State v. Medved
2019 CO 1
Colo.2019Background
- Whites Corporation donated a conservation easement (CE) and generated a CE income tax credit that it could transfer; Whites is the donor/transferor and tax matters representative (TMR).
- The Medveds purchased a portion of that CE tax credit and filed a Colorado income tax return claiming the credit in October 2006.
- Whites Corporation (the donor/TMR) filed its own return claiming the same CE credit in October 2007 and identified the Medveds as transferees.
- In March 2011 the Colorado Department of Revenue disallowed the CE tax credit in its entirety, concluding the credit was invalid.
- The Medveds argued the Department’s disallowance was time-barred by the four-year statute of limitations because their 2006 claim triggered accrual; the Department argued accrual was triggered by the donor’s (Whites) 2007 claim pursuant to section 39-22-522(7)(i) and its regulation.
- The Colorado Supreme Court granted certiorari to resolve whether the donor’s limitations period binds transferees and whether the Department’s regulation interpreting the statute is reasonable.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the statute of limitations for disallowing a CE tax credit accrues when the transferee first claims the credit or when the donor/TMR first claims it | Medved: accrual occurs at the first-filed claim (the transferee’s 2006 return), so the Department’s 2011 disallowance was too late | State/Dept: accrual occurs when the donor/TMR first claims (Whites’ 2007 return); Dept regulation applies donor’s limitations period to transferees | The Court held accrual begins when the donor/TMR first claims the CE credit; that limitations period binds transferees |
Key Cases Cited
- Markus v. Brohl, 412 P.3d 647 (Colo. App.) (discussed whether donor and transferee are treated as one entity for CE credit review and limitations)
- People v. Diaz, 347 P.3d 621 (Colo. 2015) (statutory interpretation: court must accept legislature’s chosen language)
- Pringle v. Valdez, 171 P.3d 624 (Colo. 2007) (examining sentence structure and phrasing to ascertain statutory meaning)