58.1-391 - Virginia taxable income of owners of a pass-through entity.
§ 58.1-391. Virginia taxable income of owners of a pass-through entity.
A. In determining Virginia taxable income of an owner, any modificationdescribed in § 58.1-322 that relates to an item of pass-through entityincome, gain, loss or deduction shall be made in accordance with the owner'sdistributive share, for federal income tax purposes, of the item to which themodification relates. Where an owner's distributive share of any such item isnot included in any category of income, gain, loss or deduction required tobe taken into account separately for federal income tax purposes, theowner's distributive share of such item shall be determined in accordancewith his distributive share, for federal income tax purposes, ofpass-through entity taxable income or loss.
B. Each item of pass-through entity income, gain, loss or deduction shallhave the same character for an owner under this chapter as for federal incometax purposes. Where an item is not characterized for federal income taxpurposes, it shall have the same character for an owner as if realizeddirectly from the source from which realized by the pass-through entity orincurred in the same manner by the pass-through entity.
C. Where an owner's distributive shares of an item of pass-through entityincome, gain, loss or deduction is determined for federal income tax purposesby special provision in the pass-through entity agreement with respect tosuch item, and where the principal purpose of such provision is the avoidanceor evasion of tax under this chapter, the owner's distributive share of suchitem, and any modification required with respect thereto, shall be determinedas if the pass-through entity agreement made no special provision withrespect to such item.
(Code 1950, § 58-151.014; 1971, Ex. Sess., c. 171; 1984, c. 675; 2004, Sp.Sess. I, c. 3.)