Tax Type
Individual Income Tax
Description
Out-of-state tax credit; District of Columbia S corporation franchise tax
Topic
Credits
Date Issued
01-18-1989
January 18, 1989
Re: Request for Ruling: Individual Income Tax
Dear******************
This will reply to your letter of December 19, 1988, in which you request that your clients be given a credit against their Virginia income tax for corporation franchise tax paid to the District of Columbia by an S corporation of which they are shareholders.
I have enclosed a recent ruling that addresses the issue raised in your letter. Based upon the policy set forth in that ruling, the credit provided in Virginia Code §58.1-332 for income tax paid to another state would not apply in this instance.
Since the issuance of the enclosed ruling, the department's policy has been validated by the Circuit Court of Fairfax County in Llewellyn King v. Commonwealth. In King, the court concluded that the District of Columbia unincorporated franchise tax is not an "income" tax for purposes of Virginia Code §58.1-332.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner