State Tax Credits

Posted: 5 Dec 2003


In this article, Davenport notes that the federal tax law of charitable contributions contains several anomalies. A contribution is not a realization event; the full value of the contribution may be deducted in most circumstances; appreciation both escapes tax and is deducted. This contrasts sharply with the sale of appreciated property. He believes that recent administrative guidance by the IRS both adopts and questions the premises on which these anomalous results have been based. After first discussing the economics of conservation tax credits and noting that the use of flow-through entities to transfer them to taxpayers does not work well, he discusses what he calls the standard analysis of state tax incentives and the concerns this standard analysis apparently raises for the IRS. He then offers tentative conclusions reached, in his words, without any research. He invites more informed analysis because he believes that the use of state tax credits is likely to grow.

Suggested Citation

Davenport, Charles, State Tax Credits. Tax Notes, Vol. 101, No. 10, December 8, 2003. Available at SSRN:

Charles Davenport (Contact Author)

Rutgers University School of Law ( email )

United States
(973) 353-5384 (Phone)

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