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108 p r a c t i c a l w i n e r y & v i n e ya r d n O v e M B e r 2 0 1 4 w i n e b u s i n e s s Virginia: Where southern hospitality means generous tax breaks Virginia has a long history of wine dat- ing back to Thomas Jefferson's attempts to plant a successful vineyard at Monti- cello in the foothills of the Blue Ridge Mountains. Though Jefferson once lan- guished in his efforts to bring wine to Charlottesville, Va., like he had tasted while in Europe, stating it was "the great desideratum of making at home a good wine," current vineyard owners have had better luck. In recent years, Virginia has become a go-to for wine-tasting and vineyard weddings. As Charlottesville becomes a hot travel spot, new shopping centers, inter- state highways and housing develop- ments sprout up faster than the vines. It is important to preserve scenic lands ripe for vineyards from falling prey to such development and, luckily, Virginia also allows for conservation easements that grant enormous tax benefits to vineyard owners. A certified appraiser, hired by the landowner, will value the land based upon the land less its development rights. Not only can an easement qualify for federal income tax deduction, state tax credits in Virginia for a conservation easement are 40% of the value of the easement. Though the credit cannot ex- ceed $100,000 per year, the unused credit may be rolled over to subsequent years for the next 10 years. What's more, any vineyard owner with unused credits may transfer or sell the unused credits to family and friends who are Virginia taxpayers for use on their own state income tax returns. The United States Tax Court's February 2014 decision in Route 231, LLC v. Commis- sioner of Internal Revenue suggests that income from sales of these unused cred- its may have favorable long-term capital gains treatment depending on when the sale occurred in Virginia. Determining what is best for you and your vineyard As with any business opportunity, it is important to approach conservation easements by making the most educated decision possible. In this case that means hiring a qualified appraiser to claim the benefits of a conservation easement, but vineyard owners should also hire finan- cial advisors and legal counsel to help along the way. Financial advisors may help vineyard owners with estate planning and tax ac- counting. Legal counsel is extremely beneficial when considering all of the legal issues that may arise along the way. An attorney licensed to practice in the landowner's state may review conserva- tion easement documents, negotiate and draft contracts, aid in acquisition trans- actions, enforce easements and help with all other due diligence. In the end, development easements not only can ensure that scenic property does not become the site of the next local big-box store, it can also line the pockets of vineyard owners and local economies throughout the United States. We can all raise a glass to that. PWV Erika Piccirillo is an associate with the firm of Cohn Lifland Pearlman Herrmann & Knopf LLP practicing in the areas of business and commercial litigation, employment law, personal injury, malpractice and real estate. Piccirillo graduated cum laude from the University of Illinois College of Law. Any vineyard owner with unused credits may transfer or sell the unused credits to family and friends who are Virginia taxpayers.