County District Court No. 11CV14 Honorable Steven E. Shinn,
REVERSED AND CASE REMANDED WITH DIRECTIONS
Rothschild LLP, Christopher J. Dawes, Christopher T. Groen,
Denver, Colorado, for Plaintiffs-Appellants
Cynthia H. Coffman, Attorney General, Grant T. Sullivan,
Assistant Solicitor General, Denver, Colorado, for
1 In this conservation easement (CE) tax credit case
involving both a donor and a transferee, we are asked to
decide whose tax claim triggers the four-year statute of
limitations under §§ 39-21-107(2) and
39-22-522(7)(i), C.R.S. 2006, a question left unresolved by
another division of this court in Markus v. Brohl,
2014 COA 146. Plaintiffs, John and Debra Medved (Medveds),
appeal the district court's denial of their motion for
summary judgment and its finding that defendant, Colorado
Department of Revenue (Department), timely filed its notice
of deficiency and disallowance. Relying on
Markus's reasoning and holding that §
39-22-522(7)(i), C.R.S. 2006 treats the donor and the
transferee as one entity in all matters and that the first
tax claim filed triggers the running of the statute of
limitations, we reverse and remand for the dismissal of this
2 On March 30, 2006, the Medveds purchased a CE tax credit on
a forty-acre parcel of property located in Jackson County for
$104, 000 from Whites Corporation (Whites Corp.). The
appraised value of the tax credit was $130, 000. For tax
purposes, Whites Corp. was the CE donor and the Medveds were
the CE transferees.
3 On October 23, 2006, the Medveds filed their 2005 Colorado
Individual Tax Return Forms 104 and 1305. They claimed a
$130, 000 income tax credit based on the CE. Attached to
their tax return were numerous documents related to the CE,
including the legal description of the property subject to
the easement, the identity of the grantor and donor of the
easement, the amount of the tax credit claimed, and a copy of
the appraisal provided by Whites Corp.
4 On October 30, 2007, Whites Corp. filed a 2005 Form 112,
Colorado State C Corporation Income Tax Return. Whites Corp.
claimed a $260, 000 income tax credit based on the same CE.
5 On March 4, 2011, the Department issued a notice of
disallowance to Whites Corp. and the Medveds, disallowing the
CE tax credit in its entirety. The Medveds appealed directly
to the district court and argued that the notice of
disallowance was barred by the four-year statute of
limitations under § 39-21-107(2), C.R.S.
2006. The Department, relying on the statutory
language and a Department of Revenue regulation, argued that
the Medveds and Whites Corp. were subject to the same statute
of limitations that was triggered when the donor filed its
tax return under § 39-22-522(7)(i), C.R.S. 2006.
6 Interpreting § 39-22-522(7)(i), C.R.S. 2006, the
district court found that the donor (Whites Corp.) and the
transferee (Medveds) were a single entity; that they were
bound as to all issues concerning the tax credit, including
the statute of limitations; and that the donor's tax
claim triggered the four-year statute of limitations.
Therefore, because Whites Corp. filed its tax return on
October 30, 2007, the Department's notice of disallowance
issued on March 4, 2011, was within the statute of
7 A CE "is a permanent restriction that runs with the
land for the purpose of protecting and preserving the land in
a predominantly natural, scenic, or open condition."
Kowalchik v. Brohl, 2012 COA 25, ¶ 2
(Kowalchik I); see also §§
38-30.5-101 to -111, C.R.S. 2016 (establishing the purposes
and requirements for CEs). CEs are fashioned to protect