A. The Virginia taxable income of a resident individual means his federaladjusted gross income for the taxable year, which excludes combat pay forcertain members of the Armed Forces of the United States as provided in § 112of the Internal Revenue Code, as amended, and with the modificationsspecified in this section.
B. To the extent excluded from federal adjusted gross income, there shall beadded:
1. Interest, less related expenses to the extent not deducted in determiningfederal income, on obligations of any state other than Virginia, or of apolitical subdivision of any such other state unless created by compact oragreement to which Virginia is a party;
2. Interest or dividends, less related expenses to the extent not deducted indetermining federal taxable income, on obligations or securities of anyauthority, commission or instrumentality of the United States, which the lawsof the United States exempt from federal income tax but not from state incometaxes;
3. Unrelated business taxable income as defined by § 512 of the InternalRevenue Code;
4. The amount of a lump sum distribution from a qualified retirement plan,less the minimum distribution allowance and any amount excludable for federalincome tax purposes that is excluded from federal adjusted gross incomesolely by virtue of an individual's election to use the averaging provisionsunder § 402 of the Internal Revenue Code; and
5 through 8. [Repealed.]
9. The amount required to be included in income for the purpose of computingthe partial tax on an accumulation distribution pursuant to § 667 of theInternal Revenue Code.
C. To the extent included in federal adjusted gross income, there shall besubtracted:
1. Income derived from obligations, or on the sale or exchange ofobligations, of the United States and on obligations or securities of anyauthority, commission or instrumentality of the United States to the extentexempt from state income taxes under the laws of the United States including,but not limited to, stocks, bonds, treasury bills, and treasury notes, butnot including interest on refunds of federal taxes, interest on equipmentpurchase contracts, or interest on other normal business transactions.
2. Income derived from obligations, or on the sale or exchange of obligationsof this Commonwealth or of any political subdivision or instrumentality ofthe Commonwealth.
3. [Repealed.]
4. Benefits received under Title II of the Social Security Act and otherbenefits subject to federal income taxation solely pursuant to § 86 of theInternal Revenue Code.
4a. Through December 31, 2000, the same amount used in computing the federalcredit allowed under § 22 of the Internal Revenue Code by a retiree under age65 who qualified for such retirement on the basis of permanent and totaldisability and who is a qualified individual as defined in § 22(b) (2) of theInternal Revenue Code; however, any person who claims a deduction undersubdivision 5 of subsection D of this section may not also claim asubtraction under this subdivision.
4b. For taxable years beginning on or after January 1, 2001, up to $20,000 ofdisability income, as defined in § 22(c) (2) (B) (iii) of the InternalRevenue Code; however, any person who claims a deduction under subdivision 5of subsection D of this section may not also claim a subtraction under thissubdivision.
5. The amount of any refund or credit for overpayment of income taxes imposedby the Commonwealth or any other taxing jurisdiction.
6. The amount of wages or salaries eligible for the federal Targeted JobsCredit which was not deducted for federal purposes on account of theprovisions of § 280C(a) of the Internal Revenue Code.
7, 8. [Repealed.]
9. [Expired.]
10. Any amount included therein less than $600 from a prize awarded by theState Lottery Department.
11. The wages or salaries received by any person for active and inactiveservice in the National Guard of the Commonwealth of Virginia, not to exceedthe amount of income derived from 39 calendar days of such service or $3,000,whichever amount is less; however, only those persons in the ranks of O3 andbelow shall be entitled to the deductions specified herein.
12. Amounts received by an individual, not to exceed $1,000 in any taxableyear, as a reward for information provided to a law-enforcement official oragency, or to a nonprofit corporation created exclusively to assist suchlaw-enforcement official or agency, in the apprehension and conviction ofperpetrators of crimes. This provision shall not apply to the following: anindividual who is an employee of, or under contract with, a law-enforcementagency, a victim or the perpetrator of the crime for which the reward waspaid, or any person who is compensated for the investigation of crimes oraccidents.
13. [Repealed.]
14. [Expired.]
15, 16. [Repealed.]
17. For taxable years beginning on and after January 1, 1995, the amount of"qualified research expenses" or "basic research expenses" eligible fordeduction for federal purposes, but which were not deducted, on account ofthe provisions of § 280C(c) of the Internal Revenue Code and which shall beavailable to partners, shareholders of S corporations, and members of limitedliability companies to the extent and in the same manner as other deductionsmay pass through to such partners, shareholders, and members.
18. For taxable years beginning on or after January 1, 1995, all military payand allowances, not otherwise subtracted under this subsection, earned forany month during any part of which such member performed military service inany part of the former Yugoslavia, including the air space above suchlocation or any waters subject to related naval operations, in support ofOperation JOINT ENDEAVOR as part of the NATO Peace Keeping Force. Suchsubtraction shall be available until the taxpayer completes such service.
19. For taxable years beginning on and after January 1, 1996, any incomereceived during the taxable year derived from a qualified pension,profit-sharing, or stock bonus plan as described by § 401 of the InternalRevenue Code, an individual retirement account or annuity established under §408 of the Internal Revenue Code, a deferred compensation plan as defined by§ 457 of the Internal Revenue Code, or any federal government retirementprogram, the contributions to which were deductible from the taxpayer'sfederal adjusted gross income, but only to the extent the contributions tosuch plan or program were subject to taxation under the income tax in anotherstate.
20. For taxable years beginning on and after January 1, 1997, any incomeattributable to a distribution of benefits or a refund from a prepaid tuitioncontract or savings trust account with the Virginia College Savings Plan,created pursuant to Chapter 4.9 (§ 23-38.75 et seq.) of Title 23. Thesubtraction for any income attributable to a refund shall be limited toincome attributable to a refund in the event of a beneficiary's death,disability, or receipt of a scholarship.
21. For taxable years beginning on or after January 1, 1998, all military payand allowances, to the extent included in federal adjusted gross income andnot otherwise subtracted, deducted or exempted under this section, earned bymilitary personnel while serving by order of the President of the UnitedStates with the consent of Congress in a combat zone or qualified hazardousduty area which is treated as a combat zone for federal tax purposes pursuantto § 112 of the Internal Revenue Code.
22. For taxable years beginning on or after January 1, 2000, the gain derivedfrom the sale or exchange of real property or the sale or exchange of aneasement to real property which results in the real property or the easementthereto being devoted to open-space use, as that term is defined in §58.1-3230, for a period of time not less than 30 years. To the extent asubtraction is taken in accordance with this subdivision, no tax credit underthis chapter for donating land for its preservation shall be allowed forthree years following the year in which the subtraction is taken.
23. Effective for all taxable years beginning on or after January 1, 2000,$15,000 of military basic pay for military service personnel on extendedactive duty for periods in excess of 90 days; however, the subtraction amountshall be reduced dollar-for-dollar by the amount which the taxpayer'smilitary basic pay exceeds $15,000 and shall be reduced to zero if suchmilitary basic pay amount is equal to or exceeds $30,000.
24. Effective for all taxable years beginning on and after January 1, 2000,the first $15,000 of salary for each federal and state employee whose totalannual salary from all employment for the taxable year is $15,000 or less.
25. Unemployment benefits taxable pursuant to § 85 of the Internal RevenueCode.
26. For taxable years beginning on and after January 1, 2001, any amountreceived as military retirement income by an individual awarded theCongressional Medal of Honor.
27. Effective for all taxable years beginning on and after January 1, 1999,income received as a result of (i) the "Master Settlement Agreement," asdefined in § 3.2-3100; (ii) the National Tobacco Grower Settlement Trustdated July 19, 1999; and (iii) the Tobacco Loss Assistance Program, pursuantto 7 C.F.R. Part 1464 (Subpart C, §§ 1464.201 through 1464.205), by (a)tobacco farmers; (b) any person holding a tobacco marketing quota, or tobaccofarm acreage allotment, under the Agricultural Adjustment Act of 1938; or (c)any person having the right to grow tobacco pursuant to such a quota orallotment, but only to the extent that such income has not been subtractedpursuant to subdivision C 18 of § 58.1-402.
28. For taxable years beginning on and after January 1, 2000, items of incomeattributable to, derived from or in any way related to (i) assets stolenfrom, hidden from or otherwise lost by an individual who was a victim ortarget of Nazi persecution or (ii) damages, reparations, or otherconsideration received by a victim or target of Nazi persecution tocompensate such individual for performing labor against his will under thethreat of death, during World War II and its prelude and direct aftermath.This subtraction shall not apply to assets acquired with such items of incomeor with the proceeds from the sale of assets stolen from, hidden from orotherwise lost to, during World War II and its prelude and direct aftermath,a victim or target of Nazi persecution. The provisions of this subdivisionshall only apply to an individual who was the first recipient of such itemsof income and who was a victim or target of Nazi persecution, or a spouse,widow, widower, or child or stepchild of such victim.
"Victim or target of Nazi persecution" means any individual persecuted ortargeted for persecution by the Nazi regime who had assets stolen from,hidden from or otherwise lost as a result of any act or omission in any wayrelating to (i) the Holocaust; (ii) World War II and its prelude and directaftermath; (iii) transactions with or actions of the Nazi regime; (iv)treatment of refugees fleeing Nazi persecution; or (v) the holding of suchassets by entities or persons in the Swiss Confederation during World War IIand its prelude and aftermath. A victim or target of Nazi persecution shallalso include any individual forced into labor against his will, under thethreat of death, during World War II and its prelude and direct aftermath. Asused in this subdivision, "Nazi regime" means the country of Nazi Germany,areas occupied by Nazi Germany, those European countries allied with NaziGermany, or any other neutral European country or area in Europe under theinfluence or threat of Nazi invasion.
29. For taxable years beginning on and after January 1, 2002, any gainrecognized as a result of the Peanut Quota Buyout Program of the FarmSecurity and Rural Investment Act of 2002 pursuant to 7 C.F.R. Part 1412(Subpart H, §§ 1412.801 through 1412.811) as follows:
a. If the payment is received in installment payments pursuant to 7 C.F.R. §1412.807(a) (2), then the entire gain recognized may be subtracted.
b. If the payment is received in a single payment pursuant to 7 C.F.R. §1412.807(a) (3), then 20 percent of the recognized gain may be subtracted.The taxpayer may then deduct an equal amount in each of the four succeedingtaxable years.
30. Effective for all taxable years beginning on and after January 1, 2002,but before January 1, 2005, the indemnification payments received by contractpoultry growers and table egg producers from the U.S. Department ofAgriculture as a result of the depopulation of poultry flocks because of lowpathogenic avian influenza in 2002. In no event shall indemnificationpayments made to owners of poultry who contract with poultry growers qualifyfor this subtraction.
31. Effective for all taxable years beginning on or after January 1, 2001,the military death gratuity payment made after September 11, 2001, to thesurvivor of deceased military personnel killed in the line of duty, pursuantto Chapter 75 of Title 10 of the United States Code; however, the subtractionamount shall be reduced dollar-for-dollar by the amount that the survivor mayexclude from his federal gross income in accordance with § 134 of theInternal Revenue Code.
32. Effective for all taxable years beginning on or after January 1, 2007,the death benefit payments from an annuity contract that are received by abeneficiary of such contract and are subject to federal income taxation.
33. For taxable years beginning on and after January 1, 2009, any gainrecognized from the sale of launch services to space flight participants, asdefined in 49 U.S.C. § 70102, or launch services intended to provideindividuals the training or experience of a launch, without performing anactual launch. To qualify for a deduction under this subdivision, launchservices must be performed in Virginia or originate from an airport orspaceport in Virginia.
34. For taxable years beginning on and after January 1, 2009, any gainrecognized as a result of resupply services contracts for delivering payload,as defined in 49 U.S.C. § 70102, entered into with the Commercial OrbitalTransportation Services division of the National Aeronautics and SpaceAdministration or other space flight entity, as defined in § 8.01-227.8, andlaunched from an airport or spaceport in Virginia.
35. (See Editor's note) For taxable years beginning on or after January 1,2011, any income taxed as a long-term capital gain for federal income taxpurposes, or any income taxed as investment services partnership interestincome (otherwise known as investment partnership carried interest income)for federal income tax purposes. To qualify for a subtraction under thissubdivision, such income shall be attributable to an investment in a"qualified business," as defined in § 58.1-339.4, or in any othertechnology business approved by the Secretary of Technology, provided thebusiness has its principal office or facility in the Commonwealth and lessthan $3 million in annual revenues in the fiscal year prior to theinvestment. To qualify for a subtraction under this subdivision, theinvestment shall be made between the dates of April 1, 2010, and June 30,2013. No taxpayer who has claimed a tax credit for an investment in a"qualified business" under § 58.1-339.4 shall be eligible for thesubtraction under this subdivision for an investment in the same business.
D. In computing Virginia taxable income there shall be deducted from Virginiaadjusted gross income as defined in § 58.1-321:
1. a. The amount allowable for itemized deductions for federal income taxpurposes where the taxpayer has elected for the taxable year to itemizedeductions on his federal return, but reduced by the amount of income taxesimposed by the Commonwealth or any other taxing jurisdiction and deducted onsuch federal return and increased by an amount which, when added to theamount deducted under § 170 of the Internal Revenue Code for mileage, resultsin a mileage deduction at the state level for such purposes at a rate of 18cents per mile; or
b. Three thousand dollars for single individuals for taxable years beginningon and after January 1, 1989; $5,000 for married persons (one-half of suchamounts in the case of a married individual filing a separate return) fortaxable years beginning on and after January 1, 1989, but before January 1,2005; and $6,000 for married persons (one-half of such amounts in the case ofa married individual filing a separate return) for taxable years beginning onand after January 1, 2005; provided that the taxpayer has not itemizeddeductions for the taxable year on his federal income tax return. Forpurposes of this section, any person who may be claimed as a dependent onanother taxpayer's return for the taxable year may compute the deduction onlywith respect to earned income.
2. a. A deduction in the amount of $800 for taxable years beginning on andafter January 1, 1988, but before January 1, 2005; $900 for taxable yearsbeginning on and after January 1, 2005, but before January 1, 2008; and $930for taxable years beginning on and after January 1, 2008, for each personalexemption allowable to the taxpayer for federal income tax purposes.
b. For taxable years beginning on and after January 1, 1987, each blind oraged taxpayer as defined under § 63(f) of the Internal Revenue Code shall beentitled to an additional personal exemption in the amount of $800.
The additional deduction for blind or aged taxpayers allowed under thissubdivision shall be allowable regardless of whether the taxpayer itemizesdeductions for the taxable year for federal income tax purposes.
3. A deduction equal to the amount of employment-related expenses upon whichthe federal credit is based under § 21 of the Internal Revenue Code forexpenses for household and dependent care services necessary for gainfulemployment.
4. An additional $1,000 deduction for each child residing for the entiretaxable year in a home under permanent foster care placement as defined in §63.2-908, provided the taxpayer can also claim the child as a personalexemption under § 151 of the Internal Revenue Code.
5. a. Effective for all taxable years beginning on or after January 1, 1996,but before January 1, 2004, a deduction in the amount of $12,000 fortaxpayers age 65 or older, or $6,000 for taxpayers age 62 through 64.
b. For taxable years beginning on and after January 1, 2004, a deduction inthe amount of $12,000 for individuals born on or before January 1, 1939.
c. For taxable years beginning January 1, 2004, but before January 1, 2005, adeduction in the amount of $6,000 for individuals born on or between January2, 1940, and January 1, 1942.
d. For taxable years beginning January 1, 2005, but before January 1, 2006, adeduction in the amount of $6,000 for individuals born on or between January2, 1941, and January 1, 1942.
e. For taxable years beginning on and after January 1, 2004, a deduction inthe amount of $12,000 for individuals born after January 1, 1939, who haveattained the age of 65. This deduction shall be reduced by $1 for every $1that the taxpayer's adjusted federal adjusted gross income exceeds $50,000for single taxpayers or $75,000 for married taxpayers. For married taxpayersfiling separately, the deduction will be reduced by $1 for every $1 the totalcombined adjusted federal adjusted gross income of both spouses exceeds$75,000.
f. For the purposes of this subdivision, "adjusted federal adjusted grossincome" means federal adjusted gross income minus any benefits receivedunder Title II of the Social Security Act and other benefits subject tofederal income taxation solely pursuant to § 86 of the Internal Revenue Code,as amended.
6. For taxable years beginning on and after January 1, 1997, the amount anindividual pays as a fee for an initial screening to become a possible bonemarrow donor, if (i) the individual is not reimbursed for such fee or (ii)the individual has not claimed a deduction for the payment of such fee on hisfederal income tax return.
7. a. A deduction shall be allowed to the purchaser or contributor for theamount paid or contributed during the taxable year for a prepaid tuitioncontract or savings trust account entered into with the Virginia CollegeSavings Plan, pursuant to Chapter 4.9 (§ 23-38.75 et seq.) of Title 23.Except as provided in subdivision 7 c, the amount deducted on any individualincome tax return in any taxable year shall be limited to $4,000 per prepaidtuition contract or savings trust account. No deduction shall be allowedpursuant to this section if such payments or contributions are deducted onthe purchaser's or contributor's federal income tax return. If the purchaseprice or annual contribution to a savings trust account exceeds $4,000, theremainder may be carried forward and subtracted in future taxable years untilthe purchase price or savings trust contribution has been fully deducted;however, except as provided in subdivision 7 c, in no event shall the amountdeducted in any taxable year exceed $4,000 per contract or savings trustaccount. Notwithstanding the statute of limitations on assessments containedin § 58.1-312, any deduction taken hereunder shall be subject to recapture inthe taxable year or years in which distributions or refunds are made for anyreason other than (i) to pay qualified higher education expenses, as definedin § 529 of the Internal Revenue Code or (ii) the beneficiary's death,disability, or receipt of a scholarship. For the purposes of thissubdivision, the term "purchaser" or "contributor" means the person shownas such on the records of the Virginia College Savings Plan as of December 31of the taxable year. In the case of a transfer of ownership of a prepaidtuition contract or savings trust account, the transferee shall succeed tothe transferor's tax attributes associated with a prepaid tuition contract orsavings trust account, including, but not limited to, carryover and recaptureof deductions.
b. The amount paid for a prepaid tuition contract during taxable yearsbeginning on or after January 1, 1996, but before January 1, 1998, shall bededucted in taxable years beginning on or after January 1, 1998, and shall besubject to the limitations set out in subdivision 7 a.
c. A purchaser of a prepaid tuition contract or contributor to a savingstrust account who has attained age 70 shall not be subject to the limitationthat the amount of the deduction not exceed $4,000 per prepaid tuitioncontract or savings trust account in any taxable year. Such taxpayer shall beallowed a deduction for the full amount paid for the contract or contributedto a savings trust account, less any amounts previously deducted. If aprepaid tuition contract was purchased by such taxpayer during taxable yearsbeginning on or after January 1, 1996, but before January 1, 1998, suchtaxpayer may take the deduction for the full amount paid during such years,less any amounts previously deducted with respect to such payments, intaxable year 1999 or by filing an amended return for taxable year 1998.
8. For taxable years beginning on and after January 1, 2000, the total amountan individual actually contributed in funds to the Virginia Public SchoolConstruction Grants Program and Fund, established in Chapter 11.1 (§22.1-175.1 et seq.) of Title 22.1, provided the individual has not claimed adeduction for such amount on his federal income tax return.
9. For taxable years beginning on and after January 1, 1999, an amount equalto 20 percent of the tuition costs incurred by an individual employed as aprimary or secondary school teacher licensed pursuant to Chapter 15 (§22.1-289.1 et seq.) of Title 22.1 to attend continuing teacher educationcourses that are required as a condition of employment; however, thededuction provided by this subsection shall be available only if (i) theindividual is not reimbursed for such tuition costs and (ii) the individualhas not claimed a deduction for the payment of such tuition costs on hisfederal income tax return.
10. For taxable years beginning on and after January 1, 2000, the amount anindividual pays annually in premiums for long-term health care insurance,provided the individual has not claimed a deduction for federal income taxpurposes, or a credit under § 58.1-339.11.
11. For taxable years beginning on and after January 1, 2006, contractpayments to a producer of quota tobacco or a tobacco quota holder, or theirspouses, as provided under the American Jobs Creation Act of 2004 (P.L.108-357), but only to the extent that such payments have not been subtractedpursuant to subsection D of § 58.1-402, as follows:
a. If the payment is received in installment payments, then the recognizedgain, including any gain recognized in taxable year 2005, may be subtractedin the taxable year immediately following the year in which the installmentpayment is received.
b. If the payment is received in a single payment, then 10% of the recognizedgain may be subtracted in the taxable year immediately following the year inwhich the single payment is received. The taxpayer may then deduct an equalamount in each of the nine succeeding taxable years.
12. For taxable years beginning on and after January 1, 2007, an amount equalto 20% of the sum paid by an individual pursuant to Chapter 6 (§ 58.1-600 etseq.) of this title, not to exceed $500 in each taxable year, in purchasingfor his own use the following items of tangible personal property: (i) anyclothes washers, room air conditioners, dishwashers, and standard sizerefrigerators that meet or exceed the applicable energy star efficiencyrequirements developed by the United States Environmental Protection Agencyand the United States Department of Energy; (ii) any fuel cell that (a)generates electricity using an electrochemical process, (b) has anelectricity-only generation efficiency greater than 35%, and (c) has agenerating capacity of at least two kilowatts; (iii) any gas heat pump thathas a coefficient of performance of at least 1.25 for heating and at least0.70 for cooling; (iv) any electric heat pump hot water heater that yields anenergy factor of at least 1.7; (v) any electric heat pump that has a heatingsystem performance factor of at least 8.0 and a cooling seasonal energyefficiency ratio of at least 13.0; (vi) any central air conditioner that hasa cooling seasonal energy efficiency ratio of at least 13.5; (vii) anyadvanced gas or oil water heater that has an energy factor of at least 0.65;(viii) any advanced oil-fired boiler with a minimum annual fuel-utilizationrating of 85; (ix) any advanced oil-fired furnace with a minimum annualfuel-utilization rating of 85; and (x) programmable thermostats.
13. For taxable years beginning on or after January 1, 2007, the lesser of$5,000 or the amount actually paid by a living donor of an organ or otherliving tissue for unreimbursed out-of-pocket expenses directly related to thedonation that arose within 12 months of such donation, provided the donor hasnot taken a medical deduction in accordance with the provisions of § 213 ofthe Internal Revenue Code for such expenses. The deduction may be taken inthe taxable year in which the donation is made or the taxable year in whichthe 12-month period expires.
E. There shall be added to or subtracted from federal adjusted gross income,as the case may be, the individual's share, as beneficiary of an estate ortrust, of the Virginia fiduciary adjustment determined under § 58.1-361.
F. There shall be added or subtracted, as the case may be, the amountsprovided in § 58.1-315 as transitional modifications.
G. Effective for all taxable years beginning on or after January 1, 2007, tothe extent included in federal adjusted gross income, there shall be (i)subtracted from federal adjusted gross income by a shareholder of an electingsmall business corporation (S corporation) that is subject to the bankfranchise tax imposed under Chapter 12 (§ 58.1-1200 et seq.) for the calendaryear in which such taxable year begins, the shareholder's allocable share ofthe income or gain of such electing small business corporation (Scorporation), and (ii) added back to federal adjusted gross income such that,federal adjusted gross income shall be increased, by a shareholder of anelecting small business corporation (S corporation) that is subject to thebank franchise tax imposed under Chapter 12 (§ 58.1-1200 et seq.) for thecalendar year in which such taxable year begins, the shareholder's allocableshare of the losses or deductions of such electing small business corporation(S corporation).
Effective for all taxable years beginning on or after January 1, 2007, to theextent excluded from federal adjusted gross income, there shall be added tofederal adjusted gross income by a shareholder of an electing small businesscorporation (S corporation) that is subject to the bank franchise tax imposedunder Chapter 12 (§ 58.1-1200 et seq.) for the calendar year in which suchtaxable year begins, the value of any distribution paid or distributed to theshareholder by such electing small business corporation (S corporation).
H. Notwithstanding any other provision of law, the income from anydisposition of real property which is held by the taxpayer for sale tocustomers in the ordinary course of the taxpayer's trade or business, asdefined in § 453(l) (1) (B) of the Internal Revenue Code, of property made onor after January 1, 2009, may, at the election of the taxpayer, be recognizedunder the installment method described under § 453 of the Internal RevenueCode, provided that (i) the election relating to the dealer disposition ofthe property has been made on or before the due date prescribed by law(including extensions) for filing the taxpayer's return of the tax imposedunder this chapter for the taxable year in which the disposition occurs, and(ii) the dealer disposition is in accordance with restrictions or conditionsestablished by the Department, which shall be set forth in guidelinesdeveloped by the Department. Along with such restrictions or conditions, theguidelines shall also address the recapture of such income under certaincircumstances. The development of the guidelines shall be exempt from theAdministrative Process Act (§ 2.2-4000 et seq.).
(Code 1950, § 58-151.013; 1971, Ex. Sess., c. 171; 1972, c. 827; 1973, cc.198, 345, 458; 1974, c. 682; 1975, c. 46; 1976, cc. 528, 694, 781; 1977, cc.297, 612; 1978, cc. 67, 158; 1979, cc. 226, 596; 1981, cc. 402, 414; 1982, c.633; 1983, cc. 452, 472; 1984, cc. 153, 162, 636, 674, 675, 729; 1985, cc.221, 465; 1986, cc. 474, 515; 1987, cc. 9, 484, 531, 615; 1988, cc. 741, 743,755, 756; 1989, cc. 39, 639, 749; 1989, Sp. Sess., c. 3; 1990, cc. 507, 525,714; 1991, cc. 346, 361; 1992, cc. 665, 678, 686, 691; 1993, c. 803; 1994,cc. 488, 590; 1994, 1st Sp. Sess., c. 5; 1996, cc. 401, 624; 1997, cc. 106,785, 861, 909; 1998, cc. 373, 874; 1999, cc. 285, 298, 339, 365, 485, 498,518, 535, 588; 2000, cc. 382, 387, 394, 400, 419, 1021, 1039; 2001, c. 476;2003, cc. 3, 58, 181, 209, 807, 980; 2004, Sp. Sess. I, c. 3; 2005, cc. 27,67; 2006, cc. 214, 570, 599, 617, 939; 2007, cc. 359, 527, 543, 636, 942;2008, cc. 149, 211; 2009, c. 508; 2010, cc. 802, 830.)
A. The Virginia taxable income of a resident individual means his federaladjusted gross income for the taxable year, which excludes combat pay forcertain members of the Armed Forces of the United States as provided in § 112of the Internal Revenue Code, as amended, and with the modificationsspecified in this section.
B. To the extent excluded from federal adjusted gross income, there shall beadded:
1. Interest, less related expenses to the extent not deducted in determiningfederal income, on obligations of any state other than Virginia, or of apolitical subdivision of any such other state unless created by compact oragreement to which Virginia is a party;
2. Interest or dividends, less related expenses to the extent not deducted indetermining federal taxable income, on obligations or securities of anyauthority, commission or instrumentality of the United States, which the lawsof the United States exempt from federal income tax but not from state incometaxes;
3. Unrelated business taxable income as defined by § 512 of the InternalRevenue Code;
4. The amount of a lump sum distribution from a qualified retirement plan,less the minimum distribution allowance and any amount excludable for federalincome tax purposes that is excluded from federal adjusted gross incomesolely by virtue of an individual's election to use the averaging provisionsunder § 402 of the Internal Revenue Code; and
5 through 8. [Repealed.]
9. The amount required to be included in income for the purpose of computingthe partial tax on an accumulation distribution pursuant to § 667 of theInternal Revenue Code.
C. To the extent included in federal adjusted gross income, there shall besubtracted:
1. Income derived from obligations, or on the sale or exchange ofobligations, of the United States and on obligations or securities of anyauthority, commission or instrumentality of the United States to the extentexempt from state income taxes under the laws of the United States including,but not limited to, stocks, bonds, treasury bills, and treasury notes, butnot including interest on refunds of federal taxes, interest on equipmentpurchase contracts, or interest on other normal business transactions.
2. Income derived from obligations, or on the sale or exchange of obligationsof this Commonwealth or of any political subdivision or instrumentality ofthe Commonwealth.
3. [Repealed.]
4. Benefits received under Title II of the Social Security Act and otherbenefits subject to federal income taxation solely pursuant to § 86 of theInternal Revenue Code.
4a. Through December 31, 2000, the same amount used in computing the federalcredit allowed under § 22 of the Internal Revenue Code by a retiree under age65 who qualified for such retirement on the basis of permanent and totaldisability and who is a qualified individual as defined in § 22(b) (2) of theInternal Revenue Code; however, any person who claims a deduction undersubdivision 5 of subsection D of this section may not also claim asubtraction under this subdivision.
4b. For taxable years beginning on or after January 1, 2001, up to $20,000 ofdisability income, as defined in § 22(c) (2) (B) (iii) of the InternalRevenue Code; however, any person who claims a deduction under subdivision 5of subsection D of this section may not also claim a subtraction under thissubdivision.
5. The amount of any refund or credit for overpayment of income taxes imposedby the Commonwealth or any other taxing jurisdiction.
6. The amount of wages or salaries eligible for the federal Targeted JobsCredit which was not deducted for federal purposes on account of theprovisions of § 280C(a) of the Internal Revenue Code.
7, 8. [Repealed.]
9. [Expired.]
10. Any amount included therein less than $600 from a prize awarded by theState Lottery Department.
11. The wages or salaries received by any person for active and inactiveservice in the National Guard of the Commonwealth of Virginia, not to exceedthe amount of income derived from 39 calendar days of such service or $3,000,whichever amount is less; however, only those persons in the ranks of O3 andbelow shall be entitled to the deductions specified herein.
12. Amounts received by an individual, not to exceed $1,000 in any taxableyear, as a reward for information provided to a law-enforcement official oragency, or to a nonprofit corporation created exclusively to assist suchlaw-enforcement official or agency, in the apprehension and conviction ofperpetrators of crimes. This provision shall not apply to the following: anindividual who is an employee of, or under contract with, a law-enforcementagency, a victim or the perpetrator of the crime for which the reward waspaid, or any person who is compensated for the investigation of crimes oraccidents.
13. [Repealed.]
14. [Expired.]
15, 16. [Repealed.]
17. For taxable years beginning on and after January 1, 1995, the amount of"qualified research expenses" or "basic research expenses" eligible fordeduction for federal purposes, but which were not deducted, on account ofthe provisions of § 280C(c) of the Internal Revenue Code and which shall beavailable to partners, shareholders of S corporations, and members of limitedliability companies to the extent and in the same manner as other deductionsmay pass through to such partners, shareholders, and members.
18. For taxable years beginning on or after January 1, 1995, all military payand allowances, not otherwise subtracted under this subsection, earned forany month during any part of which such member performed military service inany part of the former Yugoslavia, including the air space above suchlocation or any waters subject to related naval operations, in support ofOperation JOINT ENDEAVOR as part of the NATO Peace Keeping Force. Suchsubtraction shall be available until the taxpayer completes such service.
19. For taxable years beginning on and after January 1, 1996, any incomereceived during the taxable year derived from a qualified pension,profit-sharing, or stock bonus plan as described by § 401 of the InternalRevenue Code, an individual retirement account or annuity established under §408 of the Internal Revenue Code, a deferred compensation plan as defined by§ 457 of the Internal Revenue Code, or any federal government retirementprogram, the contributions to which were deductible from the taxpayer'sfederal adjusted gross income, but only to the extent the contributions tosuch plan or program were subject to taxation under the income tax in anotherstate.
20. For taxable years beginning on and after January 1, 1997, any incomeattributable to a distribution of benefits or a refund from a prepaid tuitioncontract or savings trust account with the Virginia College Savings Plan,created pursuant to Chapter 4.9 (§ 23-38.75 et seq.) of Title 23. Thesubtraction for any income attributable to a refund shall be limited toincome attributable to a refund in the event of a beneficiary's death,disability, or receipt of a scholarship.
21. For taxable years beginning on or after January 1, 1998, all military payand allowances, to the extent included in federal adjusted gross income andnot otherwise subtracted, deducted or exempted under this section, earned bymilitary personnel while serving by order of the President of the UnitedStates with the consent of Congress in a combat zone or qualified hazardousduty area which is treated as a combat zone for federal tax purposes pursuantto § 112 of the Internal Revenue Code.
22. For taxable years beginning on or after January 1, 2000, the gain derivedfrom the sale or exchange of real property or the sale or exchange of aneasement to real property which results in the real property or the easementthereto being devoted to open-space use, as that term is defined in §58.1-3230, for a period of time not less than 30 years. To the extent asubtraction is taken in accordance with this subdivision, no tax credit underthis chapter for donating land for its preservation shall be allowed forthree years following the year in which the subtraction is taken.
23. Effective for all taxable years beginning on or after January 1, 2000,$15,000 of military basic pay for military service personnel on extendedactive duty for periods in excess of 90 days; however, the subtraction amountshall be reduced dollar-for-dollar by the amount which the taxpayer'smilitary basic pay exceeds $15,000 and shall be reduced to zero if suchmilitary basic pay amount is equal to or exceeds $30,000.
24. Effective for all taxable years beginning on and after January 1, 2000,the first $15,000 of salary for each federal and state employee whose totalannual salary from all employment for the taxable year is $15,000 or less.
25. Unemployment benefits taxable pursuant to § 85 of the Internal RevenueCode.
26. For taxable years beginning on and after January 1, 2001, any amountreceived as military retirement income by an individual awarded theCongressional Medal of Honor.
27. Effective for all taxable years beginning on and after January 1, 1999,income received as a result of (i) the "Master Settlement Agreement," asdefined in § 3.2-3100; (ii) the National Tobacco Grower Settlement Trustdated July 19, 1999; and (iii) the Tobacco Loss Assistance Program, pursuantto 7 C.F.R. Part 1464 (Subpart C, §§ 1464.201 through 1464.205), by (a)tobacco farmers; (b) any person holding a tobacco marketing quota, or tobaccofarm acreage allotment, under the Agricultural Adjustment Act of 1938; or (c)any person having the right to grow tobacco pursuant to such a quota orallotment, but only to the extent that such income has not been subtractedpursuant to subdivision C 18 of § 58.1-402.
28. For taxable years beginning on and after January 1, 2000, items of incomeattributable to, derived from or in any way related to (i) assets stolenfrom, hidden from or otherwise lost by an individual who was a victim ortarget of Nazi persecution or (ii) damages, reparations, or otherconsideration received by a victim or target of Nazi persecution tocompensate such individual for performing labor against his will under thethreat of death, during World War II and its prelude and direct aftermath.This subtraction shall not apply to assets acquired with such items of incomeor with the proceeds from the sale of assets stolen from, hidden from orotherwise lost to, during World War II and its prelude and direct aftermath,a victim or target of Nazi persecution. The provisions of this subdivisionshall only apply to an individual who was the first recipient of such itemsof income and who was a victim or target of Nazi persecution, or a spouse,widow, widower, or child or stepchild of such victim.
"Victim or target of Nazi persecution" means any individual persecuted ortargeted for persecution by the Nazi regime who had assets stolen from,hidden from or otherwise lost as a result of any act or omission in any wayrelating to (i) the Holocaust; (ii) World War II and its prelude and directaftermath; (iii) transactions with or actions of the Nazi regime; (iv)treatment of refugees fleeing Nazi persecution; or (v) the holding of suchassets by entities or persons in the Swiss Confederation during World War IIand its prelude and aftermath. A victim or target of Nazi persecution shallalso include any individual forced into labor against his will, under thethreat of death, during World War II and its prelude and direct aftermath. Asused in this subdivision, "Nazi regime" means the country of Nazi Germany,areas occupied by Nazi Germany, those European countries allied with NaziGermany, or any other neutral European country or area in Europe under theinfluence or threat of Nazi invasion.
29. For taxable years beginning on and after January 1, 2002, any gainrecognized as a result of the Peanut Quota Buyout Program of the FarmSecurity and Rural Investment Act of 2002 pursuant to 7 C.F.R. Part 1412(Subpart H, §§ 1412.801 through 1412.811) as follows:
a. If the payment is received in installment payments pursuant to 7 C.F.R. §1412.807(a) (2), then the entire gain recognized may be subtracted.
b. If the payment is received in a single payment pursuant to 7 C.F.R. §1412.807(a) (3), then 20 percent of the recognized gain may be subtracted.The taxpayer may then deduct an equal amount in each of the four succeedingtaxable years.
30. Effective for all taxable years beginning on and after January 1, 2002,but before January 1, 2005, the indemnification payments received by contractpoultry growers and table egg producers from the U.S. Department ofAgriculture as a result of the depopulation of poultry flocks because of lowpathogenic avian influenza in 2002. In no event shall indemnificationpayments made to owners of poultry who contract with poultry growers qualifyfor this subtraction.
31. Effective for all taxable years beginning on or after January 1, 2001,the military death gratuity payment made after September 11, 2001, to thesurvivor of deceased military personnel killed in the line of duty, pursuantto Chapter 75 of Title 10 of the United States Code; however, the subtractionamount shall be reduced dollar-for-dollar by the amount that the survivor mayexclude from his federal gross income in accordance with § 134 of theInternal Revenue Code.
32. Effective for all taxable years beginning on or after January 1, 2007,the death benefit payments from an annuity contract that are received by abeneficiary of such contract and are subject to federal income taxation.
33. For taxable years beginning on and after January 1, 2009, any gainrecognized from the sale of launch services to space flight participants, asdefined in 49 U.S.C. § 70102, or launch services intended to provideindividuals the training or experience of a launch, without performing anactual launch. To qualify for a deduction under this subdivision, launchservices must be performed in Virginia or originate from an airport orspaceport in Virginia.
34. For taxable years beginning on and after January 1, 2009, any gainrecognized as a result of resupply services contracts for delivering payload,as defined in 49 U.S.C. § 70102, entered into with the Commercial OrbitalTransportation Services division of the National Aeronautics and SpaceAdministration or other space flight entity, as defined in § 8.01-227.8, andlaunched from an airport or spaceport in Virginia.
35. (See Editor's note) For taxable years beginning on or after January 1,2011, any income taxed as a long-term capital gain for federal income taxpurposes, or any income taxed as investment services partnership interestincome (otherwise known as investment partnership carried interest income)for federal income tax purposes. To qualify for a subtraction under thissubdivision, such income shall be attributable to an investment in a"qualified business," as defined in § 58.1-339.4, or in any othertechnology business approved by the Secretary of Technology, provided thebusiness has its principal office or facility in the Commonwealth and lessthan $3 million in annual revenues in the fiscal year prior to theinvestment. To qualify for a subtraction under this subdivision, theinvestment shall be made between the dates of April 1, 2010, and June 30,2013. No taxpayer who has claimed a tax credit for an investment in a"qualified business" under § 58.1-339.4 shall be eligible for thesubtraction under this subdivision for an investment in the same business.
D. In computing Virginia taxable income there shall be deducted from Virginiaadjusted gross income as defined in § 58.1-321:
1. a. The amount allowable for itemized deductions for federal income taxpurposes where the taxpayer has elected for the taxable year to itemizedeductions on his federal return, but reduced by the amount of income taxesimposed by the Commonwealth or any other taxing jurisdiction and deducted onsuch federal return and increased by an amount which, when added to theamount deducted under § 170 of the Internal Revenue Code for mileage, resultsin a mileage deduction at the state level for such purposes at a rate of 18cents per mile; or
b. Three thousand dollars for single individuals for taxable years beginningon and after January 1, 1989; $5,000 for married persons (one-half of suchamounts in the case of a married individual filing a separate return) fortaxable years beginning on and after January 1, 1989, but before January 1,2005; and $6,000 for married persons (one-half of such amounts in the case ofa married individual filing a separate return) for taxable years beginning onand after January 1, 2005; provided that the taxpayer has not itemizeddeductions for the taxable year on his federal income tax return. Forpurposes of this section, any person who may be claimed as a dependent onanother taxpayer's return for the taxable year may compute the deduction onlywith respect to earned income.
2. a. A deduction in the amount of $800 for taxable years beginning on andafter January 1, 1988, but before January 1, 2005; $900 for taxable yearsbeginning on and after January 1, 2005, but before January 1, 2008; and $930for taxable years beginning on and after January 1, 2008, for each personalexemption allowable to the taxpayer for federal income tax purposes.
b. For taxable years beginning on and after January 1, 1987, each blind oraged taxpayer as defined under § 63(f) of the Internal Revenue Code shall beentitled to an additional personal exemption in the amount of $800.
The additional deduction for blind or aged taxpayers allowed under thissubdivision shall be allowable regardless of whether the taxpayer itemizesdeductions for the taxable year for federal income tax purposes.
3. A deduction equal to the amount of employment-related expenses upon whichthe federal credit is based under § 21 of the Internal Revenue Code forexpenses for household and dependent care services necessary for gainfulemployment.
4. An additional $1,000 deduction for each child residing for the entiretaxable year in a home under permanent foster care placement as defined in §63.2-908, provided the taxpayer can also claim the child as a personalexemption under § 151 of the Internal Revenue Code.
5. a. Effective for all taxable years beginning on or after January 1, 1996,but before January 1, 2004, a deduction in the amount of $12,000 fortaxpayers age 65 or older, or $6,000 for taxpayers age 62 through 64.
b. For taxable years beginning on and after January 1, 2004, a deduction inthe amount of $12,000 for individuals born on or before January 1, 1939.
c. For taxable years beginning January 1, 2004, but before January 1, 2005, adeduction in the amount of $6,000 for individuals born on or between January2, 1940, and January 1, 1942.
d. For taxable years beginning January 1, 2005, but before January 1, 2006, adeduction in the amount of $6,000 for individuals born on or between January2, 1941, and January 1, 1942.
e. For taxable years beginning on and after January 1, 2004, a deduction inthe amount of $12,000 for individuals born after January 1, 1939, who haveattained the age of 65. This deduction shall be reduced by $1 for every $1that the taxpayer's adjusted federal adjusted gross income exceeds $50,000for single taxpayers or $75,000 for married taxpayers. For married taxpayersfiling separately, the deduction will be reduced by $1 for every $1 the totalcombined adjusted federal adjusted gross income of both spouses exceeds$75,000.
f. For the purposes of this subdivision, "adjusted federal adjusted grossincome" means federal adjusted gross income minus any benefits receivedunder Title II of the Social Security Act and other benefits subject tofederal income taxation solely pursuant to § 86 of the Internal Revenue Code,as amended.
6. For taxable years beginning on and after January 1, 1997, the amount anindividual pays as a fee for an initial screening to become a possible bonemarrow donor, if (i) the individual is not reimbursed for such fee or (ii)the individual has not claimed a deduction for the payment of such fee on hisfederal income tax return.
7. a. A deduction shall be allowed to the purchaser or contributor for theamount paid or contributed during the taxable year for a prepaid tuitioncontract or savings trust account entered into with the Virginia CollegeSavings Plan, pursuant to Chapter 4.9 (§ 23-38.75 et seq.) of Title 23.Except as provided in subdivision 7 c, the amount deducted on any individualincome tax return in any taxable year shall be limited to $4,000 per prepaidtuition contract or savings trust account. No deduction shall be allowedpursuant to this section if such payments or contributions are deducted onthe purchaser's or contributor's federal income tax return. If the purchaseprice or annual contribution to a savings trust account exceeds $4,000, theremainder may be carried forward and subtracted in future taxable years untilthe purchase price or savings trust contribution has been fully deducted;however, except as provided in subdivision 7 c, in no event shall the amountdeducted in any taxable year exceed $4,000 per contract or savings trustaccount. Notwithstanding the statute of limitations on assessments containedin § 58.1-312, any deduction taken hereunder shall be subject to recapture inthe taxable year or years in which distributions or refunds are made for anyreason other than (i) to pay qualified higher education expenses, as definedin § 529 of the Internal Revenue Code or (ii) the beneficiary's death,disability, or receipt of a scholarship. For the purposes of thissubdivision, the term "purchaser" or "contributor" means the person shownas such on the records of the Virginia College Savings Plan as of December 31of the taxable year. In the case of a transfer of ownership of a prepaidtuition contract or savings trust account, the transferee shall succeed tothe transferor's tax attributes associated with a prepaid tuition contract orsavings trust account, including, but not limited to, carryover and recaptureof deductions.
b. The amount paid for a prepaid tuition contract during taxable yearsbeginning on or after January 1, 1996, but before January 1, 1998, shall bededucted in taxable years beginning on or after January 1, 1998, and shall besubject to the limitations set out in subdivision 7 a.
c. A purchaser of a prepaid tuition contract or contributor to a savingstrust account who has attained age 70 shall not be subject to the limitationthat the amount of the deduction not exceed $4,000 per prepaid tuitioncontract or savings trust account in any taxable year. Such taxpayer shall beallowed a deduction for the full amount paid for the contract or contributedto a savings trust account, less any amounts previously deducted. If aprepaid tuition contract was purchased by such taxpayer during taxable yearsbeginning on or after January 1, 1996, but before January 1, 1998, suchtaxpayer may take the deduction for the full amount paid during such years,less any amounts previously deducted with respect to such payments, intaxable year 1999 or by filing an amended return for taxable year 1998.
8. For taxable years beginning on and after January 1, 2000, the total amountan individual actually contributed in funds to the Virginia Public SchoolConstruction Grants Program and Fund, established in Chapter 11.1 (§22.1-175.1 et seq.) of Title 22.1, provided the individual has not claimed adeduction for such amount on his federal income tax return.
9. For taxable years beginning on and after January 1, 1999, an amount equalto 20 percent of the tuition costs incurred by an individual employed as aprimary or secondary school teacher licensed pursuant to Chapter 15 (§22.1-289.1 et seq.) of Title 22.1 to attend continuing teacher educationcourses that are required as a condition of employment; however, thededuction provided by this subsection shall be available only if (i) theindividual is not reimbursed for such tuition costs and (ii) the individualhas not claimed a deduction for the payment of such tuition costs on hisfederal income tax return.
10. For taxable years beginning on and after January 1, 2000, the amount anindividual pays annually in premiums for long-term health care insurance,provided the individual has not claimed a deduction for federal income taxpurposes, or a credit under § 58.1-339.11.
11. For taxable years beginning on and after January 1, 2006, contractpayments to a producer of quota tobacco or a tobacco quota holder, or theirspouses, as provided under the American Jobs Creation Act of 2004 (P.L.108-357), but only to the extent that such payments have not been subtractedpursuant to subsection D of § 58.1-402, as follows:
a. If the payment is received in installment payments, then the recognizedgain, including any gain recognized in taxable year 2005, may be subtractedin the taxable year immediately following the year in which the installmentpayment is received.
b. If the payment is received in a single payment, then 10% of the recognizedgain may be subtracted in the taxable year immediately following the year inwhich the single payment is received. The taxpayer may then deduct an equalamount in each of the nine succeeding taxable years.
12. For taxable years beginning on and after January 1, 2007, an amount equalto 20% of the sum paid by an individual pursuant to Chapter 6 (§ 58.1-600 etseq.) of this title, not to exceed $500 in each taxable year, in purchasingfor his own use the following items of tangible personal property: (i) anyclothes washers, room air conditioners, dishwashers, and standard sizerefrigerators that meet or exceed the applicable energy star efficiencyrequirements developed by the United States Environmental Protection Agencyand the United States Department of Energy; (ii) any fuel cell that (a)generates electricity using an electrochemical process, (b) has anelectricity-only generation efficiency greater than 35%, and (c) has agenerating capacity of at least two kilowatts; (iii) any gas heat pump thathas a coefficient of performance of at least 1.25 for heating and at least0.70 for cooling; (iv) any electric heat pump hot water heater that yields anenergy factor of at least 1.7; (v) any electric heat pump that has a heatingsystem performance factor of at least 8.0 and a cooling seasonal energyefficiency ratio of at least 13.0; (vi) any central air conditioner that hasa cooling seasonal energy efficiency ratio of at least 13.5; (vii) anyadvanced gas or oil water heater that has an energy factor of at least 0.65;(viii) any advanced oil-fired boiler with a minimum annual fuel-utilizationrating of 85; (ix) any advanced oil-fired furnace with a minimum annualfuel-utilization rating of 85; and (x) programmable thermostats.
13. For taxable years beginning on or after January 1, 2007, the lesser of$5,000 or the amount actually paid by a living donor of an organ or otherliving tissue for unreimbursed out-of-pocket expenses directly related to thedonation that arose within 12 months of such donation, provided the donor hasnot taken a medical deduction in accordance with the provisions of § 213 ofthe Internal Revenue Code for such expenses. The deduction may be taken inthe taxable year in which the donation is made or the taxable year in whichthe 12-month period expires.
E. There shall be added to or subtracted from federal adjusted gross income,as the case may be, the individual's share, as beneficiary of an estate ortrust, of the Virginia fiduciary adjustment determined under § 58.1-361.
F. There shall be added or subtracted, as the case may be, the amountsprovided in § 58.1-315 as transitional modifications.
G. Effective for all taxable years beginning on or after January 1, 2007, tothe extent included in federal adjusted gross income, there shall be (i)subtracted from federal adjusted gross income by a shareholder of an electingsmall business corporation (S corporation) that is subject to the bankfranchise tax imposed under Chapter 12 (§ 58.1-1200 et seq.) for the calendaryear in which such taxable year begins, the shareholder's allocable share ofthe income or gain of such electing small business corporation (Scorporation), and (ii) added back to federal adjusted gross income such that,federal adjusted gross income shall be increased, by a shareholder of anelecting small business corporation (S corporation) that is subject to thebank franchise tax imposed under Chapter 12 (§ 58.1-1200 et seq.) for thecalendar year in which such taxable year begins, the shareholder's allocableshare of the losses or deductions of such electing small business corporation(S corporation).
Effective for all taxable years beginning on or after January 1, 2007, to theextent excluded from federal adjusted gross income, there shall be added tofederal adjusted gross income by a shareholder of an electing small businesscorporation (S corporation) that is subject to the bank franchise tax imposedunder Chapter 12 (§ 58.1-1200 et seq.) for the calendar year in which suchtaxable year begins, the value of any distribution paid or distributed to theshareholder by such electing small business corporation (S corporation).
H. Notwithstanding any other provision of law, the income from anydisposition of real property which is held by the taxpayer for sale tocustomers in the ordinary course of the taxpayer's trade or business, asdefined in § 453(l) (1) (B) of the Internal Revenue Code, of property made onor after January 1, 2009, may, at the election of the taxpayer, be recognizedunder the installment method described under § 453 of the Internal RevenueCode, provided that (i) the election relating to the dealer disposition ofthe property has been made on or before the due date prescribed by law(including extensions) for filing the taxpayer's return of the tax imposedunder this chapter for the taxable year in which the disposition occurs, and(ii) the dealer disposition is in accordance with restrictions or conditionsestablished by the Department, which shall be set forth in guidelinesdeveloped by the Department. Along with such restrictions or conditions, theguidelines shall also address the recapture of such income under certaincircumstances. The development of the guidelines shall be exempt from theAdministrative Process Act (§ 2.2-4000 et seq.).
(Code 1950, § 58-151.013; 1971, Ex. Sess., c. 171; 1972, c. 827; 1973, cc.198, 345, 458; 1974, c. 682; 1975, c. 46; 1976, cc. 528, 694, 781; 1977, cc.297, 612; 1978, cc. 67, 158; 1979, cc. 226, 596; 1981, cc. 402, 414; 1982, c.633; 1983, cc. 452, 472; 1984, cc. 153, 162, 636, 674, 675, 729; 1985, cc.221, 465; 1986, cc. 474, 515; 1987, cc. 9, 484, 531, 615; 1988, cc. 741, 743,755, 756; 1989, cc. 39, 639, 749; 1989, Sp. Sess., c. 3; 1990, cc. 507, 525,714; 1991, cc. 346, 361; 1992, cc. 665, 678, 686, 691; 1993, c. 803; 1994,cc. 488, 590; 1994, 1st Sp. Sess., c. 5; 1996, cc. 401, 624; 1997, cc. 106,785, 861, 909; 1998, cc. 373, 874; 1999, cc. 285, 298, 339, 365, 485, 498,518, 535, 588; 2000, cc. 382, 387, 394, 400, 419, 1021, 1039; 2001, c. 476;2003, cc. 3, 58, 181, 209, 807, 980; 2004, Sp. Sess. I, c. 3; 2005, cc. 27,67; 2006, cc. 214, 570, 599, 617, 939; 2007, cc. 359, 527, 543, 636, 942;2008, cc. 149, 211; 2009, c. 508; 2010, cc. 802, 830.)
A. The Virginia taxable income of a resident individual means his federaladjusted gross income for the taxable year, which excludes combat pay forcertain members of the Armed Forces of the United States as provided in § 112of the Internal Revenue Code, as amended, and with the modificationsspecified in this section.
B. To the extent excluded from federal adjusted gross income, there shall beadded:
1. Interest, less related expenses to the extent not deducted in determiningfederal income, on obligations of any state other than Virginia, or of apolitical subdivision of any such other state unless created by compact oragreement to which Virginia is a party;
2. Interest or dividends, less related expenses to the extent not deducted indetermining federal taxable income, on obligations or securities of anyauthority, commission or instrumentality of the United States, which the lawsof the United States exempt from federal income tax but not from state incometaxes;
3. Unrelated business taxable income as defined by § 512 of the InternalRevenue Code;
4. The amount of a lump sum distribution from a qualified retirement plan,less the minimum distribution allowance and any amount excludable for federalincome tax purposes that is excluded from federal adjusted gross incomesolely by virtue of an individual's election to use the averaging provisionsunder § 402 of the Internal Revenue Code; and
5 through 8. [Repealed.]
9. The amount required to be included in income for the purpose of computingthe partial tax on an accumulation distribution pursuant to § 667 of theInternal Revenue Code.
C. To the extent included in federal adjusted gross income, there shall besubtracted:
1. Income derived from obligations, or on the sale or exchange ofobligations, of the United States and on obligations or securities of anyauthority, commission or instrumentality of the United States to the extentexempt from state income taxes under the laws of the United States including,but not limited to, stocks, bonds, treasury bills, and treasury notes, butnot including interest on refunds of federal taxes, interest on equipmentpurchase contracts, or interest on other normal business transactions.
2. Income derived from obligations, or on the sale or exchange of obligationsof this Commonwealth or of any political subdivision or instrumentality ofthe Commonwealth.
3. [Repealed.]
4. Benefits received under Title II of the Social Security Act and otherbenefits subject to federal income taxation solely pursuant to § 86 of theInternal Revenue Code.
4a. Through December 31, 2000, the same amount used in computing the federalcredit allowed under § 22 of the Internal Revenue Code by a retiree under age65 who qualified for such retirement on the basis of permanent and totaldisability and who is a qualified individual as defined in § 22(b) (2) of theInternal Revenue Code; however, any person who claims a deduction undersubdivision 5 of subsection D of this section may not also claim asubtraction under this subdivision.
4b. For taxable years beginning on or after January 1, 2001, up to $20,000 ofdisability income, as defined in § 22(c) (2) (B) (iii) of the InternalRevenue Code; however, any person who claims a deduction under subdivision 5of subsection D of this section may not also claim a subtraction under thissubdivision.
5. The amount of any refund or credit for overpayment of income taxes imposedby the Commonwealth or any other taxing jurisdiction.
6. The amount of wages or salaries eligible for the federal Targeted JobsCredit which was not deducted for federal purposes on account of theprovisions of § 280C(a) of the Internal Revenue Code.
7, 8. [Repealed.]
9. [Expired.]
10. Any amount included therein less than $600 from a prize awarded by theState Lottery Department.
11. The wages or salaries received by any person for active and inactiveservice in the National Guard of the Commonwealth of Virginia, not to exceedthe amount of income derived from 39 calendar days of such service or $3,000,whichever amount is less; however, only those persons in the ranks of O3 andbelow shall be entitled to the deductions specified herein.
12. Amounts received by an individual, not to exceed $1,000 in any taxableyear, as a reward for information provided to a law-enforcement official oragency, or to a nonprofit corporation created exclusively to assist suchlaw-enforcement official or agency, in the apprehension and conviction ofperpetrators of crimes. This provision shall not apply to the following: anindividual who is an employee of, or under contract with, a law-enforcementagency, a victim or the perpetrator of the crime for which the reward waspaid, or any person who is compensated for the investigation of crimes oraccidents.
13. [Repealed.]
14. [Expired.]
15, 16. [Repealed.]
17. For taxable years beginning on and after January 1, 1995, the amount of"qualified research expenses" or "basic research expenses" eligible fordeduction for federal purposes, but which were not deducted, on account ofthe provisions of § 280C(c) of the Internal Revenue Code and which shall beavailable to partners, shareholders of S corporations, and members of limitedliability companies to the extent and in the same manner as other deductionsmay pass through to such partners, shareholders, and members.
18. For taxable years beginning on or after January 1, 1995, all military payand allowances, not otherwise subtracted under this subsection, earned forany month during any part of which such member performed military service inany part of the former Yugoslavia, including the air space above suchlocation or any waters subject to related naval operations, in support ofOperation JOINT ENDEAVOR as part of the NATO Peace Keeping Force. Suchsubtraction shall be available until the taxpayer completes such service.
19. For taxable years beginning on and after January 1, 1996, any incomereceived during the taxable year derived from a qualified pension,profit-sharing, or stock bonus plan as described by § 401 of the InternalRevenue Code, an individual retirement account or annuity established under §408 of the Internal Revenue Code, a deferred compensation plan as defined by§ 457 of the Internal Revenue Code, or any federal government retirementprogram, the contributions to which were deductible from the taxpayer'sfederal adjusted gross income, but only to the extent the contributions tosuch plan or program were subject to taxation under the income tax in anotherstate.
20. For taxable years beginning on and after January 1, 1997, any incomeattributable to a distribution of benefits or a refund from a prepaid tuitioncontract or savings trust account with the Virginia College Savings Plan,created pursuant to Chapter 4.9 (§ 23-38.75 et seq.) of Title 23. Thesubtraction for any income attributable to a refund shall be limited toincome attributable to a refund in the event of a beneficiary's death,disability, or receipt of a scholarship.
21. For taxable years beginning on or after January 1, 1998, all military payand allowances, to the extent included in federal adjusted gross income andnot otherwise subtracted, deducted or exempted under this section, earned bymilitary personnel while serving by order of the President of the UnitedStates with the consent of Congress in a combat zone or qualified hazardousduty area which is treated as a combat zone for federal tax purposes pursuantto § 112 of the Internal Revenue Code.
22. For taxable years beginning on or after January 1, 2000, the gain derivedfrom the sale or exchange of real property or the sale or exchange of aneasement to real property which results in the real property or the easementthereto being devoted to open-space use, as that term is defined in §58.1-3230, for a period of time not less than 30 years. To the extent asubtraction is taken in accordance with this subdivision, no tax credit underthis chapter for donating land for its preservation shall be allowed forthree years following the year in which the subtraction is taken.
23. Effective for all taxable years beginning on or after January 1, 2000,$15,000 of military basic pay for military service personnel on extendedactive duty for periods in excess of 90 days; however, the subtraction amountshall be reduced dollar-for-dollar by the amount which the taxpayer'smilitary basic pay exceeds $15,000 and shall be reduced to zero if suchmilitary basic pay amount is equal to or exceeds $30,000.
24. Effective for all taxable years beginning on and after January 1, 2000,the first $15,000 of salary for each federal and state employee whose totalannual salary from all employment for the taxable year is $15,000 or less.
25. Unemployment benefits taxable pursuant to § 85 of the Internal RevenueCode.
26. For taxable years beginning on and after January 1, 2001, any amountreceived as military retirement income by an individual awarded theCongressional Medal of Honor.
27. Effective for all taxable years beginning on and after January 1, 1999,income received as a result of (i) the "Master Settlement Agreement," asdefined in § 3.2-3100; (ii) the National Tobacco Grower Settlement Trustdated July 19, 1999; and (iii) the Tobacco Loss Assistance Program, pursuantto 7 C.F.R. Part 1464 (Subpart C, §§ 1464.201 through 1464.205), by (a)tobacco farmers; (b) any person holding a tobacco marketing quota, or tobaccofarm acreage allotment, under the Agricultural Adjustment Act of 1938; or (c)any person having the right to grow tobacco pursuant to such a quota orallotment, but only to the extent that such income has not been subtractedpursuant to subdivision C 18 of § 58.1-402.
28. For taxable years beginning on and after January 1, 2000, items of incomeattributable to, derived from or in any way related to (i) assets stolenfrom, hidden from or otherwise lost by an individual who was a victim ortarget of Nazi persecution or (ii) damages, reparations, or otherconsideration received by a victim or target of Nazi persecution tocompensate such individual for performing labor against his will under thethreat of death, during World War II and its prelude and direct aftermath.This subtraction shall not apply to assets acquired with such items of incomeor with the proceeds from the sale of assets stolen from, hidden from orotherwise lost to, during World War II and its prelude and direct aftermath,a victim or target of Nazi persecution. The provisions of this subdivisionshall only apply to an individual who was the first recipient of such itemsof income and who was a victim or target of Nazi persecution, or a spouse,widow, widower, or child or stepchild of such victim.
"Victim or target of Nazi persecution" means any individual persecuted ortargeted for persecution by the Nazi regime who had assets stolen from,hidden from or otherwise lost as a result of any act or omission in any wayrelating to (i) the Holocaust; (ii) World War II and its prelude and directaftermath; (iii) transactions with or actions of the Nazi regime; (iv)treatment of refugees fleeing Nazi persecution; or (v) the holding of suchassets by entities or persons in the Swiss Confederation during World War IIand its prelude and aftermath. A victim or target of Nazi persecution shallalso include any individual forced into labor against his will, under thethreat of death, during World War II and its prelude and direct aftermath. Asused in this subdivision, "Nazi regime" means the country of Nazi Germany,areas occupied by Nazi Germany, those European countries allied with NaziGermany, or any other neutral European country or area in Europe under theinfluence or threat of Nazi invasion.
29. For taxable years beginning on and after January 1, 2002, any gainrecognized as a result of the Peanut Quota Buyout Program of the FarmSecurity and Rural Investment Act of 2002 pursuant to 7 C.F.R. Part 1412(Subpart H, §§ 1412.801 through 1412.811) as follows:
a. If the payment is received in installment payments pursuant to 7 C.F.R. §1412.807(a) (2), then the entire gain recognized may be subtracted.
b. If the payment is received in a single payment pursuant to 7 C.F.R. §1412.807(a) (3), then 20 percent of the recognized gain may be subtracted.The taxpayer may then deduct an equal amount in each of the four succeedingtaxable years.
30. Effective for all taxable years beginning on and after January 1, 2002,but before January 1, 2005, the indemnification payments received by contractpoultry growers and table egg producers from the U.S. Department ofAgriculture as a result of the depopulation of poultry flocks because of lowpathogenic avian influenza in 2002. In no event shall indemnificationpayments made to owners of poultry who contract with poultry growers qualifyfor this subtraction.
31. Effective for all taxable years beginning on or after January 1, 2001,the military death gratuity payment made after September 11, 2001, to thesurvivor of deceased military personnel killed in the line of duty, pursuantto Chapter 75 of Title 10 of the United States Code; however, the subtractionamount shall be reduced dollar-for-dollar by the amount that the survivor mayexclude from his federal gross income in accordance with § 134 of theInternal Revenue Code.
32. Effective for all taxable years beginning on or after January 1, 2007,the death benefit payments from an annuity contract that are received by abeneficiary of such contract and are subject to federal income taxation.
33. For taxable years beginning on and after January 1, 2009, any gainrecognized from the sale of launch services to space flight participants, asdefined in 49 U.S.C. § 70102, or launch services intended to provideindividuals the training or experience of a launch, without performing anactual launch. To qualify for a deduction under this subdivision, launchservices must be performed in Virginia or originate from an airport orspaceport in Virginia.
34. For taxable years beginning on and after January 1, 2009, any gainrecognized as a result of resupply services contracts for delivering payload,as defined in 49 U.S.C. § 70102, entered into with the Commercial OrbitalTransportation Services division of the National Aeronautics and SpaceAdministration or other space flight entity, as defined in § 8.01-227.8, andlaunched from an airport or spaceport in Virginia.
35. (See Editor's note) For taxable years beginning on or after January 1,2011, any income taxed as a long-term capital gain for federal income taxpurposes, or any income taxed as investment services partnership interestincome (otherwise known as investment partnership carried interest income)for federal income tax purposes. To qualify for a subtraction under thissubdivision, such income shall be attributable to an investment in a"qualified business," as defined in § 58.1-339.4, or in any othertechnology business approved by the Secretary of Technology, provided thebusiness has its principal office or facility in the Commonwealth and lessthan $3 million in annual revenues in the fiscal year prior to theinvestment. To qualify for a subtraction under this subdivision, theinvestment shall be made between the dates of April 1, 2010, and June 30,2013. No taxpayer who has claimed a tax credit for an investment in a"qualified business" under § 58.1-339.4 shall be eligible for thesubtraction under this subdivision for an investment in the same business.
D. In computing Virginia taxable income there shall be deducted from Virginiaadjusted gross income as defined in § 58.1-321:
1. a. The amount allowable for itemized deductions for federal income taxpurposes where the taxpayer has elected for the taxable year to itemizedeductions on his federal return, but reduced by the amount of income taxesimposed by the Commonwealth or any other taxing jurisdiction and deducted onsuch federal return and increased by an amount which, when added to theamount deducted under § 170 of the Internal Revenue Code for mileage, resultsin a mileage deduction at the state level for such purposes at a rate of 18cents per mile; or
b. Three thousand dollars for single individuals for taxable years beginningon and after January 1, 1989; $5,000 for married persons (one-half of suchamounts in the case of a married individual filing a separate return) fortaxable years beginning on and after January 1, 1989, but before January 1,2005; and $6,000 for married persons (one-half of such amounts in the case ofa married individual filing a separate return) for taxable years beginning onand after January 1, 2005; provided that the taxpayer has not itemizeddeductions for the taxable year on his federal income tax return. Forpurposes of this section, any person who may be claimed as a dependent onanother taxpayer's return for the taxable year may compute the deduction onlywith respect to earned income.
2. a. A deduction in the amount of $800 for taxable years beginning on andafter January 1, 1988, but before January 1, 2005; $900 for taxable yearsbeginning on and after January 1, 2005, but before January 1, 2008; and $930for taxable years beginning on and after January 1, 2008, for each personalexemption allowable to the taxpayer for federal income tax purposes.
b. For taxable years beginning on and after January 1, 1987, each blind oraged taxpayer as defined under § 63(f) of the Internal Revenue Code shall beentitled to an additional personal exemption in the amount of $800.
The additional deduction for blind or aged taxpayers allowed under thissubdivision shall be allowable regardless of whether the taxpayer itemizesdeductions for the taxable year for federal income tax purposes.
3. A deduction equal to the amount of employment-related expenses upon whichthe federal credit is based under § 21 of the Internal Revenue Code forexpenses for household and dependent care services necessary for gainfulemployment.
4. An additional $1,000 deduction for each child residing for the entiretaxable year in a home under permanent foster care placement as defined in §63.2-908, provided the taxpayer can also claim the child as a personalexemption under § 151 of the Internal Revenue Code.
5. a. Effective for all taxable years beginning on or after January 1, 1996,but before January 1, 2004, a deduction in the amount of $12,000 fortaxpayers age 65 or older, or $6,000 for taxpayers age 62 through 64.
b. For taxable years beginning on and after January 1, 2004, a deduction inthe amount of $12,000 for individuals born on or before January 1, 1939.
c. For taxable years beginning January 1, 2004, but before January 1, 2005, adeduction in the amount of $6,000 for individuals born on or between January2, 1940, and January 1, 1942.
d. For taxable years beginning January 1, 2005, but before January 1, 2006, adeduction in the amount of $6,000 for individuals born on or between January2, 1941, and January 1, 1942.
e. For taxable years beginning on and after January 1, 2004, a deduction inthe amount of $12,000 for individuals born after January 1, 1939, who haveattained the age of 65. This deduction shall be reduced by $1 for every $1that the taxpayer's adjusted federal adjusted gross income exceeds $50,000for single taxpayers or $75,000 for married taxpayers. For married taxpayersfiling separately, the deduction will be reduced by $1 for every $1 the totalcombined adjusted federal adjusted gross income of both spouses exceeds$75,000.
f. For the purposes of this subdivision, "adjusted federal adjusted grossincome" means federal adjusted gross income minus any benefits receivedunder Title II of the Social Security Act and other benefits subject tofederal income taxation solely pursuant to § 86 of the Internal Revenue Code,as amended.
6. For taxable years beginning on and after January 1, 1997, the amount anindividual pays as a fee for an initial screening to become a possible bonemarrow donor, if (i) the individual is not reimbursed for such fee or (ii)the individual has not claimed a deduction for the payment of such fee on hisfederal income tax return.
7. a. A deduction shall be allowed to the purchaser or contributor for theamount paid or contributed during the taxable year for a prepaid tuitioncontract or savings trust account entered into with the Virginia CollegeSavings Plan, pursuant to Chapter 4.9 (§ 23-38.75 et seq.) of Title 23.Except as provided in subdivision 7 c, the amount deducted on any individualincome tax return in any taxable year shall be limited to $4,000 per prepaidtuition contract or savings trust account. No deduction shall be allowedpursuant to this section if such payments or contributions are deducted onthe purchaser's or contributor's federal income tax return. If the purchaseprice or annual contribution to a savings trust account exceeds $4,000, theremainder may be carried forward and subtracted in future taxable years untilthe purchase price or savings trust contribution has been fully deducted;however, except as provided in subdivision 7 c, in no event shall the amountdeducted in any taxable year exceed $4,000 per contract or savings trustaccount. Notwithstanding the statute of limitations on assessments containedin § 58.1-312, any deduction taken hereunder shall be subject to recapture inthe taxable year or years in which distributions or refunds are made for anyreason other than (i) to pay qualified higher education expenses, as definedin § 529 of the Internal Revenue Code or (ii) the beneficiary's death,disability, or receipt of a scholarship. For the purposes of thissubdivision, the term "purchaser" or "contributor" means the person shownas such on the records of the Virginia College Savings Plan as of December 31of the taxable year. In the case of a transfer of ownership of a prepaidtuition contract or savings trust account, the transferee shall succeed tothe transferor's tax attributes associated with a prepaid tuition contract orsavings trust account, including, but not limited to, carryover and recaptureof deductions.
b. The amount paid for a prepaid tuition contract during taxable yearsbeginning on or after January 1, 1996, but before January 1, 1998, shall bededucted in taxable years beginning on or after January 1, 1998, and shall besubject to the limitations set out in subdivision 7 a.
c. A purchaser of a prepaid tuition contract or contributor to a savingstrust account who has attained age 70 shall not be subject to the limitationthat the amount of the deduction not exceed $4,000 per prepaid tuitioncontract or savings trust account in any taxable year. Such taxpayer shall beallowed a deduction for the full amount paid for the contract or contributedto a savings trust account, less any amounts previously deducted. If aprepaid tuition contract was purchased by such taxpayer during taxable yearsbeginning on or after January 1, 1996, but before January 1, 1998, suchtaxpayer may take the deduction for the full amount paid during such years,less any amounts previously deducted with respect to such payments, intaxable year 1999 or by filing an amended return for taxable year 1998.
8. For taxable years beginning on and after January 1, 2000, the total amountan individual actually contributed in funds to the Virginia Public SchoolConstruction Grants Program and Fund, established in Chapter 11.1 (§22.1-175.1 et seq.) of Title 22.1, provided the individual has not claimed adeduction for such amount on his federal income tax return.
9. For taxable years beginning on and after January 1, 1999, an amount equalto 20 percent of the tuition costs incurred by an individual employed as aprimary or secondary school teacher licensed pursuant to Chapter 15 (§22.1-289.1 et seq.) of Title 22.1 to attend continuing teacher educationcourses that are required as a condition of employment; however, thededuction provided by this subsection shall be available only if (i) theindividual is not reimbursed for such tuition costs and (ii) the individualhas not claimed a deduction for the payment of such tuition costs on hisfederal income tax return.
10. For taxable years beginning on and after January 1, 2000, the amount anindividual pays annually in premiums for long-term health care insurance,provided the individual has not claimed a deduction for federal income taxpurposes, or a credit under § 58.1-339.11.
11. For taxable years beginning on and after January 1, 2006, contractpayments to a producer of quota tobacco or a tobacco quota holder, or theirspouses, as provided under the American Jobs Creation Act of 2004 (P.L.108-357), but only to the extent that such payments have not been subtractedpursuant to subsection D of § 58.1-402, as follows:
a. If the payment is received in installment payments, then the recognizedgain, including any gain recognized in taxable year 2005, may be subtractedin the taxable year immediately following the year in which the installmentpayment is received.
b. If the payment is received in a single payment, then 10% of the recognizedgain may be subtracted in the taxable year immediately following the year inwhich the single payment is received. The taxpayer may then deduct an equalamount in each of the nine succeeding taxable years.
12. For taxable years beginning on and after January 1, 2007, an amount equalto 20% of the sum paid by an individual pursuant to Chapter 6 (§ 58.1-600 etseq.) of this title, not to exceed $500 in each taxable year, in purchasingfor his own use the following items of tangible personal property: (i) anyclothes washers, room air conditioners, dishwashers, and standard sizerefrigerators that meet or exceed the applicable energy star efficiencyrequirements developed by the United States Environmental Protection Agencyand the United States Department of Energy; (ii) any fuel cell that (a)generates electricity using an electrochemical process, (b) has anelectricity-only generation efficiency greater than 35%, and (c) has agenerating capacity of at least two kilowatts; (iii) any gas heat pump thathas a coefficient of performance of at least 1.25 for heating and at least0.70 for cooling; (iv) any electric heat pump hot water heater that yields anenergy factor of at least 1.7; (v) any electric heat pump that has a heatingsystem performance factor of at least 8.0 and a cooling seasonal energyefficiency ratio of at least 13.0; (vi) any central air conditioner that hasa cooling seasonal energy efficiency ratio of at least 13.5; (vii) anyadvanced gas or oil water heater that has an energy factor of at least 0.65;(viii) any advanced oil-fired boiler with a minimum annual fuel-utilizationrating of 85; (ix) any advanced oil-fired furnace with a minimum annualfuel-utilization rating of 85; and (x) programmable thermostats.
13. For taxable years beginning on or after January 1, 2007, the lesser of$5,000 or the amount actually paid by a living donor of an organ or otherliving tissue for unreimbursed out-of-pocket expenses directly related to thedonation that arose within 12 months of such donation, provided the donor hasnot taken a medical deduction in accordance with the provisions of § 213 ofthe Internal Revenue Code for such expenses. The deduction may be taken inthe taxable year in which the donation is made or the taxable year in whichthe 12-month period expires.
E. There shall be added to or subtracted from federal adjusted gross income,as the case may be, the individual's share, as beneficiary of an estate ortrust, of the Virginia fiduciary adjustment determined under § 58.1-361.
F. There shall be added or subtracted, as the case may be, the amountsprovided in § 58.1-315 as transitional modifications.
G. Effective for all taxable years beginning on or after January 1, 2007, tothe extent included in federal adjusted gross income, there shall be (i)subtracted from federal adjusted gross income by a shareholder of an electingsmall business corporation (S corporation) that is subject to the bankfranchise tax imposed under Chapter 12 (§ 58.1-1200 et seq.) for the calendaryear in which such taxable year begins, the shareholder's allocable share ofthe income or gain of such electing small business corporation (Scorporation), and (ii) added back to federal adjusted gross income such that,federal adjusted gross income shall be increased, by a shareholder of anelecting small business corporation (S corporation) that is subject to thebank franchise tax imposed under Chapter 12 (§ 58.1-1200 et seq.) for thecalendar year in which such taxable year begins, the shareholder's allocableshare of the losses or deductions of such electing small business corporation(S corporation).
Effective for all taxable years beginning on or after January 1, 2007, to theextent excluded from federal adjusted gross income, there shall be added tofederal adjusted gross income by a shareholder of an electing small businesscorporation (S corporation) that is subject to the bank franchise tax imposedunder Chapter 12 (§ 58.1-1200 et seq.) for the calendar year in which suchtaxable year begins, the value of any distribution paid or distributed to theshareholder by such electing small business corporation (S corporation).
H. Notwithstanding any other provision of law, the income from anydisposition of real property which is held by the taxpayer for sale tocustomers in the ordinary course of the taxpayer's trade or business, asdefined in § 453(l) (1) (B) of the Internal Revenue Code, of property made onor after January 1, 2009, may, at the election of the taxpayer, be recognizedunder the installment method described under § 453 of the Internal RevenueCode, provided that (i) the election relating to the dealer disposition ofthe property has been made on or before the due date prescribed by law(including extensions) for filing the taxpayer's return of the tax imposedunder this chapter for the taxable year in which the disposition occurs, and(ii) the dealer disposition is in accordance with restrictions or conditionsestablished by the Department, which shall be set forth in guidelinesdeveloped by the Department. Along with such restrictions or conditions, theguidelines shall also address the recapture of such income under certaincircumstances. The development of the guidelines shall be exempt from theAdministrative Process Act (§ 2.2-4000 et seq.).
(Code 1950, § 58-151.013; 1971, Ex. Sess., c. 171; 1972, c. 827; 1973, cc.198, 345, 458; 1974, c. 682; 1975, c. 46; 1976, cc. 528, 694, 781; 1977, cc.297, 612; 1978, cc. 67, 158; 1979, cc. 226, 596; 1981, cc. 402, 414; 1982, c.633; 1983, cc. 452, 472; 1984, cc. 153, 162, 636, 674, 675, 729; 1985, cc.221, 465; 1986, cc. 474, 515; 1987, cc. 9, 484, 531, 615; 1988, cc. 741, 743,755, 756; 1989, cc. 39, 639, 749; 1989, Sp. Sess., c. 3; 1990, cc. 507, 525,714; 1991, cc. 346, 361; 1992, cc. 665, 678, 686, 691; 1993, c. 803; 1994,cc. 488, 590; 1994, 1st Sp. Sess., c. 5; 1996, cc. 401, 624; 1997, cc. 106,785, 861, 909; 1998, cc. 373, 874; 1999, cc. 285, 298, 339, 365, 485, 498,518, 535, 588; 2000, cc. 382, 387, 394, 400, 419, 1021, 1039; 2001, c. 476;2003, cc. 3, 58, 181, 209, 807, 980; 2004, Sp. Sess. I, c. 3; 2005, cc. 27,67; 2006, cc. 214, 570, 599, 617, 939; 2007, cc. 359, 527, 543, 636, 942;2008, cc. 149, 211; 2009, c. 508; 2010, cc. 802, 830.)
