Document Number
95-117
Tax Type
Individual Income Tax
Description
Taxation of part-year residents; Deductions
Topic
Taxpayers' Remedies
Date Issued
05-15-1995
May 15, 1995



Re: §58.1-1821 Application: Individual Income Tax


Dear***************

This will reply to your letter of October 14, 1994, concerning the 1991 Virginia individual income tax assessment of your clients, ***************(the "Taxpayers").
FACTS

The Taxpayers moved from another state to Virginia in 1991. They filed a part-year individual income tax return with Virginia and the other state. Both returns claimed a deduction for a capital loss attributable to the sale of real property located in the other state and an Individual Retirement Account (IRA) contribution. The capital loss and the IRA contribution occurred after the Taxpayers moved to Virginia. As these items were claimed as deductions on the other state's return, the Virginia return was adjusted to treat these items as occurring while the Taxpayers were not Virginia residents, and an assessment was issued. The Taxpayers contend that these items should be allowed on the Virginia return since the loss was incurred and the IRS contribution was paid during the period of their Virginia residency.
DETERMINATION

Code of Virginia §58.1-303 provides that a person who becomes a resident of Virginia is subject to taxation during the period of his Virginia residency. Additionally, Virginia Regulation (VR) 630-2-303 provides that the Virginia taxable income of a part-year resident shall be computed by determining income, deductions, subtractions, additions, and modifications attributable to the period of residence in Virginia. Income attributable to Virginia is that which is received during the period of the year in which the individual is a Virginia resident. Further, Code of Virginia §58.1-322 generally provides that income, gains, losses, or deductions received as a Virginia resident are subject to taxation the extent such items are included in federal adjusted gross income. Therefore, a capital loss or an IRA contribution that occurs during the period of a person's Virginia residency is allowable as a deduction to reduce the income on the Virginia part-year return even if these items are also allowed as deductions on another state's part-year tax return.

Based on this information, I find that the capital loss and IRA contribution were properly claimed as deductions on the 1991 Virginia part-year income tax return; therefore, the assessment will be abated in full. If you have any questions, please contact******************.
                        • Sincerely,



                          Danny M. Payne
                          Tax Commissioner

OTP/8593N

Rulings of the Tax Commissioner

Last Updated 08/25/2014 16:46