Tax Type
Individual Income Tax
Description
Subtractions from federal adjusted gross income; Interest on Resolution Funding Corporation bonds
Topic
Taxable Income
Date Issued
05-24-1999
May 24, 1999
Re: Request for Ruling: Individual Income Tax
Dear*****************
This will respond to your letter in which you request a ruling on whether interest payments made on bonds issued by the Resolution Funding Corporation is subject to Virginia income tax.
FACTS
The Resolution Funding Corporation was created by the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRRE ACT)(H.R. 1278). This Act was passed to reform, recapitalize, and consolidate the FDIC, to enhance the regulatory and enforcement powers of federal financial institutions regulatory agencies, and for other purposes.
The FIRRE ACT amended 12 U.S.C.A. 1421 by adding § 21B which established the Resolution Funding Corporation (RFC). The purpose of the RFC was to provide funds to the Resolution Trust Corporation (RTC) to enable the RTC to carry out its functions. The main function of the RTC was to manage and resolve cases in which the Federal Saving and Loan Insurance Corporation was the insurer.
The FIRRE ACT further provided tax exempt status to the RFC. This exemption provided that obligations of the RFC shall be exempt from tax both as to principal and interest to the same extent as any obligation of a Federal Home Loan Bank. You inquire as to whether the interest paid on RFC obligations is taxable for Virginia tax purposes.
RULING
Code of Virginia § 58.1-322 C. provides a subtraction, to the extent included in federal adjusted gross income, for:
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- 1. Income derived from obligations, or on sale or exchange of obligations, of the United States and on obligations or securities of any authority, commission or instrumentality of the United States including, but not limited to stocks, bonds, treasury bills, and treasury notes, but not including interest on refunds of federal taxes, interest on equipment purchase contracts, or interest on other normal business transactions.
- 1. Income derived from obligations, or on sale or exchange of obligations, of the United States and on obligations or securities of any authority, commission or instrumentality of the United States including, but not limited to stocks, bonds, treasury bills, and treasury notes, but not including interest on refunds of federal taxes, interest on equipment purchase contracts, or interest on other normal business transactions.
If you have any questions regarding this ruling, please contact * * * * * of the Office of Tax Policy at * * * * *.
Sincerely,
Danny Payne
Tax Commissioner
Rulings of the Tax Commissioner