West Virginia Code of State Rules › Agency 110 - Tax › Title 110 - LEGISLATIVE RULE STATE TAX DEPARTMENT › Series 110-21 - Personal Income Tax › Section 110-21-17 - Resident Partners

Current through Register Vol. XLI, No. 28, July 12, 2024
17.1.
				Definition. - For purposes of Article 21, Chapter 11 of the Code of West
				Virginia, 1931, as amended, a resident partner with respect to a taxable year
				is an individual, trust, or estate which is domiciled in the State of West
				Virginia, and otherwise qualifies both as a resident individual under W. Va.
				Code '11-21-7
				and is a partner in a partnership.
17.2. Partner's Modifications. - In
				determining the West Virginia adjusted gross income of a resident partner, any
				modification referred to in W. Va. Code '11-21-12
				and in Section 12 of these regulations which relates to a partnership item of
				income, gain, loss or deduction must be made with respect to the distributive
				share of the resident partner in such item as determined for federal tax
				purposes and filed upon such partner's federal income tax return for the tax
				year. Such modification, if applicable, must be made regardless of whether in
				the partner's federal return the partnership item is reflected on his
				distributive share of partnership income or is one of the items separately
				reported.
17.2.1. The modifications covered
				by this regulation do not apply to any item which, for federal income tax
				purposes, is not treated as a partnership item.
17.2.2. In determining West Virginia adjusted
				gross income, a resident partner combines the modification relating to his
				share of any partnership item with the modification relating to any similar
				item from sources other than the partnership. For example, if a portion of the
				partnership income constitutes interest on bonds of another state, and the
				nonpartnership income of a resident member of the partnership also includes
				similar bond interest, the resident partner must make an increasing
				modification to his federal adjusted gross income for both his distributive
				share of the partnership income from such bonds and the interest from similar
				bonds which he received individually.
17.2.3. If a modification relates to an item
				that is not taken into account for federal income tax purposes, and
				consequently does not appear in federal adjusted gross income, such as interest
				on bonds of another state, each partner's modification relating to that item is
				governed by the rules of this Subsection. In such cases, the partner's
				modification is determined by his distributive share of the partnership's
				ordinary income or loss.
17.2.3.1. Example. -
				X and Y are partners in a motorcycle sales and repair business. The Articles of
				Partnership provide that X is entitled to seventy-five percent (75%) and Y is
				entitled to twenty-five percent (25%) of the partnership profits or losses. In
				1989, the partnership received four thousand dollars ($4,000) of interest
				income on United States obligations (Series E Bonds). This item is subject to a
				decreasing modification as such income is in federal adjusted gross income and
				is prohibited from being subjected to state income taxation by federal law. The
				amount of each partner's modification is computed by allowing seventy-five
				percent (75%) of the interest income to X and twenty-five percent (25%) to Y;
				therefore, the modification is to be distributed in the same proportion as is
				profit and loss. Each partner is entitled to his allocable share of the
				modification and claims the modification on his individual return. X will claim
				a three thousand (3,000) dollar decreasing modification on his West Virginia
				Personal Income Tax Return, and Y will claim a one thousand (1,000) dollar
				decreasing modification on his West Virginia Personal Income Tax
				Return.
17.2.4. The West
				Virginia Personal Income Tax Return provides the appropriate spaces to make the
				applicable additions and subtractions of modification items to or from federal
				adjusted gross income to arrive at an individual's West Virginia adjusted gross
				income.