A. Whenever a Virginia resident has become liable to another state for incometax on any earned or business income or any gain on the sale of a capitalasset (within the meaning of § 1221 of the Internal Revenue Code), notincluding an asset used in a trade or business, to the extent that such gainis included in federal adjusted gross income, for the taxable year, derivedfrom sources outside the Commonwealth and subject to taxation under thischapter, the amount of such tax payable by him shall, upon proof of suchpayment, be credited on the taxpayer's return with the income tax so paid tothe other state.
However, no franchise tax, license tax, excise tax, unincorporated businesstax, occupation tax or any tax characterized as such by the taxingjurisdiction, although applied to earned or business income, shall qualifyfor a credit under this section, nor shall any tax which, if characterized asan income tax or a commuter tax, would be illegal and unauthorized under suchother state's controlling or enabling legislation qualify for a credit underthis section.
The credit allowable under this section shall not exceed: (i) such proportionof the income tax otherwise payable by him under this chapter as his incomeupon which the tax imposed by the other state was computed bears to hisVirginia taxable income upon which the tax imposed by this Commonwealth wascomputed or (ii) the income tax otherwise payable under this chapter in theevent that the income upon which the tax imposed by the other state iscomputed is less than the Virginia taxable income upon which the tax imposedby this Commonwealth is computed and all income derived from sources outsidethe Commonwealth and subject to taxation under this chapter is earned incomeor business income reported on federal form Schedule C from a single statecontiguous to Virginia. The credit provided for by this section shall not begranted to a resident individual when the laws of another state, under whichthe income in question is subject to tax assessment, provide a credit to suchresident individual substantially similar to that granted by subsection B ofthis section.
B. Whenever a nonresident individual of this Commonwealth has become liableto the state where he resides for income tax upon his Virginia taxable incomefor the taxable year, derived from Virginia sources and subject to taxationunder this chapter, the amount of such tax payable under this chapter shallbe credited with such proportion of the tax so payable by him to the statewhere he resides, upon proof of such payment, as his income subject totaxation under this chapter bears to his entire income upon which the tax sopayable to such other state was imposed. The credit, however, shall beallowed only if the laws of such state: (i) grant a substantially similarcredit to residents of Virginia subject to income tax under such laws or (ii)impose a tax upon the income of its residents derived from Virginia sourcesand exempt from taxation the income of residents of this Commonwealth. Nocredit shall be allowed against the amount of the tax on any income taxableunder this chapter which is exempt from taxation under the laws of such otherstate.
C. For purposes of this section, the amount of any state income tax paid byan electing small business corporation (S corporation) shall be deemed tohave been paid by its individual shareholders in proportion to theirownership of the stock of such corporation.
(Code 1950, § 58-151.015; 1971, Ex. Sess., c. 171; 1972, c. 827; 1984, c.675; 1985, c. 466; 1991, cc. 362, 456; 1992, c. 317; 1994, c. 195; 1998, c.291; 1999, c. 317.)
A. Whenever a Virginia resident has become liable to another state for incometax on any earned or business income or any gain on the sale of a capitalasset (within the meaning of § 1221 of the Internal Revenue Code), notincluding an asset used in a trade or business, to the extent that such gainis included in federal adjusted gross income, for the taxable year, derivedfrom sources outside the Commonwealth and subject to taxation under thischapter, the amount of such tax payable by him shall, upon proof of suchpayment, be credited on the taxpayer's return with the income tax so paid tothe other state.
However, no franchise tax, license tax, excise tax, unincorporated businesstax, occupation tax or any tax characterized as such by the taxingjurisdiction, although applied to earned or business income, shall qualifyfor a credit under this section, nor shall any tax which, if characterized asan income tax or a commuter tax, would be illegal and unauthorized under suchother state's controlling or enabling legislation qualify for a credit underthis section.
The credit allowable under this section shall not exceed: (i) such proportionof the income tax otherwise payable by him under this chapter as his incomeupon which the tax imposed by the other state was computed bears to hisVirginia taxable income upon which the tax imposed by this Commonwealth wascomputed or (ii) the income tax otherwise payable under this chapter in theevent that the income upon which the tax imposed by the other state iscomputed is less than the Virginia taxable income upon which the tax imposedby this Commonwealth is computed and all income derived from sources outsidethe Commonwealth and subject to taxation under this chapter is earned incomeor business income reported on federal form Schedule C from a single statecontiguous to Virginia. The credit provided for by this section shall not begranted to a resident individual when the laws of another state, under whichthe income in question is subject to tax assessment, provide a credit to suchresident individual substantially similar to that granted by subsection B ofthis section.
B. Whenever a nonresident individual of this Commonwealth has become liableto the state where he resides for income tax upon his Virginia taxable incomefor the taxable year, derived from Virginia sources and subject to taxationunder this chapter, the amount of such tax payable under this chapter shallbe credited with such proportion of the tax so payable by him to the statewhere he resides, upon proof of such payment, as his income subject totaxation under this chapter bears to his entire income upon which the tax sopayable to such other state was imposed. The credit, however, shall beallowed only if the laws of such state: (i) grant a substantially similarcredit to residents of Virginia subject to income tax under such laws or (ii)impose a tax upon the income of its residents derived from Virginia sourcesand exempt from taxation the income of residents of this Commonwealth. Nocredit shall be allowed against the amount of the tax on any income taxableunder this chapter which is exempt from taxation under the laws of such otherstate.
C. For purposes of this section, the amount of any state income tax paid byan electing small business corporation (S corporation) shall be deemed tohave been paid by its individual shareholders in proportion to theirownership of the stock of such corporation.
(Code 1950, § 58-151.015; 1971, Ex. Sess., c. 171; 1972, c. 827; 1984, c.675; 1985, c. 466; 1991, cc. 362, 456; 1992, c. 317; 1994, c. 195; 1998, c.291; 1999, c. 317.)
A. Whenever a Virginia resident has become liable to another state for incometax on any earned or business income or any gain on the sale of a capitalasset (within the meaning of § 1221 of the Internal Revenue Code), notincluding an asset used in a trade or business, to the extent that such gainis included in federal adjusted gross income, for the taxable year, derivedfrom sources outside the Commonwealth and subject to taxation under thischapter, the amount of such tax payable by him shall, upon proof of suchpayment, be credited on the taxpayer's return with the income tax so paid tothe other state.
However, no franchise tax, license tax, excise tax, unincorporated businesstax, occupation tax or any tax characterized as such by the taxingjurisdiction, although applied to earned or business income, shall qualifyfor a credit under this section, nor shall any tax which, if characterized asan income tax or a commuter tax, would be illegal and unauthorized under suchother state's controlling or enabling legislation qualify for a credit underthis section.
The credit allowable under this section shall not exceed: (i) such proportionof the income tax otherwise payable by him under this chapter as his incomeupon which the tax imposed by the other state was computed bears to hisVirginia taxable income upon which the tax imposed by this Commonwealth wascomputed or (ii) the income tax otherwise payable under this chapter in theevent that the income upon which the tax imposed by the other state iscomputed is less than the Virginia taxable income upon which the tax imposedby this Commonwealth is computed and all income derived from sources outsidethe Commonwealth and subject to taxation under this chapter is earned incomeor business income reported on federal form Schedule C from a single statecontiguous to Virginia. The credit provided for by this section shall not begranted to a resident individual when the laws of another state, under whichthe income in question is subject to tax assessment, provide a credit to suchresident individual substantially similar to that granted by subsection B ofthis section.
B. Whenever a nonresident individual of this Commonwealth has become liableto the state where he resides for income tax upon his Virginia taxable incomefor the taxable year, derived from Virginia sources and subject to taxationunder this chapter, the amount of such tax payable under this chapter shallbe credited with such proportion of the tax so payable by him to the statewhere he resides, upon proof of such payment, as his income subject totaxation under this chapter bears to his entire income upon which the tax sopayable to such other state was imposed. The credit, however, shall beallowed only if the laws of such state: (i) grant a substantially similarcredit to residents of Virginia subject to income tax under such laws or (ii)impose a tax upon the income of its residents derived from Virginia sourcesand exempt from taxation the income of residents of this Commonwealth. Nocredit shall be allowed against the amount of the tax on any income taxableunder this chapter which is exempt from taxation under the laws of such otherstate.
C. For purposes of this section, the amount of any state income tax paid byan electing small business corporation (S corporation) shall be deemed tohave been paid by its individual shareholders in proportion to theirownership of the stock of such corporation.
(Code 1950, § 58-151.015; 1971, Ex. Sess., c. 171; 1972, c. 827; 1984, c.675; 1985, c. 466; 1991, cc. 362, 456; 1992, c. 317; 1994, c. 195; 1998, c.291; 1999, c. 317.)
