Share with your friends

State brownfield tax credit amounts held subject to federal income tax

State tax credit amounts subject to federal income tax

The U.S. Court of Appeals for the Federal Circuit today affirmed the summary judgment motion granted to the government in the taxpayers’ refund suit for a portion of federal income tax that they paid on an excess amount of a state tax credit received by them.


Related content

The case is: Ginsburg v. United States, 2018-1788 (Fed. Cir. April 25 2019). Read the Federal Circuit’s decision [PDF 129 KB]


The taxpayers (married individuals) through a limited liability corporation in which they indirectly held a majority of the partnership interests, had received a New York State tax credit for the re-development of a brownfield site. The amount of the brownfield re-development credit was approximately $6.6 million for 2011, and the taxpayers’ share of that credit was just under $5 million.

In 2013, New York State paid the taxpayers a refund of $1.9 million attributable to the brownfield re-development tax credit. The taxpayers did not report this amount as income on their 2013 federal income tax return, claiming that this payment was a nontaxable refund.

The IRS, however, examined the return and proposed adjustments to include about $1.8 million of the $1.9 million as taxable income. The amount of federal tax owed was approximately $609,000 which the taxpayers paid. The taxpayers in May 2016 filed a refund claim with the IRS for $602,000 (representing a part of the deficiency attributable to the brownfield re-development tax credit). Eventually, the refund claim ended up in the U.S. Court of Federal Claims which denied the taxpayers’ contention that the brownfield re-development tax credit qualified for certain exceptions or exclusions from federal income tax. The taxpayers had asserted that the tax credit was a reimbursement of capital costs.

The Federal Circuit today affirmed.

© 2021 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

For more detail about the structure of the KPMG global organization please visit

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us


Want to do business with KPMG?


loading image Request for proposal

Stay up to date with what matters to you

Gain access to personalized content based on your interests by signing up today

Sign up today