Tax Type
Fiduciary Income Tax
Individual Income Tax
Description
Nonresident estates and trusts
Topic
Estates and Trusts
Date Issued
09-26-1991
September 26, 1991
Re: Request for Ruling: Individual Income Tax
Dear****************
This will reply to your letter dated April 29, 1991 requesting a ruling on behalf of your client, *****************(the "Estate").
FACTS
The Estate was created by*************(the "Decedent"). who was a resident of Virginia at the date of his death. All of the income of the Decedent's estate consists of either dividends or interest, a substantial portion of which is derived from U.S. Treasury obligations.
The sole beneficiaries of the estate are the Decedent's son and daughter, neither of whom are residents of Virginia. The Decedent's son is a resident of Washington state on active duty in the military residing in Virginia, pursuant to military orders. The son's spouse does not earn any income in Virginia. The Decedent's daughter also resides in Washington state.
The income of the estate for 1990 flowed through to the beneficiaries through Federal Form K-1. Your client requests a ruling on the Virginia income tax return filing requirements of the estate and its beneficiaries.
DISCUSSION
Fiduciary Requirements
Pursuant to Va. Code §58.1-381, every resident estate or trust required to file a federal income tax return for the taxable year must also file a Virginia fiduciary income tax return. Va. Code §58.1-302 provides the definition of a Virginia resident estate or trust, which includes "[an] estate of a decedent who at his death was domiciled in the Commonwealth." Accordingly, the estate in question is subject to the Virginia fiduciary income tax as a Virginia resident estate.
Individual Requirements
Va. Code §58.1-325 defines the Virginia taxable income of a nonresident individual. The nonresident's total income, computed as if he were a Virginia resident, is multiplied by the ratio of his net income, gain, loss and deductions from Virginia sources to his net income, gain, loss and deduction from all sources to arrive at his Virginia taxable income.
The income generated by the estate does not meet the definition of "income from Virginia sources", which is found in Va. Code §58.1-302; therefore, unless they receive other income from Virginia sources, the beneficiaries are not subject to the Virginia individual income tax filing requirements for nonresidents.
RULING
A Virginia resident fiduciary return was filed for taxable year 1990. This, in compliance with the Virginia income tax statutes, is the correct procedure.
As nonresidents of Virginia, the beneficiaries had no individual income tax return filing requirement for 1990, based upon the facts which are presented herein.
I hope that the foregoing has responded to your inquiries. If you need any additional information, please contact the department.
Sincerely.
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner