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Silver Cos. pays state, investors to settle disputed land-preservation tax credits
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Date published: 6/13/2010
"Personally, my heart told me to fight this unfairness, but my mind said litigation would be a continuing waste of time," he wrote.
The tax department does not comment on matters involving individual taxpayers, and has declined to discuss this case.
After securing its own appraisals, the tax department determined that the river easements should have been valued at $5.6 million, with allowable tax credits of $2.8 million--only a fraction of the KTR Newmark appraisal.
Under the settlement, investors had to file amended tax returns to reflect the reduced value of the credits and pay the additional tax and interest. Half the accrued interest was waived; no penalties were assessed.
Silver then reimbursed each investor for about half of what he owed. For example, someone who paid $40,000 to settle the tax liability paid less than $20,000 out of his own pocket.
Many of the investors were local business people and professionals who were shocked when the tax department stepped in to challenge the credits that they bought in a good deal--50 cents on the dollar.
Silver, who now has an office in Boca Raton, Fla., was unavailable for comment on the settlement or his letter. Craig Bell, the attorney for McGuireWoods law firm in Richmond who represented the investors in the matter, did not respond to several requests for comment.
One area investor who had to pay tens of thousands of dollars extra in taxes said simply: "It's over. It's settled."
The matter didn't end there: Appraisals on Celebrate Virginia and several other large parcels in Virginia where millions of dollars in tax credits were claimed prompted the General Assembly to place a cap on them in 2007.
Rusty Dennen: 540/374-5431
ABOUT THE CREDITS
Virginia's land-preservation tax credit now allows an income tax credit for 40 percent of the value of donated land or conservation easements.
From 2002 through 2008, the allowable credit was 50 percent of the value, and taxpayers could use up to $100,000 per year for the year of the donation and the 10 subsequent tax years.
For 2009 through 2011, taxpayers are allowed up to $50,000 per year for the year of the donation, then 13 subsequent tax years for taxpayers affected by the credit reduction for those years.
Unused credits can be sold to other investors.
--Virginia Department of Conservation and Recreation