Virginia Long-Term Capital Gain Subtraction

Forum|Forum|6 years ago
May 31, 2019
6 replies
0 views

I have an amount of federally taxable long term gains that have been transferred to state taxes due to the sale of a rental property. Does any of this qualify for Virginia Long-term Capital Gain Subtraction?

TurboTax Premier Online

N

nonicknamepls

Employee

I have this exact same issue. Have you been able to find the answer elsewhere? I feel like I can't go forward without it.

H

hclement1056

Employee

I, unfortunately, have been unable to get a satisfying answer anywhere else. I completely understand your frustration.

J

joanoringer

Employee

Software does not warn that the subtraction is not available

S

sagemgt

Employee

The answer given by Intuit is very clear: qualified small business (revenues less than $3 MM annually), located (headquarters) in Virginia and a specific time that is from (note) 2010 to 2015 for the actual investment. The investment is likely in a private company, not one publicly listed one on the major exchanges (a penny stock, perhaps) and very likely not any mutual fund. As a tax preparer (Enrolled Agent), I have not seen an investment example in 5 years of preparing VA state taxes, i.e., getting this capital gain subtraction is a rare event for most taxpayers.

L

luvdpiano

Employee

I decided to go straight to the Virginia 760 form and try to figure out where that info might be entered, and from there what the instructions were.
The instructions for both form are found here:
http://www.tax.virginia.gov/sites/tax.virginia.gov/files/instructions/income-tax/2014/7602014instructions.pdf
The reference to Long-Term Capital Gain is on p 21, Item #52. There's a reference to the actual Tax Code, but the "translation" is this -- in addition to being a "Qualified Business":
"The business must
have its principal facility in Virginia and less than
$3 million in annual revenues for the fiscal year
preceding the investment. The investment must
be made between the dates of April 1, 2010, and
June 30, 2015."
I am NOT a tax professional, but sharing this info and reference hoping it helps someone else.

A

astrojny

Employee

Much more helpful than what is given in Turbo tax.

S

sharmami

Employee

The paragraph below comes from the state and answered my question. My rental property business does not qualify and looks like it does not pertain to rental property sales due to lack of 'investment' into a 'qualified company'. We sold our properties and closed each LLC. I am only a business owner, not a tax professional.

"Income taxed as a long-term capital gain, or any income taxed as investment services partnership income for federal tax purposes is allowed as a subtraction provided the income is attributable to an investment in a "qualified business" as defined in Va. Code § 58.1-339.4 or in any other technology business approved by the Secretary of Technology. Qualified businesses include those related to advanced computing, advanced materials, advanced manufacturing, agricultural technologies, biotechnology, electronic device technology, energy, environmental technology, medical device technology, nanotechnology, or any similar technology related field. The business must have its principal facility in Virginia and less than $3 million in annual revenues for the fiscal year preceding the investment. The investment must be made between the dates of April 1, 2010, and June 30, 2015. Taxpayers claiming the Qualified Equity and Subordinated Debt Credit cannot claim this subtraction relating to investments in the same business. In addition, no investment is "qualified" for this deduction if the business performs research in Virginia on human embryonic stem cells. Report on Schedule ADJ, Line 6, Code 52. Code of Virginia Section 58.1-322(C)(35)."

E

egold

Does any one know about this?

I have this exact same issue. Have you been able to find the answer elsewhere? I feel like I can't go forward without it.

AmyC

Employee

VA long-term capital gains subtraction is very limited and difficult to obtain. A personal investment will not qualify since this must be business related between 2010 -2020. The full rules can be found here. You can scroll down or use the search bar.

@egold if this does not answer your question, please respond with more facts regarding your situation.

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