Tax Type
Corporation Income Tax
Description
Targeted Jobs Tax Credit; Adjustments on Virginia return
Topic
Computation of Income
Date Issued
03-14-1986
March 14, 1986
Re: Section 58.1-1821 Application: Corporation Income Tax
Dear *****************
This will reply to your letter of October 17, 1985, protesting the assessment of tax against ****************** ("Taxpayer") for the years ended January 30, 1982 and January 29, 1983.
FACTS
In taxable years 1982 and 1983, Taxpayer reduced the deduction for wages and salaries on its federal income tax returns by the amount of the targeted jobs tax credit. On its Virginia return for the same years, Taxpayer subtracted from federal adjusted gross income the amount of such credit. On audit, the credit was disallowed for both years, which Taxpayer protests.
Taxpayer also asserts that the audit adjustment to cost basis for machinery and equipment erroneously reflected accumulated depreciation at January 29, 1982, rather than the average of the beginning and end of the year.
Taxpayer has submitted a check in the amount of
DETERMINATION
Sections 58-151.032(c) and 58-151.013(c)(7) of the Code of Virginia (recodified, effective January 1, 1985, as §§58.1-402 C6) requires a subtraction, to the extent included in federal adjusted gross income, of the amount of wages or salaries eligible for the federal targeted jobs credit which was not deducted for federal purposes because of I.R.C. §280 C(a). Taxpayer's subtraction was proper and should not have been disallowed.
With respect to calculation of property for taxable year 1982, Taxpayer is correct in noting that the average value of machinery and equipment, which should be valued at its original cost, must be determined by averaging its value at the beginning and end of the taxable year. Virginia Code §§58.1-410 and 58.1-411 (before recodification, §§58-151.043 and 58-151.044). On audit, in adjusting Taxpayer's machinery and equipment for taxable year 1982, accumulated depreciation was added to book value to arrive at original cost. Taxpayer is correct that the accumulated depreciation should have been valued at the average of the beginning and end of taxable year 1982, and not as of the end of taxable year 1982.
Taxpayer's check in the amount of ************* has been deposited. Adjustments to the audit will be made in accordance with this determination and a revised assessment will be issued if necessary.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner