W. Va. Code R. § 110-21-39

Current through Register Vol. XLI, No. 50, December 13, 2024

Section 110-21-39 - Share Of Nonresident Estate, Trust Or Beneficiary In Income From West Virginia Sources

39.1. General. - The share of a nonresident estate or trust and the share of a nonresident beneficiary of any estate or trust, in estate or trust income, gain, loss and deduction from West Virginia sources shall be determined in accordance with W. Va. Code '11-21-39 and this regulation.

39.1.1. Items Of Distributable Net Income From West Virginia Sources. - There shall be determined the items of income, gain, loss and deduction derived from or connected with West Virginia sources which enter into the definition of federal distributable net income of the estate or trust for the taxable year (including such items from another estate or trust of which the first (1st) estate or trust is a beneficiary). Items of federal distributable net income from West Virginia sources represent items of income, gain, loss and deduction which are either attributable to the ownership by the estate or trust of any interest in real or tangible personal property in West Virginia or attributable to a business, trade, profession or occupation carried on in this State by the estate or trust. Such determination of items from West Virginia sources shall be made in accordance with W. Va. Code '11-21-32 and the rules prescribed in Section 32 of these regulations.

39.1.2. Modifications. - The applicable modifications, described in Subsections 12.2 and 12.3 of these regulations, pertaining to items from West Virginia sources shall be first combined into a single net number. This number, which may be a positive or negative number, constitutes the net modification. After this number is computed, it is then allocated in the manner prescribed in Subsection 39.1.3 of this regulation for allocating distributable net income from West Virginia sources. When, however, a West Virginia item which would be treated as a modification is already included in federal distributable net income, no modification which in effect would duplicate the item shall be made.

39.1.3. Allocation Among Estate Or Trust And Beneficiaries. - The distributable net income of an estate or trust from West Virginia sources shall be allocated between the nonresident estate or trust and its nonresident beneficiaries in proportion to their respective shares of federal distributable net income, including, solely for the purpose of this allocation, any share of resident beneficiaries. The share of the estate or trust in federal distributable net income is the amount, if any, by which the federal distributable net income exceeds the aggregate of the shares therein of all its beneficiaries.

39.1.3.1. Character Of Items. - Each of the estate or trust items of income, gain, loss or deduction shall have the same character for West Virginia income tax purposes as for federal income tax purposes. Where such an item is not characterized for federal income tax purposes, the item shall have the same character as if realized directly from the source from which realized by the estate or trust, or incurred in the same manner as incurred by the estate or trust. The same is true if an estate or trust item is not required to be taken into account for federal income tax purposes.

39.2. Alternate Methods Of Determining Shares. - If the estate or trust has no federal distributable net income for the taxable year, the share of each beneficiary (including, solely for the purpose of this allocation, resident beneficiaries) in the net amounts determined under Subsection 39.1 (distributable net income and net modification) shall be in proportion to his share of the estate or trust income for such year, under local law or the governing instrument, which is required to be distributed currently and any other amounts of such income distributed in such year. Any balance of such net amounts shall be allocated to the estate or trust.

39.2.1. The Tax Commissioner may allow the use of other methods of determining the respective shares of the beneficiaries and of the estate or trust in its income derived from West Virginia sources, and the modifications related thereto, if such other methods are fair and equitable to all parties concerned, and if a full disclosure of the adopted method is made to the Tax Commissioner.

W. Va. Code R. § 110-21-39