Tax Type
Individual Income Tax
Description
Capital gain income, Earned or business income
Topic
Credits
Date Issued
12-14-1982
December 14, 1982
Re: 58-1118 Application: Individual Income Tax
Dear ***********************
This will reply to your correspondence of November 4, 1982, a request for correction of individual income tax assessed and paid for the taxable year 1981.
FACTS
Although a domiciliary resident of ************* the taxpayer was an actual resident of Virginia for the entire year of 1981. The taxpayer earned wages of $ ******* from which Virginia income tax was withheld The taxpayer also received interest, dividends, and capital gains totaling $ ********* from sources in ************* and taxable by that state. ********* Capital Gains and Dividends Tax was paid on this income, which was also taxed by Virginia. The taxpayer remitted tax due under protest, contending that an out-of-state tax credit should be granted for tax paid to Connecticut.
DETERMINATION
A resident is defined in § 58-151.02 of the Code of Virginia as any individual domiciled in this state at any time during t he taxable year and any other individual "who, for an aggregate of more than one hundred eighty-three days of the taxable year, maintained his place of abode within this State, whether domiciled in this State or not. Further, the taxable income of a resident individual is defined in. Virginia Code § 58-151.013 as his/her federal adjusted gross income with certain additions, subtractions, deductions, and modifications. No subtractions, deductions or modifications are provided under this section for income earned outside this state by individuals deemed to actual and/or domiciliary residents under Virginia Code § 58-151.02.
However, a resident individual is provided a credit under Virginia Code § 58-l5l.0l5(a) when he/she "has become liable for income tax to another state, on earned or business income, or any part thereof... derived from sources without this State and subject to taxation" within this state. Interest, dividend, and capital gain income cannot be classified as earned or business income. Absent specific statutory authority to do otherwise, a credit for tax paid another state on unearned, nonbusiness income must be disallowed.
Therefore, based on the foregoing, I find no basis for correction of your income tax return for the taxable year 1981.
Sincerely,
W. H. Forst
State Tax Commissioner
Rulings of the Tax Commissioner