidance on income tax treatment of state tax credits for buyers:*

IRS Memorandum 200126005 discusses the deductibility of state credits on the federal return.

IRS AM 2007-002 suggests taxable gain or loss may result from use of a credit by a transferee. The IRS has not indicated whether gain on the sale or use of a credit by a transferee would be taxed as ordinary or capital gain income. 

Federal Guidance on income tax treatment of sale of tax credits by original recipient:*

IRS Chief Counsel Advisory 200211042 indicates the sale of the credits by the original recipient results in ordinary income, not capital gain, regardless of how long the seller has held the credits.

*The Exchange does not offer tax advice, these resources have been excerpted from

A Tax Guide to Conservation Easements, by C. Timothy Lindstrom, 2008 Island Press,

which addresses the federal, not state specific treatment of transferable credits.

As a reminder, Chief Counsel Attorney Memorandums and Chief Counsel Advisories are

not be used or cited as precedent.

Key Provisions of the Conservation Incentives Act
The law allows a taxpayer who is entitled to and claims a federal charitable deduction for a gift of land for conservation or for a qualified conservation contribution (conservation easement) donated after May 31, 2001, to claim an income tax credit equal to 25% of the deduction attributable to the gift. The credit cannot exceed $250 per acre of covered property and the total credit claimed by a taxpayer may not exceed $52,500 per year.

The South Carolina Conservation Incentives Act
Use the following link to view the Conservation Incentives Act as implemented in the South Carolina Code of Law. When the document opens view Section 12-6-3515: http://www.scstatehouse.net/code/t12c006.htm

The SC Conservation Easement Handbook
For a comprehensive review of conservation easements see the SC Department of Revenue handbook on conservation easements via the following link: http://www.sctax.org/Publications/conservsation.htm

More About Conservation Easements and Land Trusts
The Land Trust Alliance is an umbrella organization that “promotes voluntary conservation and strengthens the land trust movement by providing leadership, information, skills and resources land trusts need to conserve land for the benefit of communities and natural systems.” Their website offers a wide range of background information and further reading on easements: http://www.lta.org/index.shtml

A Tax Guide to Conservation Easements

Lindstrom, C. Timothy, 2008 Island Press

Preserving Family Lands

Steve Small

List of South Carolina Land Trusts
South Carolina Land Trusts http://sccbank.sc.gov/entitlandtrust.htm

The South Carolina Conservation Credit Exchange connects buyers and sellers of conservation credits and does not offer tax advice. Buyers and sellers must rely on their own tax advisors to advise them as to the technical aspects of the sale, purchase and use of credits.