For personal income and corporate income tax purposes, Virginia has advanced the Internal Revenue Code (IRC) conformity date from December 31, 2010, to December 31, 2011. Therefore, references to the IRC are updated to conform Virginia law to federal law changes enacted through December 31, 2011, except that Virginia does not conform to:
– the special bonus depreciation allowance for certain property provided for under IRC §§168(k), 168(l), 168(m), 1400L, and 1400N;
– the five-year carryback period for certain net operating losses (NOLs) under IRC §172(b)(1)(H);
– the original issue discount on applicable high-yield discount obligations under IRC §163(e)(5)(F);
– the deferral of income from the cancellation of debt under IRC §108(i), unless the taxpayer elects to include such income in Virginia taxable income ratably over a three-year period beginning with tax year 2009 for transactions completed in tax year 2009, or over a three-year period beginning with tax year 2010 for transactions completed in tax year 2010 or before April 21, 2010;
– the federal domestic production activities deduction under IRC §199 (two-thirds of the amount deducted for federal income tax purposes may be deducted for Virginia income tax purposes for tax years beginning after 2009); and
– the provisions of IRC §32(b)(3) that relate to the federal earned income tax credit (EITC) for tax years after 2011.
The legislation also makes a technical correction to reinstate language related to the age deduction for individuals born on or before January 1, 1939, which was inadvertently deleted during the 2011 session.
Ch. 2 (H.B. 516), Laws 2012, effective February 7, 2012, unless noted otherwise