West Virginia Code of State Rules › Agency 110 - Tax › Title 110 - LEGISLATIVE RULE STATE TAX DEPARTMENT › Series 110-21 - Personal Income Tax › Section 110-21-37 - Nonresident Partners

Current through Register Vol. XLI, No. 28, July 12, 2024
37.1.
				Nonresident Partner Defined. - A nonresident partner is an individual who is a
				partner in a West Virginia partnership or a partner in any partnership doing
				business in West Virginia where that individual does not qualify as a resident
				individual under the provisions of W. Va. Code '11-21-7.
37.2. Partnership Doing Business In West
				Virginia Defined. - A partnership is doing business in West Virginia if it has
				any revenue from West Virginia sources, or if it engages in any purposeful
				revenue generating activity with the object of direct or indirect gain or
				economic benefit in West Virginia.
37.3. Partnership Income And Deductions
				Derived From West Virginia Sources. - The West Virginia adjusted gross income
				of a nonresident partner of any partnership shall include his or her
				distributive share of all partnership items of income, gain, loss and deduction
				which entered into his or her federal adjusted gross income as filed for the
				taxable year in question to the extent that the amount or amounts of such items
				are derived from or connected with West Virginia sources; that is, from real or
				tangible personal property having an actual situs in West Virginia or from a
				business, trade, profession, or occupation carried on in this State, as
				determined under Section 32 of these regulations.
37.4. Special Rules As To West Virginia
				Sources. - In determining the sources of a nonresident partner's share of
				partnership income, as either within or without West Virginia the following
				shall apply:
37.4.1. No recognition or tax
				effect shall be given to a provision in the partnership agreement which
				characterizes payments to the partner as being employee compensation or other
				consideration paid or distributable for the use of capital of a
				partner.
37.4.2. Similarly, no tax
				effect shall be given to a provision in the partnership agreement which
				allocates to the nonresident partner, as income or gain from sources outside
				West Virginia, a greater proportion of his distributive share of partnership
				income or gain than the ratio of partnership income or gain from sources
				outside West Virginia to partnership income or gain from all sources.
37.4.2.1. Example. - X is a nonresident
				partner of a partnership located in West Virginia, sixty percent (60%) of the
				business of which is from West Virginia sources. X's total distributive share
				of partnership income from all sources is five thousand dollars ($5,000). X is
				required to report on his West Virginia nonresident income tax return three
				thousand dollars ($3,000) (60% of $5,000), as his partnership distributive
				share, even though, under special provisions of the partnership agreement, his
				share of the total West Virginia income of the partnership may have been fixed
				at less than three thousand dollars ($3,000).
37.4.3. Similarly, no tax effect shall be
				given to a provision in the partnership agreement which allocates to the
				nonresident partner a greater proportion of a particular partnership item of
				loss or deduction connected with West Virginia sources than his proportionate
				share for federal income tax purposes of partnership loss or deduction
				generally. If, for example, the proportionate share of a nonresident partner of
				partnership losses is generally fifty percent (50%) for federal income tax
				purposes, he is not permitted to deduct on his West Virginia income tax return
				more than fifty percent (50%) of any particular partnership loss or deduction
				connected with West Virginia sources, irrespective of any special provision of
				the partnership agreement allocating a larger percentage of the specific loss
				or deduction to him.