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Introduced Version Senate Bill 629 History

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sb629 intr
Senate Bill No. 629

(By Senators Sharpe and Helmick)

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[Introduced March 21, 2005; referred to the Committee

on Finance.]

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A BILL to amend and reenact §11-21-30 of the Code of West Virginia, 1931, as amended, relating to personal income tax; and making a technical change in the computation of tax for nonresidents and part-year residents.

Be it enacted by the Legislature of West Virginia:
That §11-21-30 of the Code of West Virginia, 1931, as amended, be amended and reenacted to read as follows:
ARTICLE 21. PERSONAL INCOME TAX.
§11-21-30. Computation of tax on income of nonresidents and part-year residents.

(a) Computation of tax. -- For taxable years beginning after the thirty-first day of December, one thousand nine hundred ninety- one, the tax due under this article on taxable income derived from sources in this state by a nonresident individual, estate or trust or by a part-year resident individual shall be calculated as provided in this section.
(1) Taxpayer shall first calculate tax liability under this article as if taxpayer, whether an individual, estate or trust, were a resident of this state for the entire taxable year. When determining tentative tax liability under this subdivision, a nonresident shall be allowed the same deductions, exemptions and credits that would be allowable if taxpayer were a resident individual, estate or trust, as the case may be, for the entire taxable year, except that no credit shall be allowed under section twenty of this article.
(2) The amount of tentative tax determined under subdivision (1) of this subsection shall then be multiplied by a fraction the numerator of which is the taxpayer's West Virginia source income, determined in accordance with Part III of this article for the taxable year, and the denominator of which is such taxpayer's "federal West Virginia adjusted gross income" for the taxable year as defined in section nine of this article.
(b) Special rules for estates and trusts. -- For purposes of subdivision (1),subsection (a) of this section:
(1) The "federal adjusted gross income" of an estate or trust shall be determined as if such estate or trust were an individual; and
(2) In the case of a trust, "federal adjusted gross income" shall be its "federal adjusted gross income" for the taxable year increased by the amount of any includable gain, reduced by any deductions properly allocable thereto, upon which the tax is imposed for the taxable year pursuant to Section 644 of the Internal Revenue Code.
(c) Special rules for part-year residents. --
(1) For purposes of subdivision (1), subsection (a) of this section, the "federal adjusted gross income" of a part-year resident individual shall be taxpayer's federal adjusted gross income for the taxable year, as defined in section nine of this article, increased or decreased, as the case may be, by the items accrued under subdivision (1), subsection (b), section forty-five of this article, to the extent such items are not otherwise included in federal adjusted gross income for the taxable year, and decreased or increased, as the case may be, by the items accrued under subdivision (2) of said subsection, to the extent such items are included in federal adjusted gross income for the taxable year; and
(2) In computing the tax due as if taxpayer were a resident of this state for the entire tax year, West Virginia adjusted gross income shall include the accruals specified in subdivision (1) of this subsection, with the applicable modifications described in section forty-five of this article.
(d) Definitions.
(1) "Nonresident estate" means an estate of a decedent who was not a resident of this state at the time of his or her death.
(2) "Nonresident trust" means a trust which is not a resident trust, as defined in section seven of this article.
(3) "Part-year resident individual" means an individual who is not a resident or nonresident of this state for the entire taxable year.
(e) Effective date. -- (1) The provisions of this section shall apply to taxable years beginning after the thirty-first day of December, one thousand nine hundred ninety-one. As to taxable years beginning prior to that date, the provisions of this article as then in effect shall apply and be controlling, and for that purpose, prior law is fully and completely preserved.
(2) The amendments to this section enacted in the regular session of the Legislature in two thousand five are effective for tax years beginning on or after the first day of January, two thousand five.
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(NOTE: The purpose of this bill is to make a technical change in the computation of personal income tax on income of nonresidents and part-year residents. Currently, tentative tax is multiplied by a fraction - West Virginia source income divided by federal adjusted gross income (AGI). Using federal AGI in the denominator causes an unreasonable tax liability for some taxpayers who have modifications to their federal AGI. The bill changes the denominator of the fraction from federal AGI to West Virginia AGI, which is federal AGI after the modifications required by W. Va. Code §11-21-12 are made. This change will reduce the tax liability of nonresident and part-year residents who have income from sources not included in their federal AGI but included in their West Virginia AGI.

Strike-throughs indicate language that would be stricken from the present law, and underscoring indicates new language that would be added.)
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