Bill Text: VA SB912 | 2017 | Regular Session | Chaptered
Bill Title: Virginia taxable income of residents; reorganization of additions, subtractions, and deductions.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Passed) 2017-03-13 - Governor: Acts of Assembly Chapter text (CHAP0444) [SB912 Detail]
Download: Virginia-2017-SB912-Chaptered.html
Be it enacted by the General Assembly of Virginia:
1. That §§55-556, 55-557, 55-558, 58.1-302, 58.1-315, 58.1-321, 58.1-322, 58.1-324, 58.1-339.8, 58.1-362, 58.1-363, 58.1-391, 58.1-490, 58.1-513, and 58.1-1823 of the Code of Virginia are amended and reenacted and that the Code of Virginia is amended by adding sections numbered 58.1-322.01 through 58.1-322.04 as follows:
§55-556. Claiming first-time home buyer status.
A. The account holder shall be responsible for the use or application of moneys or funds in an account for which the account holder claims first-time home buyer savings account status.
B. The account holder shall (i) not use moneys or funds held
in an account to pay expenses of administering the account, except that a
service fee may be deducted from the account by a financial institution; (ii)
maintain documentation of the segregation of moneys or funds in separate
accounts and documentation of eligible costs for the purchase of a
single-family residence in the Commonwealth; such documentation may include the
settlement statement; (iii) file, with the account holder's Virginia income tax
return, forms developed by the Department of Taxation regarding treatment of
the account as a first-time home buyer savings account under this chapter,
along with the Form 1099 issued by the financial institution for such account;
and (iv) remit to the Department of Taxation the tax on any amounts (a) added
to individual income pursuant to subdivision B 10 6 of §
58.1-322 58.1-322.01 or (b) recaptured pursuant to subdivision C
36 25 of § 58.1-322 58.1-322.02.
C. The Tax Commissioner shall develop guidelines applicable to account holders to implement the provisions of this chapter. Such guidelines shall be exempt from the provisions of the Administrative Process Act (§ 2.2-4000 et seq.). Such guidelines shall not apply to, or impose administrative, reporting, or other obligations or requirements on, financial institutions-related accounts for which first-time home buyer savings account status is claimed by the account holder.
§55-557. Tax exemption; conditions.
A. All interest or other income earned attributable to an
account shall be excluded from the Virginia taxable income of the account
holder as provided under subdivision C 36 25 of § 58.1-322
58.1-322.02.
B. There shall be an aggregate limit of $50,000 per account on the amount of principal for which the account holder may claim first-time home buyer savings account status. Only cash and marketable securities may be contributed to an account.
C. Subject to the aggregate limit on the amount of principal that may be contributed to an account pursuant to subsection B, there shall be a limitation of $150,000 on the amount of principal and interest or other income on the principal that may be retained within an account.
D. An account holder shall be subject to Virginia income tax
pursuant to subdivision B 10 6 of § 58.1-322
58.1-322.01 to the extent of any loss deducted as a capital loss by the
individual for federal income tax purposes attributable to the person's
account.
E. Upon being furnished proof of the death of the account holder, a financial institution shall distribute the principal and accumulated interest or other income in the account in accordance with the terms of the contract governing the account.
§55-558. Withdrawal of funds from account for purposes other than eligible costs for first-time home purchase.
If moneys or funds are withdrawn from an account for any
purpose other than the payment of eligible costs by or on behalf of a qualified
beneficiary, there shall be imposed a penalty calculated using the Form 1099
showing the amount of income exempted from state income tax and a five percent penalty
shall be assessed on the amount of exempted income. The penalty shall be paid
to the Department of Taxation. In addition, as provided under subdivision C
36 25 of § 58.1-322 58.1-322.02, the account holder
shall also be subject to recapture of income that was subtracted pursuant to
that subdivision.
Such five percent penalty shall not apply to, and there shall be no recapture of income with regard to, the extent of moneys or funds withdrawn that were (i) withdrawn by reason of the qualified beneficiary's death or disability, (ii) a disbursement of assets of the account pursuant to a filing for protection under the United States Bankruptcy Code, 11 U.S.C. §§101 through 1330, or (iii) transferred from an account established pursuant to this chapter into another account established pursuant to this chapter for the benefit of another qualified beneficiary.
§58.1-302. Definitions.
For the purpose of this chapter and unless otherwise required by the context:
"Affiliated" means two or more corporations subject to Virginia income taxes whose relationship to each other is such that (i) one corporation owns at least 80 percent of the voting stock of the other or others or (ii) at least 80 percent of the voting stock of two or more corporations is owned by the same interests.
"Compensation" means wages, salaries, commissions and any other form of remuneration paid or accrued to employees for personal services.
"Corporation" includes associations, joint stock companies and insurance companies.
"Domicile" means the permanent place of residence of a taxpayer and the place to which he intends to return even though he may actually reside elsewhere. In determining domicile, consideration may be given to the applicant's expressed intent, conduct, and all attendant circumstances including, but not limited to, financial independence, business pursuits, employment, income sources, residence for federal income tax purposes, marital status, residence of parents, spouse and children, if any, leasehold, sites of personal and real property owned by the applicant, motor vehicle and other personal property registration, residence for purposes of voting as proven by registration to vote, if any, and such other factors as may reasonably be deemed necessary to determine the person's domicile.
"Foreign source income" means:
1. Interest, other than interest derived from sources within the United States;
2. Dividends, other than dividends derived from sources within the United States;
3. Rents, royalties, license, and technical fees from property located or services performed without the United States or from any interest in such property, including rents, royalties, or fees for the use of or the privilege of using without the United States any patents, copyrights, secret processes and formulas, good will, trademarks, trade brands, franchises, and other like properties;
4. Gains, profits, or other income from the sale of intangible or real property located without the United States; and
5. The amount of an individual's share of net income attributable to a foreign source qualified business unit of an electing small business corporation (S corporation). For purposes of this subsection, qualified business unit shall be defined by §989 of the Internal Revenue Code, and the source of such income shall be determined in accordance with §§861, 862 and 987 of the Internal Revenue Code.
In determining the source of "foreign source income," the provisions of §§861, 862, and 863 of the Internal Revenue Code shall be applied except as specifically provided in subsection 5 above.
"Income and deductions from Virginia sources" includes:
1. Items of income, gain, loss and deduction attributable to:
a. The ownership of any interest in real or tangible personal property in Virginia;
b. A business, trade, profession or occupation carried on in Virginia; or
c. Prizes paid by the Virginia Lottery Department, and gambling winnings from wagers placed or paid at a location in Virginia.
2. Income from intangible personal property, including annuities, dividends, interest, royalties and gains from the disposition of intangible personal property to the extent that such income is from property employed by the taxpayer in a business, trade, profession, or occupation carried on in Virginia.
"Income tax return preparer" means any person who prepares for compensation, or who employs one or more persons to prepare for compensation, any return of tax imposed by this chapter or any claim for refund of tax. For purposes of the preceding sentence, the preparation for compensation of any portion of a return or claim for refund shall be treated as if it were the preparation of the return or claim for refund. A person shall not be an "income tax return preparer" merely because the person:
1. Furnishes typing, reproducing, or other mechanical assistance;
2. Prepares a return or claim for refund of the employer (or of an officer or employee of the employer) by whom he is regularly and continuously employed;
3. Prepares as a fiduciary a return or claim for refund for any person; or
4. Prepares an application for correction of an erroneous assessment or a protective claim for refund for a taxpayer in response to any assessment pursuant to §58.1-1812 issued to the taxpayer or in response to any waiver pursuant to §58.1-101 or 58.1-220 after the commencement of an audit of the taxpayer or another taxpayer if a determination in such audit of such other taxpayer directly or indirectly affects the tax liability of such taxpayer.
"Individual" means all natural persons whether married or unmarried and fiduciaries acting for natural persons, but not fiduciaries acting for trusts or estates.
"Intangible expenses and costs" means:
1. Expenses, losses and costs for, related to, or in connection directly or indirectly with the direct or indirect acquisition, use, maintenance or management, ownership, sale, exchange, lease, transfer, or any other disposition of intangible property to the extent such amounts are allowed as deductions or costs in determining taxable income;
2. Losses related to or incurred in connection directly or indirectly with factoring transactions or discounting transactions;
3. Royalty, patent, technical and copyright fees;
4. Licensing fees; and
5. Other similar expenses and costs.
"Intangible property" means patents, patent applications, trade names, trademarks, service marks, copyrights and similar types of intangible assets.
"Interest expenses and costs" means amounts directly or indirectly allowed as deductions under §163 of the Internal Revenue Code for purposes of determining taxable income under the Internal Revenue Code to the extent such expenses and costs are directly or indirectly for, related to, or in connection with the direct or indirect acquisition, use, maintenance, management, ownership, sale, exchange, lease, transfer, or disposition of intangible property.
"Nonresident estate or trust" means an estate or trust which is not a resident estate or trust.
"Related entity" means:
1. A stockholder who is an individual, or a member of the stockholder's family enumerated in §318 of the Internal Revenue Code, if the stockholder and the members of the stockholder's family own, directly, indirectly, beneficially or constructively, in the aggregate, at least 50 percent of the value of the taxpayer's outstanding stock;
2. A stockholder, or a stockholder's partnership, limited liability company, estate, trust or corporation, if the stockholder and the stockholder's partnerships, limited liability companies, estates, trusts and corporations own directly, indirectly, beneficially or constructively, in the aggregate, at least 50 percent of the value of the taxpayer's outstanding stock; or
3. A corporation, or a party related to the corporation in a manner that would require an attribution of stock from the corporation to the party or from the party to the corporation under the attribution rules of §318 of the Internal Revenue Code, if the taxpayer owns, directly, indirectly, beneficially or constructively, at least 50 percent of the value of the corporation's outstanding stock. The attribution rules of §318 of the Internal Revenue Code shall apply for purposes of determining whether the ownership requirements of this subdivision have been met.
"Related member" means a person that, with respect to the taxpayer during all or any portion of the taxable year, is a related entity, a component member as defined in §1563(b) of the Internal Revenue Code, or is a person to or from whom there is attribution of stock ownership in accordance with §1563(e) of the Internal Revenue Code.
"Resident" applies only to natural persons and includes, for the purpose of determining liability for the taxes imposed by this chapter upon the income of any taxable year every person domiciled in Virginia at any time during the taxable year and every other person who, for an aggregate of more than 183 days of the taxable year, maintained his place of abode within Virginia, whether domiciled in Virginia or not. The word "resident" shall not include any member of the United States Congress who is domiciled in another state.
"Resident estate or trust" means:
1. The estate of a decedent who at his death was domiciled in the Commonwealth;
2. A trust created by will of a decedent who at his death was domiciled in the Commonwealth;
3. A trust created by or consisting of property of a person domiciled in the Commonwealth; or
4. A trust or estate which is being administered in the Commonwealth.
"Sales" means all gross receipts of the corporation not allocated under §58.1-407, except the sale or other disposition of intangible property shall include only the net gain realized from the transaction.
"State," means for purposes of Article
10 of this chapter (§58.1-400 et seq.), means any state of the
United States, the District of Columbia, the Commonwealth of Puerto Rico, any
territory or possession of the United States, and any foreign country.
"Trust" or "estate" means a trust or estate, or a fiduciary thereof, which is required to file a fiduciary income tax return under the laws of the United States.
"Virginia fiduciary adjustment" means the net amount
of the applicable modifications described in §58.1-322 §§
58.1-322.01, 58.1-322.02, and 58.1-322.04 (including subsection E
thereof subdivision 1 of §58.1-322.04 if the estate or trust is a
beneficiary of another estate or trust) which relate to items of income, gain,
loss or deduction of an estate or trust. The fiduciary adjustment shall not
include the modification in subsection D of § 58.1-322
58.1-322.03, except that the amount of state income taxes excluded from federal
taxable income shall be included. The fiduciary adjustment shall also include
the modification in subsection D subdivision 7 of §
58.1-322, 58.1-322.03 regarding the deduction for the purchase of a
prepaid tuition contract or contribution to a savings trust account.
§58.1-315. Transitional modifications to Virginia taxable income.
The modifications of Virginia taxable income to be made in
accordance with subsection F subdivision 2 of § 58.1-322
58.1-322.04 and subsection D of §58.1-402, so long as applicable, are as
follows:
1. There shall be subtracted from Virginia taxable income the amount necessary to prevent the taxation under this chapter of any annuity or of any other amount of income or gain which was properly included in income or gain and was taxable under Articles 1, 2, 3, 4, 5, 6, or 7 (§§58-77 through 58-151) of Chapter 4 of Title 58 to the taxpayer prior to the repeal thereof, or to a decedent by reason of whose death the taxpayer acquires the right to receive the income or gain, or to a trust or estate from which the taxpayer received the income or gain.
2. The carry-back of net operating losses or net capital losses to reduce taxable income of taxable years beginning prior to January 1, 1972, shall not be permitted. Where a taxpayer would have been allowed to deduct an amount as a net operating loss carry-over or net capital loss carry-over in determining taxable income for a taxable year beginning after December 31, 1971, but for the fact that such loss, or a portion of such loss, had been carried back in determining taxable income for a taxable year beginning prior to January 1, 1972, there shall be added to Virginia taxable income any amount which was actually deducted in determining taxable income as a net operating loss carry-over or net capital loss carry-over and there shall be subtracted from Virginia taxable income the amount which could have been deducted as a net operating loss carry-over or net capital loss carry-over in arriving at taxable income but for the fact that such loss, or a portion of such loss, had been carried back for federal purposes.
3. There shall be added to Virginia taxable income the amount necessary to prevent the deduction under this chapter of any item which was properly deductible by the taxpayer in determining a tax under §§58-77 through 58-151 prior to the repeal thereof.
4. There shall be subtracted from Virginia taxable income that portion of any accumulation distribution which is allocable, under the laws of the United States relating to federal income taxes, to undistributed net income of a trust for any taxable year beginning on or before December 31, 1971. The rules prescribed by such laws of the United States with reference to any such accumulation distribution shall be applied, mutatis mutandis, to allow for this limitation; and, without limiting the generality of the foregoing, the credit provided by §58.1-370 in the case of accumulation distributions shall in no instance encompass any part of any tax paid for a taxable year beginning on or before December 31, 1971.
5. As to gain or loss attributable to the sale or exchange of nondepreciable property, Virginia taxable income shall be adjusted to effect a reduction in such gain or increase in such loss by the amount by which the adjusted basis of such property, determined for Virginia income tax purposes at the close of the taxable period immediately preceding the first taxable period to which Articles 7.1 to 7.6 (§58-151.01 et seq.) of Title 58 applied prior to repeal thereof exceeds the adjusted basis of such property for federal income tax purposes determined at the close of the same period.
6. There shall be subtracted from the Virginia taxable income of a shareholder of an electing small business corporation any amount included in his taxable income as his share of the undistributed taxable income of such corporation for any year of the corporation beginning before January 1, 1972.
7. There shall be subtracted from federal taxable income amounts which would have been deductible by the corporation in computing federal taxable income but for the election of such corporation of the additional investment tax credit under §46(a)(2)(B) of the Internal Revenue Code in effect on January 1, 1978.
§58.1-321. Exemptions and exclusions.
A. No tax levied pursuant to §58.1-320 is imposed, nor any return required to be filed, by:
1. A single individual where the Virginia adjusted gross
income for such taxable year is less than $5,000 for taxable years beginning on
and after January 1, 1987, but before January 1, 2004.
A single individual where the Virginia adjusted gross
income plus the modification specified in subdivision D 5 of §58.1-322 for
such taxable year is less than $5,000 for taxable years beginning on and after
January 1, 2004, but before January 1, 2005.
A single individual where the Virginia adjusted gross
income plus the modification specified in subdivision D 5 of §58.1-322 for
such taxable year is less than $7,000 for taxable years beginning on and after
January 1, 2005, but before January 1, 2008.
A single individual where the Virginia adjusted gross
income plus the modification specified in subdivision D 5 of §58.1-322 for
such taxable year is less than $11,250 for taxable years beginning on and after
January 1, 2008, but before January 1, 2010.
A single individual where the Virginia adjusted gross income
plus the modification specified in subdivision D 5 of § 58.1-322
58.1-322.03 for such taxable year is less than $11,650 for taxable years
beginning on and after January 1, 2010, but before January 1, 2012.
A single individual where the Virginia adjusted gross income
plus the modification specified in subdivision D 5 of § 58.1-322
58.1-322.03 for such taxable year is less than $11,950 for taxable years
beginning on and after January 1, 2012.
2. An individual and spouse if their combined Virginia
adjusted gross income for such taxable year is less than $8,000 for taxable
years beginning on and after January 1, 1987, (or one-half of such amount in
the case of a married individual filing a separate return) but before January
1, 2004.
An individual and spouse if their combined Virginia adjusted
gross income plus the modification specified in subdivision D 5 of §
58.1-322 58.1-322.03 is less than $8,000 for taxable years
beginning on and after January 1, 2004, (or one-half of such amount in the case
of a married individual filing a separate return) but before January 1, 2005;
less than $14,000 for taxable years beginning on and after January 1, 2005, (or
one-half of such amount in the case of a married individual filing a separate
return) but before January 1, 2008; less than $22,500 for taxable years
beginning on and after January 1, 2008, (or one-half of such amount in the case
of a married individual filing a separate return) but before January 1, 2010;
less than $23,300 for taxable years beginning on and after January 1, 2010,
(or one-half of such amount in the case of a married individual filing a
separate return) but before January 1, 2012;, and less than
$23,900 for taxable years beginning on and after January 1, 2012, (or
one-half of such amount in the case of a married individual filing a separate
return).
For the purposes of this section, "Virginia
adjusted gross income" means federal adjusted gross income for the taxable
years with the modifications specified in §58.1-322 B, §58.1-322 C and the
additional deductions allowed under §58.1-322 D 2 b and D 5 for taxable years
beginning before January 1, 2004 §§58.1-322.01 and 58.1-322.02.
For taxable years beginning on and after January 1, 2004, Virginia adjusted
gross income means federal adjusted gross income with the modifications
specified in subsections B and C of §58.1-322.
B. Persons in the armed forces Armed Forces of
the United States stationed on military or naval reservations within Virginia
who are not domiciled in Virginia shall not be held liable to income taxation
for compensation received from military or naval service.
§58.1-322. Virginia taxable income of residents.
A. The Virginia taxable income of a resident individual means
his federal adjusted gross income for the taxable year, which excludes combat
pay for certain members of the Armed Forces of the United States as provided in
§112 of the Internal Revenue Code, as amended, and with the modifications
specified in this section §§58.1-322.01 through 58.1-322.04.
B. To the extent excluded from federal adjusted gross
income, there shall be added:
1. Interest, less related expenses to the extent not
deducted in determining federal income, on obligations of any state other than
Virginia, or of a political subdivision of any such other state unless created
by compact or agreement to which Virginia is a party;
2. Interest or dividends, less related expenses to the
extent not deducted in determining federal taxable income, on obligations or
securities of any authority, commission or instrumentality of the United
States, which the laws of the United States exempt from federal income tax but
not from state income taxes;
3. Unrelated business taxable income as defined by §512 of
the Internal Revenue Code;
4. The amount of a lump sum distribution from a qualified
retirement plan, less the minimum distribution allowance and any amount
excludable for federal income tax purposes that is excluded from federal
adjusted gross income solely by virtue of an individual's election to use the
averaging provisions under §402 of the Internal Revenue Code;
5 through 8. [Repealed.]
9. The amount required to be included in income for the
purpose of computing the partial tax on an accumulation distribution pursuant
to §667 of the Internal Revenue Code;
10. For taxable years beginning on and after January 1,
2014, any loss for the taxable year that was deducted as a capital loss for
federal income tax purposes by an account holder attributable to such person's
first-time home buyer savings account established pursuant to Chapter 32 (§
55-555 et seq.) of Title 55. For purposes of this subdivision, "account
holder" and "first-time home buyer savings account" mean the
same as those terms are defined in §55-555; and
11. For taxable years beginning on or after January 1,
2016, to the extent that tax credit is allowed for the same donation pursuant
to §58.1-439.12:12, any amount claimed as a federal income tax deduction for
such donation under §170 of the Internal Revenue Code, as amended or
renumbered.
C. To the extent included in federal adjusted gross income,
there shall be subtracted:
1. Income derived from obligations, or on the sale or
exchange of obligations, of the United States and on obligations or securities
of any authority, commission or instrumentality of the United States to the
extent exempt from state income taxes under the laws of the United States
including, but not limited to, stocks, bonds, treasury bills, and treasury
notes, but not including interest on refunds of federal taxes, interest on
equipment purchase contracts, or interest on other normal business
transactions.
2. Income derived from obligations, or on the sale or
exchange of obligations of this Commonwealth or of any political subdivision or
instrumentality of the Commonwealth.
3. [Repealed.]
4. Benefits received under Title II of the Social Security
Act and other benefits subject to federal income taxation solely pursuant to §
86 of the Internal Revenue Code.
4a. Through December 31, 2000, the same amount used in
computing the federal credit allowed under §22 of the Internal Revenue Code by
a retiree under age 65 who qualified for such retirement on the basis of
permanent and total disability and who is a qualified individual as defined in
§22(b)(2) of the Internal Revenue Code; however, any person who claims a
deduction under subdivision D 5 may not also claim a subtraction under this
subdivision.
4b. For taxable years beginning on or after January 1,
2001, up to $20,000 of disability income, as defined in §22(c)(2)(B)(iii) of
the Internal Revenue Code; however, any person who claims a deduction under
subdivision D 5 may not also claim a subtraction under this subdivision.
5. The amount of any refund or credit for overpayment of
income taxes imposed by the Commonwealth or any other taxing jurisdiction.
6. The amount of wages or salaries eligible for the federal
Targeted Jobs Credit which was not deducted for federal purposes on account of
the provisions of §280C(a) of the Internal Revenue Code.
7, 8. [Repealed.]
9. [Expired.]
10. Any amount included therein less than $600 from a prize
awarded by the Virginia Lottery.
11. The wages or salaries received by any person for active
and inactive service in the National Guard of the Commonwealth of Virginia, not
to exceed the amount of income derived from 39 calendar days of such service or
$3,000, whichever amount is less; however, only those persons in the ranks of
O3 and below shall be entitled to the deductions specified herein.
12. Amounts received by an individual, not to exceed $1,000
in any taxable year, as a reward for information provided to a law-enforcement
official or agency, or to a nonprofit corporation created exclusively to assist
such law-enforcement official or agency, in the apprehension and conviction of
perpetrators of crimes. This provision shall not apply to the following: an
individual who is an employee of, or under contract with, a law-enforcement
agency, a victim or the perpetrator of the crime for which the reward was paid,
or any person who is compensated for the investigation of crimes or accidents.
13. [Repealed.]
14. [Expired.]
15, 16. [Repealed.]
17. For taxable years beginning on and after January 1,
1995, the amount of "qualified research expenses" or "basic
research expenses" eligible for deduction for federal purposes, but which
were not deducted, on account of the provisions of §280C(c) of the Internal
Revenue Code and which shall be available to partners, shareholders of S corporations,
and members of limited liability companies to the extent and in the same manner
as other deductions may pass through to such partners, shareholders, and
members.
18. [Repealed.]
19. For taxable years beginning on and after January 1,
1996, any income received during the taxable year derived from a qualified
pension, profit-sharing, or stock bonus plan as described by §401 of the
Internal Revenue Code, an individual retirement account or annuity established
under §408 of the Internal Revenue Code, a deferred compensation plan as
defined by §457 of the Internal Revenue Code, or any federal government
retirement program, the contributions to which were deductible from the
taxpayer's federal adjusted gross income, but only to the extent the
contributions to such plan or program were subject to taxation under the income
tax in another state.
20. For taxable years beginning on and after January 1,
1997, any income attributable to a distribution of benefits or a refund from a
prepaid tuition contract or savings trust account with the Virginia College
Savings Plan, created pursuant to Chapter 7 (§23.1-700 et seq.) of Title 23.1.
The subtraction for any income attributable to a refund shall be limited to
income attributable to a refund in the event of a beneficiary's death,
disability, or receipt of a scholarship.
21. For taxable years beginning on or after January 1,
1998, all military pay and allowances, to the extent included in federal
adjusted gross income and not otherwise subtracted, deducted or exempted under
this section, earned by military personnel while serving by order of the
President of the United States with the consent of Congress in a combat zone or
qualified hazardous duty area which is treated as a combat zone for federal tax
purposes pursuant to §112 of the Internal Revenue Code.
22. For taxable years beginning on or after January 1,
2000, but before January 1, 2015, the gain derived from the sale or exchange of
real property or the sale or exchange of an easement to real property which
results in the real property or the easement thereto being devoted to
open-space use, as that term is defined in §58.1-3230, for a period of time
not less than 30 years. To the extent a subtraction is taken in accordance with
this subdivision, no tax credit under this chapter for donating land for its
preservation shall be allowed for three years following the year in which the
subtraction is taken.
23. Effective for all taxable years beginning on or after
January 1, 2000, $15,000 of military basic pay for military service personnel
on extended active duty for periods in excess of 90 days; however, the
subtraction amount shall be reduced dollar-for-dollar by the amount which the
taxpayer's military basic pay exceeds $15,000 and shall be reduced to zero if
such military basic pay amount is equal to or exceeds $30,000.
24. Effective for all taxable years beginning on and after
January 1, 2000, the first $15,000 of salary for each federal and state
employee whose total annual salary from all employment for the taxable year is
$15,000 or less.
25. Unemployment benefits taxable pursuant to §85 of the
Internal Revenue Code.
26. For taxable years beginning on and after January 1,
2001, any amount received as military retirement income by an individual
awarded the Congressional Medal of Honor.
27. Effective for all taxable years beginning on and after
January 1, 1999, income received as a result of (i) the "Master Settlement
Agreement," as defined in §3.2-3100; and (ii) the National Tobacco Grower
Settlement Trust dated July 19, 1999, by (a) tobacco farmers; (b) any person
holding a tobacco marketing quota, or tobacco farm acreage allotment, under the
Agricultural Adjustment Act of 1938; or (c) any person having the right to grow
tobacco pursuant to such a quota or allotment, but only to the extent that such
income has not been subtracted pursuant to subdivision C 18 of §58.1-402.
28. For taxable years beginning on and after January 1,
2000, items of income attributable to, derived from or in any way related to
(i) assets stolen from, hidden from or otherwise lost by an individual who was
a victim or target of Nazi persecution or (ii) damages, reparations, or other
consideration received by a victim or target of Nazi persecution to compensate
such individual for performing labor against his will under the threat of
death, during World War II and its prelude and direct aftermath. This
subtraction shall not apply to assets acquired with such items of income or
with the proceeds from the sale of assets stolen from, hidden from or otherwise
lost to, during World War II and its prelude and direct aftermath, a victim or
target of Nazi persecution. The provisions of this subdivision shall only apply
to an individual who was the first recipient of such items of income and who
was a victim or target of Nazi persecution, or a spouse, widow, widower, or
child or stepchild of such victim.
"Victim or target of Nazi persecution" means any
individual persecuted or targeted for persecution by the Nazi regime who had
assets stolen from, hidden from or otherwise lost as a result of any act or
omission in any way relating to (i) the Holocaust; (ii) World War II and its
prelude and direct aftermath; (iii) transactions with or actions of the Nazi
regime; (iv) treatment of refugees fleeing Nazi persecution; or (v) the holding
of such assets by entities or persons in the Swiss Confederation during World
War II and its prelude and aftermath. A victim or target of Nazi persecution
shall also include any individual forced into labor against his will, under the
threat of death, during World War II and its prelude and direct aftermath. As
used in this subdivision, "Nazi regime" means the country of Nazi
Germany, areas occupied by Nazi Germany, those European countries allied with
Nazi Germany, or any other neutral European country or area in Europe under the
influence or threat of Nazi invasion.
29, 30. [Repealed.]
31. Effective for all taxable years beginning on or after
January 1, 2001, the military death gratuity payment made after September 11,
2001, to the survivor of deceased military personnel killed in the line of
duty, pursuant to Chapter 75 of Title 10 of the United States Code; however,
the subtraction amount shall be reduced dollar-for-dollar by the amount that
the survivor may exclude from his federal gross income in accordance with §134
of the Internal Revenue Code.
32. Effective for all taxable years beginning on or after
January 1, 2007, the death benefit payments from an annuity contract that are
received by a beneficiary of such contract provided that (i) the death benefit
payment is made pursuant to an annuity contract with an insurance company and
(ii) the death benefit payment is paid solely by lump sum. The subtraction
under this subdivision shall be allowed only for that portion of the death benefit
payment that is included in federal adjusted gross income.
33. For taxable years beginning on and after January 1,
2009, any gain recognized from the sale of launch services to space flight
participants, as defined in 49 U.S.C. §70102, or launch services intended to
provide individuals the training or experience of a launch, without performing
an actual launch. To qualify for a deduction under this subdivision, launch
services must be performed in Virginia or originate from an airport or
spaceport in Virginia.
34. For taxable years beginning on and after January 1,
2009, any gain recognized as a result of resupply services contracts for
delivering payload, as defined in 49 U.S.C. §70102, entered into with the
Commercial Orbital Transportation Services division of the National Aeronautics
and Space Administration or other space flight entity, as defined in §
8.01-227.8, and launched from an airport or spaceport in Virginia.
35. For taxable years beginning on or after January 1,
2011, any income taxed as a long-term capital gain for federal income tax
purposes, or any income taxed as investment services partnership interest
income (otherwise known as investment partnership carried interest income) for
federal income tax purposes. To qualify for a subtraction under this
subdivision, such income shall be attributable to an investment in a
"qualified business," as defined in §58.1-339.4, or in any other
technology business approved by the Secretary of Technology, provided the
business has its principal office or facility in the Commonwealth and less than
$3 million in annual revenues in the fiscal year prior to the investment. To
qualify for a subtraction under this subdivision, the investment shall be made
between the dates of April 1, 2010, and June 30, 2020 No taxpayer who has
claimed a tax credit for an investment in a "qualified business"
under §58.1-339.4 shall be eligible for the subtraction under this subdivision
for an investment in the same business.
36. For taxable years beginning on and after January 1,
2014, any income of an account holder for the taxable year taxed as (i) a
capital gain for federal income tax purposes attributable to such person's
first-time home buyer savings account established pursuant to Chapter 32 (§
55-555 et seq.) of Title 55 and (ii) interest income or other income for
federal income tax purposes attributable to such person's first-time home buyer
savings account.
Notwithstanding the statute of limitations on assessments
contained in §58.1-312, any subtraction taken under this subdivision shall be
subject to recapture in the taxable year or years in which moneys or funds
withdrawn from the first-time home buyer savings account were used for any
purpose other than the payment of eligible costs by or on behalf of a qualified
beneficiary, as provided under §55-558. The amount subject to recapture shall
be a portion of the amount withdrawn in the taxable year that was used for
other than the payment of eligible costs, computed by multiplying the amount
withdrawn and used for other than the payment of eligible costs by the ratio of
the aggregate earnings in the account at the time of the withdrawal to the
total balance in the account at such time.
However, recapture shall not apply to the extent of moneys
or funds withdrawn that were (i) withdrawn by reason of the qualified
beneficiary's death or disability, (ii) a disbursement of assets of the account
pursuant to a filing for protection under the United States Bankruptcy Code, 11
U.S.C. §§101 through 1330, or (iii) transferred from an account established
pursuant to Chapter 32 (§55-555 et seq.) of Title 55 into another account
established pursuant to such chapter for the benefit of another qualified
beneficiary.
For purposes of this subdivision, "account
holder," "eligible costs," "first-time home buyer savings
account," and "qualified beneficiary" mean the same as those
terms are defined in §55-555.
37. For taxable years beginning on or after January 1,
2015, any income for the taxable year attributable to the discharge of a student
loan solely by reason of the student's death. For purposes of this subdivision,
"student loan" means the same as that term is defined under §108(f)
of the Internal Revenue Code.
D. In computing Virginia taxable income there shall be
deducted from Virginia adjusted gross income as defined in §58.1-321:
1. a. The amount allowable for itemized deductions for
federal income tax purposes where the taxpayer has elected for the taxable year
to itemize deductions on his federal return, but reduced by the amount of
income taxes imposed by the Commonwealth or any other taxing jurisdiction and
deducted on such federal return and increased by an amount which, when added to
the amount deducted under §170 of the Internal Revenue Code for mileage,
results in a mileage deduction at the state level for such purposes at a rate
of 18 cents per mile; or
b. Three thousand dollars for single individuals and $6,000
for married persons (one-half of such amounts in the case of a married
individual filing a separate return) for taxable years beginning on and after
January 1, 2005; provided that the taxpayer has not itemized deductions for the
taxable year on his federal income tax return. For purposes of this section,
any person who may be claimed as a dependent on another taxpayer's return for
the taxable year may compute the deduction only with respect to earned income.
2. a. A deduction in the amount of $900 for taxable years
beginning on and after January 1, 2005, but before January 1, 2008; and $930
for taxable years beginning on and after January 1, 2008, for each personal
exemption allowable to the taxpayer for federal income tax purposes.
b. For taxable years beginning on and after January 1,
1987, each blind or aged taxpayer as defined under §63(f) of the Internal Revenue
Code shall be entitled to an additional personal exemption in the amount of
$800.
The additional deduction for blind or aged taxpayers
allowed under this subdivision shall be allowable regardless of whether the
taxpayer itemizes deductions for the taxable year for federal income tax
purposes.
3. A deduction equal to the amount of employment-related
expenses upon which the federal credit is based under §21 of the Internal
Revenue Code for expenses for household and dependent care services necessary for
gainful employment.
4. An additional $1,000 deduction for each child residing
for the entire taxable year in a home under permanent foster care placement as
defined in §63.2-908, provided the taxpayer can also claim the child as a
personal exemption under §151 of the Internal Revenue Code.
5. a. For taxable years beginning on and after January 1,
2004, a deduction in the amount of $12,000 for individuals born on or before
January 1, 1939.
b. For taxable years beginning on and after January 1,
2004, a deduction in the amount of $12,000 for individuals born after January
1, 1939, who have attained the age of 65. This deduction shall be reduced by $1
for every $1 that the taxpayer's adjusted federal adjusted gross income exceeds
$50,000 for single taxpayers or $75,000 for married taxpayers. For married
taxpayers filing separately, the deduction will be reduced by $1 for every $1
the total combined adjusted federal adjusted gross income of both spouses
exceeds $75,000.
For the purposes of this subdivision, "adjusted
federal adjusted gross income" means federal adjusted gross income minus
any benefits received under Title II of the Social Security Act and other
benefits subject to federal income taxation solely pursuant to §86 of the
Internal Revenue Code, as amended.
6. For taxable years beginning on and after January 1,
1997, the amount an individual pays as a fee for an initial screening to become
a possible bone marrow donor, if (i) the individual is not reimbursed for such
fee or (ii) the individual has not claimed a deduction for the payment of such
fee on his federal income tax return.
7. a. A deduction shall be allowed to the purchaser or
contributor for the amount paid or contributed during the taxable year for a
prepaid tuition contract or college savings trust account entered into with the
Virginia College Savings Plan, pursuant to Chapter 7 (§23.1-700 et seq.) of
Title 23.1. Except as provided in subdivision 7 c, the amount deducted on any
individual income tax return in any taxable year shall be limited to $4, 000
per prepaid tuition contract or college savings trust account. No deduction
shall be allowed pursuant to this section if such payments or contributions are
deducted on the purchaser's or contributor's federal income tax return. If the
purchase price or annual contribution to a college savings trust account
exceeds $4, 000, the remainder may be carried forward and subtracted in future
taxable years until the purchase price or college savings trust contribution
has been fully deducted; however, except as provided in subdivision 7 c, in no
event shall the amount deducted in any taxable year exceed $4, 000 per contract
or college savings trust account. Notwithstanding the statute of limitations on
assessments contained in §58.1-312, any deduction taken hereunder shall be
subject to recapture in the taxable year or years in which distributions or
refunds are made for any reason other than (i) to pay qualified higher
education expenses, as defined in §529 of the Internal Revenue Code or (ii) the
beneficiary's death, disability, or receipt of a scholarship. For the purposes
of this subdivision, the term "purchaser" or "contributor"
means the person shown as such on the records of the Virginia College Savings
Plan as of December 31 of the taxable year. In the case of a transfer of
ownership of a prepaid tuition contract or college savings trust account, the
transferee shall succeed to the transferor's tax attributes associated with a
prepaid tuition contract or college savings trust account, including, but not
limited to, carryover and recapture of deductions.
b. The amount paid for a prepaid tuition contract during
taxable years beginning on or after January 1, 1996, but before January 1,
1998, shall be deducted in taxable years beginning on or after January 1, 1998,
and shall be subject to the limitations set out in subdivision 7 a.
c. A purchaser of a prepaid tuition contract or contributor
to a college savings trust account who has attained age 70 shall not be subject
to the limitation that the amount of the deduction not exceed $4,000 per
prepaid tuition contract or college savings trust account in any taxable year.
Such taxpayer shall be allowed a deduction for the full amount paid for the
contract or contributed to a college savings trust account, less any amounts
previously deducted.
8. For taxable years beginning on and after January 1,
2000, the total amount an individual actually contributed in funds to the
Virginia Public School Construction Grants Program and Fund, established in
Chapter 11.1 (§22.1-175.1 et seq.) of Title 22.1, provided the individual has
not claimed a deduction for such amount on his federal income tax return.
9. For taxable years beginning on and after January 1,
1999, an amount equal to 20 percent of the tuition costs incurred by an
individual employed as a primary or secondary school teacher licensed pursuant
to Chapter 15 (§22.1-289.1 et seq.) of Title 22.1 to attend continuing teacher
education courses that are required as a condition of employment; however, the
deduction provided by this subsection shall be available only if (i) the
individual is not reimbursed for such tuition costs and (ii) the individual has
not claimed a deduction for the payment of such tuition costs on his federal
income tax return.
10. For taxable years beginning on or after January 1,
2000, the amount an individual pays annually in premiums for long-term health
care insurance, provided the individual has not claimed a deduction for federal
income tax purposes, or, for taxable years beginning before January 1, 2014, a
credit under §58.1-339.11. For taxable years beginning on or after January 1,
2014, no such deduction for long-term health care insurance premiums paid by
the individual during the taxable year shall be allowed if the individual has
claimed a federal income tax deduction for such taxable year for long-term
health care insurance premiums paid by him.
11. For taxable years beginning on and after January 1,
2006, contract payments to a producer of quota tobacco or a tobacco quota holder,
or their spouses, as provided under the American Jobs Creation Act of 2004
(P.L. 108-357), but only to the extent that such payments have not been
subtracted pursuant to subsection D of §58.1-402, as follows:
a. If the payment is received in installment payments, then
the recognized gain, including any gain recognized in taxable year 2005, may be
subtracted in the taxable year immediately following the year in which the
installment payment is received.
b. If the payment is received in a single payment, then 10
percent of the recognized gain may be subtracted in the taxable year
immediately following the year in which the single payment is received. The
taxpayer may then deduct an equal amount in each of the nine succeeding taxable
years.
12. For taxable years beginning on and after January 1,
2007, an amount equal to 20 percent of the sum paid by an individual pursuant
to Chapter 6 (§58.1-600 et seq.), not to exceed $500 in each taxable year, in
purchasing for his own use the following items of tangible personal property:
(i) any clothes washers, room air conditioners, dishwashers, and standard size
refrigerators that meet or exceed the applicable energy star efficiency
requirements developed by the United States Environmental Protection Agency and
the United States Department of Energy; (ii) any fuel cell that (a) generates
electricity using an electrochemical process, (b) has an electricity-only
generation efficiency greater than 35 percent, and (c) has a generating
capacity of at least two kilowatts; (iii) any gas heat pump that has a
coefficient of performance of at least 1.25 for heating and at least 0.70 for
cooling; (iv) any electric heat pump hot water heater that yields an energy
factor of at least 1.7; (v) any electric heat pump that has a heating system
performance factor of at least 8.0 and a cooling seasonal energy efficiency
ratio of at least 13.0; (vi) any central air conditioner that has a cooling
seasonal energy efficiency ratio of at least 13.5; (vii) any advanced gas or
oil water heater that has an energy factor of at least 0.65; (viii) any
advanced oil-fired boiler with a minimum annual fuel-utilization rating of 85;
(ix) any advanced oil-fired furnace with a minimum annual fuel-utilization
rating of 85; and (x) programmable thermostats.
13. For taxable years beginning on or after January 1,
2007, the lesser of $5,000 or the amount actually paid by a living donor of an
organ or other living tissue for unreimbursed out-of-pocket expenses directly
related to the donation that arose within 12 months of such donation, provided
the donor has not taken a medical deduction in accordance with the provisions
of §213 of the Internal Revenue Code for such expenses. The deduction may be
taken in the taxable year in which the donation is made or the taxable year in
which the 12-month period expires.
14. For taxable years beginning on or after January 1,
2013, the amount an individual age 66 or older with earned income of at least
$20,000 for the year and federal adjusted gross income not in excess of $30,000
for the year pays annually in premiums for (i) a prepaid funeral insurance
policy covering the individual or (ii) medical or dental insurance for any
person for whom individual tax filers may claim a deduction for such premiums
under federal income tax laws. "Earned income" means the same as that
term is defined in §32(c) of the Internal Revenue Code of 1954, as amended or
renumbered. The deduction shall not be allowed for any portion of such premiums
paid for which the individual has (a) been reimbursed, (b) claimed a deduction
for federal income tax purposes, (c) claimed a deduction or subtraction under
another provision of this section, or (d) claimed a federal income tax credit
or any income tax credit pursuant to this chapter.
E. There shall be added to or subtracted from federal
adjusted gross income, as the case may be, the individual's share, as
beneficiary of an estate or trust, of the Virginia fiduciary adjustment
determined under §58.1-361.
F. There shall be added or subtracted, as the case may be,
the amounts provided in §58.1-315 as transitional modifications.
G. Effective for all taxable years beginning on or after
January 1, 2007, to the extent included in federal adjusted gross income, there
shall be (i) subtracted from federal adjusted gross income by a shareholder of
an electing small business corporation (S corporation) that is subject to the
bank franchise tax imposed under Chapter 12 (§58.1-1200 et seq.) for the
calendar year in which such taxable year begins, the shareholder's allocable
share of the income or gain of such electing small business corporation (S
corporation), and (ii) added back to federal adjusted gross income such that,
federal adjusted gross income shall be increased, by a shareholder of an
electing small business corporation (S corporation) that is subject to the bank
franchise tax imposed under Chapter 12 (§58.1-1200 et seq.) for the calendar
year in which such taxable year begins, the shareholder's allocable share of
the losses or deductions of such electing small business corporation (S
corporation).
Effective for all taxable years beginning on or after
January 1, 2007, to the extent excluded from federal adjusted gross income,
there shall be added to federal adjusted gross income by a shareholder of an
electing small business corporation (S corporation) that is subject to the bank
franchise tax imposed under Chapter 12 (§58.1-1200 et seq.) for the calendar
year in which such taxable year begins, the value of any distribution paid or
distributed to the shareholder by such electing small business corporation (S
corporation).
H. Notwithstanding any other provision of law, the income
from any disposition of real property which is held by the taxpayer for sale to
customers in the ordinary course of the taxpayer's trade or business, as
defined in §453(l)(1)(B) of the Internal Revenue Code, of property made on or
after January 1, 2009, may, at the election of the taxpayer, be recognized
under the installment method described under §453 of the Internal Revenue Code,
provided that (i) the election relating to the dealer disposition of the
property has been made on or before the due date prescribed by law (including
extensions) for filing the taxpayer's return of the tax imposed under this
chapter for the taxable year in which the disposition occurs, and (ii) the
dealer disposition is in accordance with restrictions or conditions established
by the Department, which shall be set forth in guidelines developed by the
Department. Along with such restrictions or conditions, the guidelines shall
also address the recapture of such income under certain circumstances. The
development of the guidelines shall be exempt from the Administrative Process
Act (§2.2-4000 et seq.).
§58.1-322.01. Virginia taxable income; additions.
In computing Virginia taxable income pursuant to § 58.1-322, to the extent excluded from federal adjusted gross income, there shall be added:
1. Interest, less related expenses to the extent not deducted in determining federal income, on obligations of any state other than Virginia, or of a political subdivision of any such other state unless created by compact or agreement to which Virginia is a party.
2. Interest or dividends, less related expenses to the extent not deducted in determining federal taxable income, on obligations or securities of any authority, commission, or instrumentality of the United States, which the laws of the United States exempt from federal income tax but not from state income taxes.
3. Unrelated business taxable income as defined by §512 of the Internal Revenue Code.
4. The amount of a lump sum distribution from a qualified retirement plan, less the minimum distribution allowance and any amount excludable for federal income tax purposes that is excluded from federal adjusted gross income solely by virtue of an individual's election to use the averaging provisions under §402 of the Internal Revenue Code.
5. The amount required to be included in income for the purpose of computing the partial tax on an accumulation distribution pursuant to §667 of the Internal Revenue Code.
6. For taxable years beginning on and after January 1, 2014, any loss for the taxable year that was deducted as a capital loss for federal income tax purposes by an account holder attributable to such person's first-time home buyer savings account established pursuant to Chapter 32 (§ 55-555 et seq.) of Title 55. For purposes of this subdivision, "account holder" and "first-time home buyer savings account" mean the same as those terms are defined in §55-555.
7. For taxable years beginning on and after January 1, 2016, to the extent that tax credit is allowed for the same donation pursuant to §58.1-439.12:12, any amount claimed as a federal income tax deduction for such donation under §170 of the Internal Revenue Code, as amended or renumbered.
§58.1-322.02. Virginia taxable income; subtractions.
In computing Virginia taxable income pursuant to § 58.1-322, to the extent included in federal adjusted gross income, there shall be subtracted:
1. Income derived from obligations, or on the sale or exchange of obligations, of the United States and on obligations or securities of any authority, commission, or instrumentality of the United States to the extent exempt from state income taxes under the laws of the United States, including, but not limited to, stocks, bonds, treasury bills, and treasury notes but not including interest on refunds of federal taxes, interest on equipment purchase contracts, or interest on other normal business transactions.
2. Income derived from obligations, or on the sale or exchange of obligations, of the Commonwealth or of any political subdivision or instrumentality of the Commonwealth.
3. Benefits received under Title II of the Social Security Act and other benefits subject to federal income taxation solely pursuant to § 86 of the Internal Revenue Code.
4. Up to $20,000 of disability income, as defined in § 22(c)(2)(B)(iii) of the Internal Revenue Code; however, any person who claims a deduction under subdivision 5 of §58.1-322.03 may not also claim a subtraction under this subdivision.
5. The amount of any refund or credit for overpayment of income taxes imposed by the Commonwealth or any other taxing jurisdiction.
6. The amount of wages or salaries eligible for the federal Work Opportunity Credit which was not deducted for federal purposes on account of the provisions of §280C(a) of the Internal Revenue Code.
7. Any amount included therein less than $600 from a prize awarded by the Virginia Lottery.
8. The wages or salaries received by any person for active and inactive service in the National Guard of the Commonwealth of Virginia, not to exceed the amount of income derived from 39 calendar days of such service or $3,000, whichever amount is less; however, only those persons in the ranks of O3 and below shall be entitled to the deductions specified in this subdivision.
9. Amounts received by an individual, not to exceed $1,000 in any taxable year, as a reward for information provided to a law-enforcement official or agency, or to a nonprofit corporation created exclusively to assist such law-enforcement official or agency, in the apprehension and conviction of perpetrators of crimes. This subdivision shall not apply to the following: an individual who is an employee of, or under contract with, a law-enforcement agency, a victim or the perpetrator of the crime for which the reward was paid, or any person who is compensated for the investigation of crimes or accidents.
10. The amount of "qualified research expenses" or "basic research expenses" eligible for deduction for federal purposes, but which were not deducted, on account of the provisions of § 280C(c) of the Internal Revenue Code and which shall be available to partners, shareholders of S corporations, and members of limited liability companies to the extent and in the same manner as other deductions may pass through to such partners, shareholders, and members.
11. Any income received during the taxable year derived from a qualified pension, profit-sharing, or stock bonus plan as described by § 401 of the Internal Revenue Code, an individual retirement account or annuity established under §408 of the Internal Revenue Code, a deferred compensation plan as defined by §457 of the Internal Revenue Code, or any federal government retirement program, the contributions to which were deductible from the taxpayer's federal adjusted gross income, but only to the extent the contributions to such plan or program were subject to taxation under the income tax in another state.
12. Any income attributable to a distribution of benefits or a refund from a prepaid tuition contract or savings trust account with the Virginia College Savings Plan, created pursuant to Chapter 7 (§23.1-700 et seq.) of Title 23.1. The subtraction for any income attributable to a refund shall be limited to income attributable to a refund in the event of a beneficiary's death, disability, or receipt of a scholarship.
13. All military pay and allowances, to the extent included in federal adjusted gross income and not otherwise subtracted, deducted, or exempted under this section, earned by military personnel while serving by order of the President of the United States with the consent of Congress in a combat zone or qualified hazardous duty area that is treated as a combat zone for federal tax purposes pursuant to §112 of the Internal Revenue Code.
14. For taxable years beginning before January 1, 2015, the gain derived from the sale or exchange of real property or the sale or exchange of an easement to real property which results in the real property or the easement thereto being devoted to open-space use, as that term is defined in § 58.1-3230, for a period of time not less than 30 years. To the extent that a subtraction is taken in accordance with this subdivision, no tax credit under this chapter for donating land for its preservation shall be allowed for three years following the year in which the subtraction is taken.
15. Fifteen thousand dollars of military basic pay for military service personnel on extended active duty for periods in excess of 90 days; however, the subtraction amount shall be reduced dollar-for-dollar by the amount by which the taxpayer's military basic pay exceeds $15,000 and shall be reduced to zero if such military basic pay amount is equal to or exceeds $30,000.
16. The first $15,000 of salary for each federal and state employee whose total annual salary from all employment for the taxable year is $15,000 or less.
17. Unemployment benefits taxable pursuant to §85 of the Internal Revenue Code.
18. Any amount received as military retirement income by an individual awarded the Congressional Medal of Honor.
19. Items of income attributable to, derived from, or in any way related to (i) assets stolen from, hidden from, or otherwise lost by an individual who was a victim or target of Nazi persecution or (ii) damages, reparations, or other consideration received by a victim or target of Nazi persecution to compensate such individual for performing labor against his will under the threat of death, during World War II and its prelude and direct aftermath. This subtraction shall not apply to assets acquired with such items of income or with the proceeds from the sale of assets stolen from, hidden from, or otherwise lost to, during World War II and its prelude and direct aftermath, a victim or target of Nazi persecution. The provisions of this subdivision shall only apply to an individual who was the first recipient of such items of income and who was a victim or target of Nazi persecution, or a spouse, widow, widower, or child or stepchild of such victim.
As used in this subdivision:
"Nazi regime" means the country of Nazi Germany, areas occupied by Nazi Germany, those European countries allied with Nazi Germany, or any other neutral European country or area in Europe under the influence or threat of Nazi invasion.
"Victim or target of Nazi persecution" means any individual persecuted or targeted for persecution by the Nazi regime who had assets stolen from, hidden from, or otherwise lost as a result of any act or omission in any way relating to (i) the Holocaust, (ii) World War II and its prelude and direct aftermath, (iii) transactions with or actions of the Nazi regime, (iv) treatment of refugees fleeing Nazi persecution, or (v) the holding of such assets by entities or persons in the Swiss Confederation during World War II and its prelude and aftermath. A "victim or target of Nazi persecution" also includes any individual forced into labor against his will, under the threat of death, during World War II and its prelude and direct aftermath.
20. The military death gratuity payment made after September 11, 2001, to the survivor of deceased military personnel killed in the line of duty, pursuant to 10 U.S.C. Chapter 75; however, the subtraction amount shall be reduced dollar-for-dollar by the amount that the survivor may exclude from his federal gross income in accordance with §134 of the Internal Revenue Code.
21. The death benefit payments from an annuity contract that are received by a beneficiary of such contract, provided that (i) the death benefit payment is made pursuant to an annuity contract with an insurance company and (ii) the death benefit payment is paid solely by lump sum. The subtraction under this subdivision shall be allowed only for that portion of the death benefit payment that is included in federal adjusted gross income.
22. Any gain recognized from the sale of launch services to space flight participants, as defined in 49 U.S.C. §70102, or launch services intended to provide individuals with the training or experience of a launch, without performing an actual launch. To qualify for a deduction under this subdivision, launch services must be performed in Virginia or originate from an airport or spaceport in Virginia.
23. Any gain recognized as a result of resupply services contracts for delivering payload, as defined in 49 U.S.C. §70102, entered into with the Commercial Orbital Transportation Services division of the National Aeronautics and Space Administration or other space flight entity, as defined in §8.01-227.8, and launched from an airport or spaceport in Virginia.
24. Any income taxed as a long-term capital gain for federal income tax purposes, or any income taxed as investment services partnership interest income (otherwise known as investment partnership carried interest income) for federal income tax purposes. To qualify for a subtraction under this subdivision, such income shall be attributable to an investment in a "qualified business," as defined in §58.1-339.4, or in any other technology business approved by the Secretary of Technology, provided that the business has its principal office or facility in the Commonwealth and less than $3 million in annual revenues in the fiscal year prior to the investment. To qualify for a subtraction under this subdivision, the investment shall be made between the dates of April 1, 2010, and June 30, 2020. No taxpayer who has claimed a tax credit for an investment in a "qualified business" under §58.1-339.4 shall be eligible for the subtraction under this subdivision for an investment in the same business.
25. For taxable years beginning on and after January 1, 2014, any income of an account holder for the taxable year taxed as (i) a capital gain for federal income tax purposes attributable to such person's first-time home buyer savings account established pursuant to Chapter 32 (§55-555 et seq.) of Title 55 and (ii) interest income or other income for federal income tax purposes attributable to such person's first-time home buyer savings account.
Notwithstanding the statute of limitations on assessments contained in §58.1-312, any subtraction taken under this subdivision shall be subject to recapture in the taxable year or years in which moneys or funds withdrawn from the first-time home buyer savings account were used for any purpose other than the payment of eligible costs by or on behalf of a qualified beneficiary, as provided under §55-558. The amount subject to recapture shall be a portion of the amount withdrawn in the taxable year that was used for other than the payment of eligible costs, computed by multiplying the amount withdrawn and used for other than the payment of eligible costs by the ratio of the aggregate earnings in the account at the time of the withdrawal to the total balance in the account at such time.
However, recapture shall not apply to the extent of moneys or funds withdrawn that were (i) withdrawn by reason of the qualified beneficiary's death or disability; (ii) a disbursement of assets of the account pursuant to a filing for protection under the United States Bankruptcy Code, 11 U.S.C. §§101 through 1330; or (iii) transferred from an account established pursuant to Chapter 32 (§55-555 et seq.) of Title 55 into another account established pursuant to such chapter for the benefit of another qualified beneficiary.
For purposes of this subdivision, "account holder," "eligible costs," "first-time home buyer savings account," and "qualified beneficiary" mean the same as those terms are defined in §55-555.
26. For taxable years beginning on and after January 1, 2015, any income for the taxable year attributable to the discharge of a student loan solely by reason of the student's death. For purposes of this subdivision, "student loan" means the same as that term is defined under §108(f) of the Internal Revenue Code.
§58.1-322.03. Virginia taxable income; deductions.
In computing Virginia taxable income pursuant to § 58.1-322, there shall be deducted from Virginia adjusted gross income as defined in §58.1-321:
1. a. The amount allowable for itemized deductions for federal income tax purposes where the taxpayer has elected for the taxable year to itemize deductions on his federal return, but reduced by the amount of income taxes imposed by the Commonwealth or any other taxing jurisdiction and deducted on such federal return and increased by an amount that, when added to the amount deducted under §170 of the Internal Revenue Code for mileage, results in a mileage deduction at the state level for such purposes at a rate of 18 cents per mile; or
b. Three thousand dollars for single individuals and $6,000 for married persons (one-half of such amounts in the case of a married individual filing a separate return), provided that the taxpayer has not itemized deductions for the taxable year on his federal income tax return. For purposes of this section, any person who may be claimed as a dependent on another taxpayer's return for the taxable year may compute the deduction only with respect to earned income.
2. a. A deduction in the amount of $930 for each personal exemption allowable to the taxpayer for federal income tax purposes.
b. Each blind or aged taxpayer as defined under §63(f) of the Internal Revenue Code shall be entitled to an additional personal exemption in the amount of $800.
The additional deduction for blind or aged taxpayers allowed under this subdivision shall be allowable regardless of whether the taxpayer itemizes deductions for the taxable year for federal income tax purposes.
3. A deduction equal to the amount of employment-related expenses upon which the federal credit is based under §21 of the Internal Revenue Code for expenses for household and dependent care services necessary for gainful employment.
4. An additional $1,000 deduction for each child residing for the entire taxable year in a home under permanent foster care placement as defined in §63.2-908, provided that the taxpayer can also claim the child as a personal exemption under §151 of the Internal Revenue Code.
5. a. A deduction in the amount of $12,000 for individuals born on or before January 1, 1939.
b. A deduction in the amount of $12,000 for individuals born after January 1, 1939, who have attained the age of 65. This deduction shall be reduced by $1 for every $1 that the taxpayer's adjusted federal adjusted gross income exceeds $50,000 for single taxpayers or $75,000 for married taxpayers. For married taxpayers filing separately, the deduction shall be reduced by $1 for every $1 that the total combined adjusted federal adjusted gross income of both spouses exceeds $75,000.
For the purposes of this subdivision, "adjusted federal adjusted gross income" means federal adjusted gross income minus any benefits received under Title II of the Social Security Act and other benefits subject to federal income taxation solely pursuant to §86 of the Internal Revenue Code, as amended.
6. The amount an individual pays as a fee for an initial screening to become a possible bone marrow donor, if (i) the individual is not reimbursed for such fee or (ii) the individual has not claimed a deduction for the payment of such fee on his federal income tax return.
7. a. A deduction shall be allowed to the purchaser or contributor for the amount paid or contributed during the taxable year for a prepaid tuition contract or college savings trust account entered into with the Virginia College Savings Plan, pursuant to Chapter 7 (§23.1-700 et seq.) of Title 23.1. Except as provided in subdivision b, the amount deducted on any individual income tax return in any taxable year shall be limited to $4,000 per prepaid tuition contract or college savings trust account. No deduction shall be allowed pursuant to this subdivision 7 if such payments or contributions are deducted on the purchaser's or contributor's federal income tax return. If the purchase price or annual contribution to a college savings trust account exceeds $4,000, the remainder may be carried forward and subtracted in future taxable years until the purchase price or college savings trust contribution has been fully deducted; however, except as provided in subdivision b, in no event shall the amount deducted in any taxable year exceed $4,000 per contract or college savings trust account. Notwithstanding the statute of limitations on assessments contained in §58.1-312, any deduction taken hereunder shall be subject to recapture in the taxable year or years in which distributions or refunds are made for any reason other than (i) to pay qualified higher education expenses, as defined in §529 of the Internal Revenue Code or (ii) the beneficiary's death, disability, or receipt of a scholarship. For the purposes of this subdivision, "purchaser" or "contributor" means the person shown as such on the records of the Virginia College Savings Plan as of December 31 of the taxable year. In the case of a transfer of ownership of a prepaid tuition contract or college savings trust account, the transferee shall succeed to the transferor's tax attributes associated with a prepaid tuition contract or college savings trust account, including, but not limited to, carryover and recapture of deductions.
b. A purchaser of a prepaid tuition contract or contributor to a college savings trust account who has attained age 70 shall not be subject to the limitation that the amount of the deduction not exceed $4,000 per prepaid tuition contract or college savings trust account in any taxable year. Such taxpayer shall be allowed a deduction for the full amount paid for the contract or contributed to a college savings trust account, less any amounts previously deducted.
8. The total amount an individual actually contributed in funds to the Virginia Public School Construction Grants Program and Fund, established in Chapter 11.1 (§22.1-175.1 et seq.) of Title 22.1, provided that the individual has not claimed a deduction for such amount on his federal income tax return.
9. An amount equal to 20 percent of the tuition costs incurred by an individual employed as a primary or secondary school teacher licensed pursuant to Chapter 15 (§22.1-289.1 et seq.) of Title 22.1 to attend continuing teacher education courses that are required as a condition of employment; however, the deduction provided by this subdivision shall be available only if (i) the individual is not reimbursed for such tuition costs and (ii) the individual has not claimed a deduction for the payment of such tuition costs on his federal income tax return.
10. The amount an individual pays annually in premiums for long-term health care insurance, provided that the individual has not claimed a deduction for federal income tax purposes, or, for taxable years beginning before January 1, 2014, a credit under §58.1-339.11. For taxable years beginning on and after January 1, 2014, no such deduction for long-term health care insurance premiums paid by the individual during the taxable year shall be allowed if the individual has claimed a federal income tax deduction for such taxable year for long-term health care insurance premiums paid by him.
11. Contract payments to a producer of quota tobacco or a tobacco quota holder, or their spouses, as provided under the American Jobs Creation Act of 2004 (P.L. 108-357), but only to the extent that such payments have not been subtracted pursuant to subsection D of §58.1-402, as follows:
a. If the payment is received in installment payments, then the recognized gain may be subtracted in the taxable year immediately following the year in which the installment payment is received.
b. If the payment is received in a single payment, then 10 percent of the recognized gain may be subtracted in the taxable year immediately following the year in which the single payment is received. The taxpayer may then deduct an equal amount in each of the nine succeeding taxable years.
12. An amount equal to 20 percent of the sum paid by an individual pursuant to Chapter 6 (§58.1-600 et seq.), not to exceed $500 in each taxable year, in purchasing for his own use the following items of tangible personal property: (i) any clothes washers, room air conditioners, dishwashers, and standard size refrigerators that meet or exceed the applicable energy star efficiency requirements developed by the U.S. Environmental Protection Agency and the U.S. Department of Energy; (ii) any fuel cell that (a) generates electricity using an electrochemical process, (b) has an electricity-only generation efficiency greater than 35 percent, and (c) has a generating capacity of at least two kilowatts; (iii) any gas heat pump that has a coefficient of performance of at least 1.25 for heating and at least 0.70 for cooling; (iv) any electric heat pump hot water heater that yields an energy factor of at least 1.7; (v) any electric heat pump that has a heating system performance factor of at least 8.0 and a cooling seasonal energy efficiency ratio of at least 13.0; (vi) any central air conditioner that has a cooling seasonal energy efficiency ratio of at least 13.5; (vii) any advanced gas or oil water heater that has an energy factor of at least 0.65; (viii) any advanced oil-fired boiler with a minimum annual fuel-utilization rating of 85; (ix) any advanced oil-fired furnace with a minimum annual fuel-utilization rating of 85; and (x) programmable thermostats.
13. The lesser of $5,000 or the amount actually paid by a living donor of an organ or other living tissue for unreimbursed out-of-pocket expenses directly related to the donation that arose within 12 months of such donation, provided that the donor has not taken a medical deduction in accordance with the provisions of §213 of the Internal Revenue Code for such expenses. The deduction may be taken in the taxable year in which the donation is made or the taxable year in which the 12-month period expires.
14. For taxable years beginning on and after January 1, 2013, the amount an individual age 66 or older with earned income of at least $20,000 for the year and federal adjusted gross income not in excess of $30,000 for the year pays annually in premiums for (i) a prepaid funeral insurance policy covering the individual or (ii) medical or dental insurance for any person for whom individual tax filers may claim a deduction for such premiums under federal income tax laws. As used in this subdivision, "earned income" means the same as that term is defined in §32(c) of the Internal Revenue Code. The deduction shall not be allowed for any portion of such premiums paid for which the individual has (a) been reimbursed, (b) claimed a deduction for federal income tax purposes, (c) claimed a deduction or subtraction under another provision of this section, or (d) claimed a federal income tax credit or any income tax credit pursuant to this chapter.
§58.1-322.04. Virginia taxable income; additional modifications.
In calculating Virginia taxable income pursuant to § 58.1-322, the following adjustments shall be made:
1. There shall be added to or subtracted from federal adjusted gross income, as the case may be, the individual's share, as beneficiary of an estate or trust, of the Virginia fiduciary adjustment determined under §58.1-361.
2. There shall be added or subtracted, as the case may be, the amounts provided in §58.1-315 as transitional modifications.
3. To the extent included in federal adjusted gross income, there shall be (i) subtracted from federal adjusted gross income, by a shareholder of an electing small business corporation (S corporation) that is subject to the bank franchise tax imposed under Chapter 12 (§58.1-1200 et seq.) for the calendar year in which such taxable year begins, the shareholder's allocable share of the income or gain of such electing small business corporation (S corporation) and (ii) added back to federal adjusted gross income, such that federal adjusted gross income shall be increased, by a shareholder of an electing small business corporation (S corporation) that is subject to the bank franchise tax imposed under Chapter 12 (§58.1-1200 et seq.) for the calendar year in which such taxable year begins, the shareholder's allocable share of the losses or deductions of such electing small business corporation (S corporation).
To the extent excluded from federal adjusted gross income, there shall be added to federal adjusted gross income, by a shareholder of an electing small business corporation (S corporation) that is subject to the bank franchise tax imposed under Chapter 12 (§58.1-1200 et seq.) for the calendar year in which such taxable year begins, the value of any distribution paid or distributed to the shareholder by such electing small business corporation (S corporation).
4. Notwithstanding any other provision of law, the income from any disposition of real property that is held by the taxpayer for sale to customers in the ordinary course of the taxpayer's trade or business, as defined in §453(l)(1)(B) of the Internal Revenue Code, of property may, at the election of the taxpayer, be recognized under the installment method described under §453 of the Internal Revenue Code, provided that (i) the election relating to the dealer disposition of the property has been made on or before the due date prescribed by law (including extensions) for filing the taxpayer's return of the tax imposed under this chapter for the taxable year in which the disposition occurs and (ii) the dealer disposition is in accordance with restrictions or conditions established by the Department, which shall be set forth in guidelines developed by the Department. Along with such restrictions or conditions, the guidelines shall also address the recapture of such income under certain circumstances. The development of the guidelines shall be exempt from the Administrative Process Act (§2.2-4000 et seq.).
§58.1-324. Husband and wife.
A. If the federal taxable income of husband or wife is determined on a separate federal return, their Virginia taxable incomes shall be separately determined.
B. If the federal taxable income of husband and wife is determined on a joint federal return, or if neither files a federal return:
1. Their tax shall be determined on their joint Virginia taxable income; or
2. Separate taxes may be determined on their separate Virginia taxable incomes if they so elect.
C. Where husband and wife have not separately reported and claimed items of income, exemptions and deductions for federal income tax purposes, and have not elected to file a joint Virginia income tax return, such items allowable for Virginia income tax purposes shall be allocated and adjusted as follows:
1. Income shall be allocated to the spouse who earned the income or with respect to whose property the income is attributable.
2. Allowable deductions with respect to trade, business, production of income, or employment shall be allocated to the spouse to whom attributable.
3. Nonbusiness deductions, where properly taken for federal
income tax purposes, shall be allowable for Virginia income tax purposes, but
shall be allocable between husband and wife as they may mutually agree. For
this purpose, "nonbusiness deductions" consist of allowable
deductions not described in subdivision 2 of this subsection.
4. Where the standard deduction or low income allowance is
properly taken pursuant to subdivision D 1 a of § 58.1-322
58.1-322.03, such deduction or allowance shall be allocable between husband
and wife as they may mutually agree.
5. Personal exemptions properly allowable for federal income tax purposes shall be allocated for Virginia income tax purposes as husband and wife may mutually agree; however, exemptions for taxpayer and spouse together with exemptions for old age and blindness must be allocated respectively to the spouse to whom they relate.
D. Where allocations are permitted to be made under subsection
C pursuant to agreement between husband and wife, and husband and wife have
failed to agree as to those allocations, such allocations shall be made between
husband and wife in a manner corresponding to the treatment for federal income
tax purposes of the items involved, under regulations prescribed by the
Department of Taxation.
§58.1-339.8. Income tax credit for low-income taxpayers.
A. As used in this section, unless the context requires otherwise:
"Family Virginia adjusted gross income" means the combined Virginia adjusted gross income of an individual, the individual's spouse, and any person claimed as a dependent on the individual's or his spouse's income tax return for the taxable year.
"Poverty guidelines" means the poverty guidelines for the 48 contiguous states and the District of Columbia updated annually in the Federal Register by the U.S. Department of Health and Human Services under the authority of §673(2) of the Omnibus Budget Reconciliation Act of 1981.
"Virginia adjusted gross income" has the same meaning as the term is defined in §58.1-321.
B. 1. For taxable years beginning on and after January 1, 2000, any individual or persons filing a joint return whose family Virginia adjusted gross income does not exceed 100 percent of the poverty guideline amount corresponding to a household of an equal number of persons as listed in the poverty guidelines published during such taxable year, shall be allowed a credit against the tax levied pursuant to §58.1-320 in an amount equal to $300 each for the individual, the individual's spouse, and any person claimed as a dependent on the individual's or married persons' income tax return for the taxable year. For any taxable year in which a husband and wife file separate Virginia income tax returns, the credit provided under this section shall be allowed against the tax for only one of such two tax returns. Additionally, the credit provided under this section shall not be allowed against such tax of a dependent of the individual or of married persons.
2. For taxable years beginning on and after January 1, 2006, any individual or married persons, eligible for a tax credit pursuant to §32 of the Internal Revenue Code, may for the taxable year, in lieu of the credit authorized under subdivision B 1, claim a credit against the tax imposed pursuant to §58.1-320 in an amount equal to 20 percent of the credit claimed by the individual or married persons for federal individual income taxes pursuant to §32 of the Internal Revenue Code for the taxable year. In no case shall a household be allowed a credit pursuant to this subdivision and subdivision B 1 for the same taxable year.
For purpose of this subdivision, "household" means an individual and in the case of married persons, the individual and his spouse regardless of whether or not the individual and his spouse file combined or separate Virginia individual income tax returns.
C. The amount of the credit provided pursuant to subsection B for any taxable year shall not exceed the individual's or married persons' Virginia income tax liability.
D. Notwithstanding any other provision of this section, no credit shall be allowed pursuant to subsection B in any taxable year in which the individual, the individual's spouse, or both, or any person claimed as a dependent on such individual's or married persons' income tax return, claims one or any combination of the following on his or their income tax return for such taxable year:
1. The subtraction under subdivision C 11 8 of §
58.1-322 58.1-322.02;
2. The subtraction under subdivision C 23 15 of
§ 58.1-322 58.1-322.02;
3. The subtraction under subdivision C 24 16 of
§ 58.1-322 58.1-322.02;
4. The deduction for the additional personal exemption for
blind or aged taxpayers under subdivision D 2 b of § 58.1-322
58.1-322.03; or
5. The deduction under subdivision D 5 of § 58.1-322
58.1-322.03.
§58.1-362. Virginia taxable income of a nonresident estate or trust.
The Virginia taxable income of a nonresident estate or trust shall be its share of income, gain, loss and deduction attributable to Virginia sources as determined under §58.1-363 increased or reduced, as the case may be, by:
1. The amount derived from or connected with Virginia sources of any income, gain, loss and deduction recognized for federal income tax purposes but excluded from the computation of distributable net income of the estate or trust; and
2. The net amount of any modifications as provided for in §
58.1-322 (not including subsection D thereof) §§58.1-322.01,
58.1-322.02, and 58.1-322.04 with respect to the income or gain referred to
in subdivision 1 of this section.
§58.1-363. Share of a nonresident estate, trust, or beneficiary in income from Virginia sources.
A. The share of a nonresident estate or trust under §58.1-362 and the share of a nonresident beneficiary of any estate or trust under provisions otherwise applicable to nonresident individuals in estate or trust income or loss attributable to Virginia sources shall be determined as follows:
1. There shall be determined the items of income, gain, loss and deduction derived from Virginia sources, which enter into the computation of distributable net income of the estate or trust for the taxable year (including such items from another estate or trust of which the first estate or trust is a beneficiary).
2. There shall be added or subtracted (as the case may be) the
modifications described in §58.1-322 §§58.1-322.01, 58.1-322.02,
58.1-322.03, and 58.1-322.04 to the extent relating to items of income,
gain, loss and deduction derived from Virginia sources which enter into the
computation of distributable net income (including all such items from another
estate or trust of which the first estate or trust is a beneficiary). No
modification shall be made under this subsection which has the effect of
duplicating an item already reflected in the computation of distributable net
income.
3. The amounts determined under subdivisions 1 and 2 shall be allocated among the estate or trust and its beneficiaries (including, solely for the purposes of this allocation, resident beneficiaries) in proportion to their respective shares of distributable net income. The amounts so allocated shall have the same character under this article as under the laws of the United States relating to federal income taxes. Where an item entering into the computation of such amounts is not characterized by such laws, it shall have the same character as if realized directly from the source from which realized by the estate or trust, or incurred in the same manner as incurred by the estate or trust.
B. If the estate or trust has no distributable net income for
the taxable year, the share of each beneficiary (including, solely for the
purpose of such allocation, resident beneficiaries) in the net amount
determined under subdivisions A 1 and 2 of subsection A shall be
in proportion to his share of the estate or trust income for such year, under
local law or the governing instrument, which is required to be distributed
currently and any other amounts of such income distributed in such year. Any
balance of such net amount shall be allocated to the estate or trust.
§58.1-391. Virginia taxable income of owners of a pass-through entity.
A. In determining Virginia taxable income of an owner, any
modification described in §58.1-322 §§58.1-322.01, 58.1-322.02,
58.1-322.03, and 58.1-322.04 that relates to an item of pass-through entity
income, gain, loss or deduction shall be made in accordance with the owner's
distributive share, for federal income tax purposes, of the item to which the
modification relates. Where an owner's distributive share of any such item is
not included in any category of income, gain, loss or deduction required to be
taken into account separately for federal income tax purposes, the owner's
distributive share of such item shall be determined in accordance with his
distributive share, for federal income tax purposes, of pass-through entity
taxable income or loss.
B. Each item of pass-through entity income, gain, loss or deduction shall have the same character for an owner under this chapter as for federal income tax purposes. Where an item is not characterized for federal income tax purposes, it shall have the same character for an owner as if realized directly from the source from which realized by the pass-through entity or incurred in the same manner by the pass-through entity.
C. Where an owner's distributive shares of an item of pass-through entity income, gain, loss or deduction is determined for federal income tax purposes by special provision in the pass-through entity agreement with respect to such item, and where the principal purpose of such provision is the avoidance or evasion of tax under this chapter, the owner's distributive share of such item, and any modification required with respect thereto, shall be determined as if the pass-through entity agreement made no special provision with respect to such item.
§58.1-490. Declarations of estimated tax.
A. Every resident and nonresident individual shall make a
declaration of his estimated tax for every taxable year, if his Virginia tax
liability can reasonably be expected to exceed an amount, to be determined
under regulations promulgated by the Tax Commissioner, which takes into account
the additions, subtractions, and deductions set forth in §58.1-322
§§58.1-322.01, 58.1-322.02, 58.1-322.03, and 58.1-322.04, the credits set
forth in Articles 3 (§58.1-332 et seq.) and 13.2 (§58.1-439.18 et seq.), and
the filing exclusions set forth in §58.1-321. Every estate with respect to any
taxable year ending two or more years after the date of death of the decedent
and every trust shall make a declaration of its estimated tax for every taxable
year, if its Virginia taxable income can reasonably be expected to exceed the
amount specified by regulation for individuals as set forth above.
B. For purposes of this article, "estimated tax" means the amount which an individual estimates to be his income tax under this chapter for the taxable year, less the amount which he estimates to be the sum of any credits allowable against the tax.
C. For purposes of this section, the declaration shall be the first voucher.
D. In the case of a husband and wife, a single declaration under this section may be made by them jointly, in which case the liability with respect to the estimated tax shall be joint and several. No joint declaration may be made if either the husband or the wife is a nonresident of the Commonwealth unless both are required by this chapter to file a return, if they are separated under a decree of divorce or of separate maintenance, or if they have different taxable years. If a joint declaration is made but a joint return is not made for the taxable year, the estimated tax for such year may be treated as the estimated tax of either the husband or the wife, or may be divided between them.
E. A declaration of estimated tax of an individual other than a farmer, fisherman, or merchant seaman shall be filed on or before May 1 of the taxable year, except that if the requirements of subsection A are first met:
1. The declaration shall be filed on or before June 15,;
or
2. After June 1 and before September 2 of the taxable year,
the declaration shall be filed on or before September 15,; or
3. After September 1 of the taxable year, the declaration shall be filed on or before January 15 of the succeeding year.
F. A declaration of estimated tax of an individual having an estimated gross income from (i) farming (including oyster farming); (ii) fishing; or (iii) working as a merchant seaman for the taxable year, which is at least two-thirds of his total estimated gross income for the taxable year, may be filed at any time on or before January 15 of the succeeding year, in lieu of the time otherwise prescribed.
G. A declaration of estimated tax of an individual having a total estimated tax for the taxable year of $40 or less may be filed at any time on or before January 15 of the succeeding year under regulations of the Tax Commissioner.
H. An individual may amend a declaration under regulations of the Tax Commissioner.
I. If on or before March 1 of the succeeding taxable year an individual files his return for the taxable year for which the declaration is required, and pays therewith the full amount of the tax shown to be due on the return:
1. Such return shall be considered as his declaration if no declaration was required to be filed during the taxable year, but is otherwise required to be filed on or before January 15.
2. Such return shall be considered as the amendment permitted by subsection H to be filed on or before January 15 if the tax shown on the return is greater than the estimated tax shown in a declaration previously made.
J. This section shall apply to a taxable year other than a calendar year by the substitution of the months of such fiscal year for the corresponding months specified in this section.
K. An individual having a taxable year of less than 12 months shall make a declaration in accordance with regulations of the Tax Commissioner.
L. The declaration of estimated tax for an individual who is unable to make a declaration by reason of any disability shall be made and filed by his guardian, committee, fiduciary or other person charged with the care of his person or property (other than a receiver in possession of only a part of his property), or by his duly authorized agent.
M. The declaration of estimated tax for a trust or estate shall be made by the fiduciary. For purposes of the estimated tax imposed in this article, any reference to an "individual" shall be deemed to include the fiduciary required to file a declaration for a trust or estate. Any overpayment of estimated tax with respect to any trust or estate shall be refunded to the fiduciary. A beneficiary of a trust or estate shall not be entitled to a credit against the beneficiary's individual income tax for any overpayment of estimated tax by a trust or estate.
§58.1-513. Limitations; transfer of credit; gain or loss from tax credit.
A. Any taxpayer claiming a tax credit under this article shall
not claim a credit under any similar Virginia law for costs related to the same
project. To the extent a credit is taken in accordance with this article, no
subtraction allowed for the gain on the sale of (i) land dedicated to
open-space use or (ii) an easement dedicated to open-space use under
subsection C subdivision 14 of § 58.1-322 58.1-322.02
shall be allowed for three years following the year in which the credit is
taken. Any building which serves as the basis, in whole or in part, of a tax
credit under this article shall not serve as the basis of the tax credit
allowed under §58.1-339.2 for a period of five years following the donation on
which the credit is based; and any building which serves as the basis for the
tax credit allowed under §58.1-339.2 shall not serve as the basis, in whole or
in part, for a tax credit under this article for a period of five years
following the completion of the rehabilitation project on which the credit is
based.
B. Any tax credits that arise under this article from the donation of land or an interest in land made by a pass-through tax entity such as a trust, estate, partnership, limited liability company or partnership, limited partnership, subchapter S corporation or other fiduciary shall be used either by such entity if it is the taxpayer on behalf of such entity or by the member, manager, partner, shareholder or beneficiary, as the case may be, in proportion to their interest in such entity in the event that income, deductions and tax liability pass through such entity to such member, manager, partner, shareholder or beneficiary or as set forth in the agreement of said entity. Such tax credits shall not be claimed by both the entity and the member, manager, partner, shareholder or beneficiary for the same donation.
C. 1. Any taxpayer holding a credit under this article may transfer unused but otherwise allowable credit for use by another taxpayer on Virginia income tax returns. A taxpayer who transfers any amount of credit under this article shall file a notification of such transfer to the Department in accordance with procedures and forms prescribed by the Tax Commissioner.
2. A fee of two percent of the value of the donated interest shall be imposed upon any transfer arising from the sale by any taxpayer of credits under this article and upon the distribution of a portion of credits under this article to a member, manager, partner, shareholder or beneficiary pursuant to subsection B. Revenues generated by such fees first shall be used by the Department of Taxation and the Department of Conservation and Recreation for their costs in implementing this article but in no event shall such amount exceed 50 percent of the total revenue generated by the fee on an annual basis. The remainder of such revenues shall be transferred to the Virginia Land Conservation Fund for distribution to the public or private conservation agencies or organizations, excluding federal governmental entities, that are responsible for enforcing the conservation and preservation purposes of the donated interests. Distribution of such revenues shall be made annually by the Virginia Land Conservation Foundation proportionally based on a three-year average of the number of donated interests accepted by the public or private conservation agencies or organizations, excluding federal governmental entities, during the immediately preceding three-year period.
D. To the extent included in and not otherwise subtracted from
federal adjusted gross income pursuant to § 58.1-322 58.1-322.02
or federal taxable income pursuant to §58.1-402, there shall be subtracted any
amount of gain or income recognized by a taxpayer on the application of a tax
credit under this article against a Virginia income tax liability.
E. The transfer of the credit and its application against a tax liability shall not create gain or loss for the transferor or the transferee of such credit.
F. A pass-through tax entity, such as a partnership, limited liability company or Subchapter S corporation, may appoint a tax matters representative, who shall be a general partner, member/manager or shareholder, and register that representative with the Tax Commissioner. The Tax Commissioner shall be entitled to deal with the tax matters representative as representative of the taxpayers to whom credits have been allocated or transferred by the entity under this article with respect to those credits. In the event a pass-through tax entity allocates or transfers tax credits arising under this article to its partners, members or shareholders and the allocated or transferred credits shall be disallowed, in whole or in part, such that an assessment of additional tax against a taxpayer shall be made, the Tax Commissioner shall first make written demand for payment of any additional tax, together with interest and penalties, from the tax matters representative. In the event such payment demand is not satisfied, the Tax Commissioner shall proceed to collection against the taxpayers in accordance with the provisions of Chapter 18 (§58.1-1800 et seq.).
§58.1-1823. Reassessment and refund upon the filing of amended return or the payment of an assessment.
A. Any person filing a tax return or paying an
assessment required for any tax administered by the Department of Taxation
may file an amended return with the Department within the later of: (i)
three years from the last day prescribed by law for the timely filing of the
return; (ii) one year from the final determination of any change or correction
in the liability of the taxpayer for any federal tax upon which the state tax
is based, provided that the refund does not exceed the amount of the decrease
in Virginia tax attributable to such federal change or correction; (iii) two
years from the filing of an amended Virginia return resulting in the payment of
additional tax, provided that the amended return raises issues relating solely
to such prior amended return and that the refund does not exceed the amount of
the payment with such prior amended return; (iv) two years from the payment of
an assessment, provided that the amended return raises issues relating solely
to such assessment and that the refund does not exceed the amount of such
payment; or (v) one year from the final determination of any change or
correction in the income tax of the taxpayer for any other state, provided that
the refund does not exceed the amount of the decrease in Virginia tax attributable
to such change or correction. If the Department is satisfied, by evidence
submitted to it or otherwise, that the tax assessed and paid upon the original
return exceeds the proper amount, the Department may reassess the taxpayer and
order that any amount excessively paid be refunded to him. The Department may
reduce such refund by the amount of any taxes, penalties and interest which are
due for the period covered by the amended return, or any past-due taxes,
penalties and interest which have been assessed within the appropriate period
of limitations. Any order of the Department denying such reassessment and
refund, or the failure of the Department to act thereon within three months
shall, as to matters first raised by the amended return, be deemed an assessment
for the purpose of enabling the taxpayer to pursue the remedies allowed under
this chapter.
B. Notwithstanding the statute of limitations established
in this section, any retired employee of a political subdivision of the
Commonwealth, established pursuant to Chapter 627 of the 1958 Acts of Assembly,
may file an amended individual income tax return until May 1, 1990, for taxable
years beginning on and after January 1, 1985, and before January 1, 1986, for
taxes paid on retirement income exempt pursuant to §58.1-322.
C. Notwithstanding the statute of limitations contained in
subsection A, any individual who claimed an age subtraction on his 1990
individual income tax return may file an amended individual income tax return
on July 1, 1994, for taxable years beginning on and after January 1, 1990, and
ending before January 1, 1991, to claim an income deduction as provided in §
58.1-322 D 5 in lieu of the income subtraction originally claimed.
