H. B. 4628
(By Delegate Michael)
[Introduced February 27, 1998; referred to the
Committee on Finance.]
A BILL to amend and reenact section thirty-two, article
twenty-one, chapter eleven of the code of West Virginia, one
thousand nine hundred thirty-one, as amended, relating to
personal income tax; defining West Virginia source income of
nonresidential individuals; eliminating exclusion of federal
alimony deduction from West Virginia source income for
nonresidents; and specifying effective date.
Be it enacted by the Legislature of West Virginia:
That section thirty-two, article twenty-one, chapter eleven
of the code of West Virginia, one thousand nine hundred
thirty-one, as amended, be amended and reenacted to read as
ARTICLE 21. PERSONAL INCOME TAX.
§11-21-32. West Virginia source income of nonresident individual.
(a) General. -- The West Virginia source income of a
shall be is the sum of the net amount of
income, gain, loss and deduction entering into his or her federal adjusted gross income, as defined in the laws of the United
States and section nine of this article, for the taxable year,
derived from or connected with West Virginia sources, including:
(1) His or her distributive share of partnership income,
gain, loss and deduction, determined under section thirty-seven
of this article; and
(2) His or her pro rata share of S corporation income, loss
and deduction, determined under section thirty-seven of this
article, increased by reductions for taxes described in
paragraphs (2) and (3), subsection (f), section 1366 of the
Internal Revenue Code; and
(3) His or her share of estate or trust income, gain, loss
and deduction, determined under section thirty-nine of this
(b) Income and deductions from West Virginia sources. --
(1) Items of income, gain, loss and deduction derived from
or connected with West Virginia sources
shall be are those items
(A) The ownership of any interest in real or tangible
personal property in this state; or
(B) A business, trade, profession or occupation carried on
in this state; or
(C) In the case of a shareholder of an S corporation, the
ownership of shares issued by such corporation, to the extent
determined under section thirty-seven of this article.
(2) Income from intangible personal property, including
annuities, dividends, interest, and gains from the disposition of intangible personal property,
shall constitute is income derived
from West Virginia sources only to the extent that such the
income is from property employed in a business, trade, profession
or occupation carried on in this state.
(3) Deductions with respect to capital losses and net
operating losses shall be based solely on income, gain, loss and
deduction derived from or connected with West Virginia sources,
regulations rules of the tax commissioner, but otherwise
shall be determined in the same manner as the corresponding
(4) The deduction allowed by section 215 of the Internal
Revenue Code, relating to alimony, shall not constitute a
deduction derived from West Virginia sources.
(c) Income and deductions partly from West Virginia sources.
-- If a business, trade, profession or occupation is carried on
partly within and partly without this state, as determined under
regulations rules of the tax commissioner, the items of income,
gain, loss and deduction derived from or connected with West
Virginia sources shall be determined by apportionment and
allocation under such regulations the rules.
(d) Purchase and sale for own account. -- A nonresident,
other than a dealer holding property for sale to customers in the
ordinary course of his or her trade or business,
shall not be
deemed to carry is not carrying on a business, trade, profession
or occupation in this state solely by reason of the purchase and
sale of property for his or her own account.
(e) Husband and wife. -- If a husband and wife determine their federal income tax on a joint return but determine their
West Virginia income taxes separately, they shall determine their
West Virginia source incomes separately as if their federal
adjusted gross incomes had been determined separately.
(f) Effective date. -- This section as amended and reenacted
in the year one thousand nine hundred
shall apply applies to taxable years beginning after the
thirty-first day of December, one thousand nine hundred
ninety-one ninety-seven. As to prior taxable years, the
provisions of this section and of section thirty-one of this
article, as then in effect, are fully and completely preserved.
NOTE: The purpose of this bill is to eliminate an alimony
provision which is identical to the New York statute declared
unconstitutional by the U.S. Supreme Court on December 21, 1997
in Lunding v. New York Tax Appeals Tribunal, et al, No. 96- 1462, on the ground that denying nonresidents an alimony
deduction while permitting a deduction for residents violates the
Privileges and Immunity Clause of the United States Constitution.
Strike-throughs indicate language that would be stricken
from the present law, and underscoring indicates new language
that would be added.