Tax Type
Individual Income Tax
Description
Foreign source income subtraction
Topic
Subtractions and Exclusions
Date Issued
07-15-1986
July 1 5, 1986
Re: Virginia Code §58.1-1821 Application
Individual Income Tax
Dear ********************
This is in response to your firm's letter of March 20, 1985 in which application is made, on behalf of your clients for the correction of an individual income tax assessment issued by the Department of Taxation for taxable year 1982. This assessment was issued after the department examined your client's return and disallowed the amount claimed as "foreign source income."
The facts as presented to the Department of Taxation are somewhat confusing and contradictory in this case. In a letter to the Department of Taxation, written by the taxpayer on February 5, 1985, he states that he "...worked as an employee of a foreign corporation on a salary and bonus arrangement for technical work performed ...." However, in the application for correction that your firm filed March 20, 1985, it was stated that he "... was not an employee of nor a consultant to*********** at any time and did not receive a salary from**********. Therefore, the exact status of your client for the period in question is indeterminable based upon the information presented at this time.
A recent determination was issued on the subject of the department's position on the subtraction for foreign source income provided under Virginia Code §58.1-322 C 7 and regulated under §630-2-322 of the Virginia Individual Income Tax Regulations. This attached determination affirmed the department's regulations by explaining the legislative history surrounding the enactment of the Virginia Foreign Source Income Subtraction. I believe that the determination made in that case is pertinent to your client's situation.
If after reviewing this attached determination and the facts of your client's case with your client, you still feel that the amount subtracted as foreign source income was proper under Virginia Code §58.1-322 C 7, please contact this office within the next 30 days. Your failure to contact this office will be confirmation that you have determined that the attached determination is applicable to your client.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner