Tax Type
Individual Income Tax
Description
Sale of out-of-state residence; Capital gain
Topic
Credits
Date Issued
08-11-1994
August 11, 1994
Re: §58.1-1821 Application: Individual Income Tax
Dear**********
This will reply to your letter of June 8, 1993, in which you and your spouse (the "Taxpayers") protest the disallowance of an out-of-state tax credit claimed on your Virginia return for taxable year 1990.
FACTS
During taxable year 1990, the Taxpayers sold their former principle residence, which was located in Connecticut. The Taxpayers relocated to and established residency in Virginia during 1989. The Taxpayers filed a joint 1990 Virginia resident return, claiming a credit for the Connecticut Capital Gains Tax paid on the gain recognized from this sale. The return was later selected for audit and this credit was disallowed. The Taxpayers protest the denial of this credit:, and request relief from the assessment.
DETERMINATION
Va. Code§58.1-332 (A) provides individuals a credit for income tax paid to another state:
-
- Whenever a Virginia resident has become liable to another state for income tax on any earned or business income for the taxable year... (Emphasis added)
- Whenever a Virginia resident has become liable to another state for income tax on any earned or business income for the taxable year... (Emphasis added)
This issue was addressed during the 1994 Session of the Virginia General Assembly by the passage of House Bill 335. This bill amended Va. Code §58.1-332 (A) to expand the availability of this credit to include gains from the sale of a principle residence. Unfortunately, this amendment is effective only for taxable years beginning on or after January 1, 1994.
Since no statutory authority exists for granting a credit in this circumstance, your application for relief cannot be allowed. Accordingly, the assessment is correct. A review of your account for 1990 shows the assessment has been paid in full. Any interest that accrued beyond the date of your letter of protest shall be refunded to you.
Sincerely,
Danny M. Payne
Tax Commissioner
Rulings of the Tax Commissioner