Tax Type
Individual Income Tax
Description
Subtractions from federal adjusted gross income; Excess alimony recaptured
Topic
Taxable Income
Date Issued
09-23-1994
September 23, 1994
Re: §58.1-1821 Application: Individual Income Tax
Dear*************
This will reply to your letter concerning the subtraction on the 1990 Virginia Individual Income Tax Return for the recapture of excess alimony payments by your clients,********* (the "Taxpayers").
FACTS
The Taxpayer, who was a resident of Alabama in 1988, paid a lump sum alimony payment in 1988 and excluded the alimony payment on the 1988 federal and Alabama income tax returns. Subsequently, the Taxpayer moved to Virginia. In 1990, the Taxpayer was required, for federal purposes, to recapture the excess alimony payment by including it in federal adjusted gross income. When the 1990 Virginia income tax return was filed, the Taxpayer claimed a subtraction for the excess alimony recaptured. However, as a result of the department's compliance program, the subtraction was disallowed, and an assessment was issued. The Taxpayer contends that the subtraction claimed on the Virginia return represented the true and accurate income earned and taxable in Virginia and that the tax benefit for claiming the exclusion for the excess alimony was received in 1988 while the Taxpayer was a resident of Alabama. The Taxpayers request that the tax assessment be abated.
DETERMINATION
Va. Code § 58.1-301 provides that Virginia individual income taxation conforms with that of the Internal Revenue Code. Therefore, any income, regardless of whether it is earned income, included in federal adjusted gross income, is also subject to Virginia taxation. In addition, the federal adjusted gross income of a Virginia resident may be modified only by the additions, subtractions, deductions, and exemptions specifically indicated in Va. Code §58.1-322 when computing the Virginia taxable income.
Although the excess alimony was paid and the tax benefit was received in 1988 when the Taxpayer was a resident of Alabama, the recapture of the excess alimony was included in the federal adjusted gross income while the Taxpayer was a resident of Virginia. , there is no provision in Va. Code § 58.1-322 to modify the federal adjusted gross income by excess alimony payments recaptured based on excess alimony paid during the period that an individual was not a resident of Virginia. Therefore, the excess alimony recaptured on the 1990 federal return is not an allowable subtraction on the Virginia return when computing Virginia taxable income.
As Virginia law is clear on this point, the department properly denied the Taxpayer's 1990 subtraction. A revised notice of assessment with accrued interest will be issued as soon as practical. If you have any questions, you may contact***********of my staff at ********.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/8349N
Rulings of the Tax Commissioner