Bulletin Number
VTB 85-12
Tax Type
Corporation Income Tax
Individual Income Tax
Description
1985 Legislative Changes: Income Tax
Topic
Reports
Date Issued
07-02-1985
Virginia Tax Bulletin
Virginia Department of Taxation
85-12
DATE: July 2, 1985
SUBJECT: Income Tax - 1985 Legislative Changes
The General Assembly enacted several laws which have an impact on individual and corporation income taxes. The effective date of each of these acts is for taxable years beginning on and after January 1, 1985, unless otherwise specified. Brief summaries of the enacted legislation are provided below:
A. INDIVIDUAL AND CORPORATION INCOME TAXES
1. Conservation Tillage Credit: Va. Code §§ 58.1-334 and 58.1-432 have been added to allow a credit against the tax of an amount equaling twenty-five percent of all expenditures for the purchase and installation of conservation tillage equipment. "Conservation tillage equipment" means a planter or drill commonly known as a "no till" planter or drill, designed to minimize disturbance of the soil in planting crops, including such planters or drills which may be attached to equipment already owned by the taxpayer.
This credit ray not exceed $2,500 or the total tax, whichever is less, in the year of purchase. If the credit exceeds the tax liability in the year of purchase, the balance of the credit may be carried over for credit against income taxes in the next five succeeding taxable years until the total amount of the tax credit has been taken. (Chapter 560, Senate Bill 712)
2. Gleaning Subtraction: Va. Code §§ 58.1-322 and 58.1-402 have been amended to allow an individual or corporation to claim a subtraction for a "qualified agricultural contribution."
"Qualified agricultural contribution" means any contribution of an agricultural product (crop) by an individual, engaged in the trade or business of growing, or raising such product, to an organization exempt from taxation pursuant to § 501(c)(3) of the Internal Revenue Code provided:
(a) The product is fit for human consumption;
(b) The use of the product by the donee is related to the purpose or function constituting the basis for the donee's exemption from taxation;
(c) The contribution is not made in exchange for money, property, or service; and
Virginia Tax Bulletin 85-12
(d) The donee provides the individual a written statement representing that the donee's use and disposition of the crop will be in accordance with these provisions.
The subtraction allowable is the wholesale market price of the agricultural products contributed less the amount of any other deductions related to qualified agricultural contributions claimed under § 170 of the Internal Revenue Code.
Effective Date: Taxable years beginning on and after January 1, 1985 but before January 1, 1988. (Chanter 465, Senate Bill 588)
3. Technical Corrections: House Bill 1475 corrects a number of technical errors in Title 58.1 resulting; from the recodification of Title 58 and corrects references to the Internal Revenue Code affected by the Tax Reform Act of 1984. (Chapter 221, House Bill 1475)
B. INDIVIDUAL INCOME TAX
1. Credit For Income Taxes Paid By An S Corporation: Va. Code § 58.1-332 was amended to provide an individual income tax credit to individual shareholders of an electing small business corporation (S corporation) which has paid corporation income tax to a state which does not recognize the federal S election. Individual shareholders shall be deemed to have paid the corporation income tax in proportion to their ownership of the S corporation stock. Prior to this change, individuals were not eligible to claim a credit for income tax paid to another state by an S corporation. (Chapter 466, Senate Bill 651)
2. Charitable Contributions: Va. Code § 58.1-322 was amended in 1984 to allow an individual to adjust his federal itemized charitable contribution to result in a Virginia deduction for mileage of 18 cents per mile. If the individual uses the standard mileage rate of 12 cents per mile for federal purposes, the result would be an increased deduction of 6 cents per mile for Virginia purposes. If the individual uses actual expenses for federal purposes, the result would be an increased Virginia deduction to the extent that actual expenses are less than the equivalent of 18 cents per mile. If actual expenses for federal purposes exceed 18 cents per miles no adjustment to the Virginia return would be required. (Chapter 636, 1984 Acts of Assembly, House Bill 196)
If there are say questions regarding this bulletin, please contact the Department of Taxation, P. O. Box 6-L, Richmond, Virginia 23282 or call (804) 257-8031.
Tax Bulletins