Tax Type
Individual Income Tax
Description
Federal Adjusted Gross Income;Interest on Bonds
Topic
Taxable Income
Date Issued
05-11-1990
May 11, 1990
Re: Request for Ruling: Individual Income Tax
Dear********************
This is in response to your letter of October 16, 1989 requesting a ruling on the taxability of interest on District of Columbia Redevelopment Land Agency 5.25% 9/01/02 ser. '73 bonds purchased by your client, a Virginia resident, on September 26, 1989.
FACTS
The D.C. Redevelopment Act of 1945 authorized creation of the Redevelopment Land Agency the objective of which, as prescribed by law, is to eliminate slum and blighted areas through clearance or rehabilitation and conservation.
It is your firm's opinion that the interest on the above referenced bonds issued by the District of Columbia in 1973 were exempt from taxation in all 50 states both federally and locally prior to 1979. You request a ruling as to whether the interest on the bonds purchased in 1989 will be exempt from Virginia income taxation as well as from federal income taxation.
RULING
Va. Code §58.1-322(B)(1) generally requires that to the extent excluded from federal adjusted gross income (FAGI), interest on obligations of any state other than Virginia, or of a political subdivision of any such other state unless created by compact or agreement to which Virginia is a party must be added to FAGI in order to compute Virginia taxable income.
Therefore, unless specifically exempted from state taxation by federal law or another Virginia law. income from the bonds in question must be added to FAGI for state income tax purposes. Furthermore, the fact that income from the bonds may originally have been exempt from state taxation under federal law is of no consequence as the federal statutory exemption has apparently been repealed and as there is no provision in Virginia to allow a "grandfathered" exemption in cases such as this.
I hope the foregoing information has answered your questions. However, please contact the department if you need additional information.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner