Tax Type
Individual Income Tax
Description
Interest income of nonresident
Topic
Taxable Income
Date Issued
09-23-1997
September 23, 1997
Re: Request for Ruling: Individual Income Tax
Dear*************
This will respond to your letter of July 7, 1997, concerning the application of Virginia tax on interest income received by a non-resident client (the "Taxpayer") who receives installment payments from the sale of a Virginia corporation.
FACTS
The Taxpayer, a Virginia resident, sold stock secured by an installment note in a closely held corporation. The Taxpayer moved from Virginia shortly thereafter and receives quarterly installment payments of principal and interest on the note. You inquire whether the Taxpayer, now a non-resident, should source the interest payments to his current state of residence, or to Virginia.
RULING
Virginia imposes an individual income tax on all residents and nonresidents with income from Virginia sources. Income from Virginia sources includes, but is not limited to, the ownership of any real or tangible personal property in Virginia, income from a business, trade, or profession or occupation carried on in Virginia and 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, or occupation carried on in Virginia.
Interest income derived from an installment note is considered to be income received from an intangible asset. The individual note holder is not domiciled in Virginia and the interest income is not from an intangible asset employed in a trade or business carried on in Virginia. The Taxpayer, therefore, will not be required to pay taxes to the Commonwealth on the interest income received on the note.
This ruling is based on the facts and circumstances enumerated in your letter and any changes could alter the conclusions reached herein. If you have any questions regarding this ruling, please contact *****of the Office of Tax Policy at ****** .
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/12714
Rulings of the Tax Commissioner