W. Va. Code R. § 110-23-7

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

Section 110-23-7 - Persons And Organizations Exempt From Tax

The following organizations and persons shall be exempt from the business franchise tax to the extent provided in Section '11-23-7 of the West Virginia Code and in this Section of these regulations:

7.1. Natural persons doing business in the State of West Virginia that are not doing business in the form of a partnership (as defined in Section 3 of these regulations). Such persons include persons doing business as sole proprietors, sole practitioners and other self-employed persons.

7.2. Corporations and organizations which by reason of their purposes or activities are exempt from federal income tax: Provided, That this exemption shall not apply to that portion of their capital (as defined in Section 110-23-3 of these regulations) which is used, directly or indirectly in the generation of unrelated business income.

7.2.1. For purposes of this regulation, "unrelated business income" means the gross income derived by any tax exempt corporation or organization from any unrelated trate or business (as defined in I.R.C. 513) regularly carried on by it which constitutes gross income for purposes of I.R.C. 512.

7.2.2. For purposes of this regulation, the determination of the portion of capital which is used directly or indirectly in the generation of unrelated business income shall be made by multiplying capital (as defined in Section 110-23-3 of these regulations) of the corporation or organization by a fraction, the numerator of which is the total gross unrelated business income of the corporation or organization, and the denominator of which is the gross income of the corporation or organization from all of its activity.

7.2.3. Capital used directly or indirectly in the generation of unrelated business income shall be adjusted as provided in Section 3.4 of these regulations and apportioned as provided in Section 110-23-5 of these regulations when the corporation or organization is also taxable in another state.

7.3. Insurance companies which pay the State of West Virginia a tax upon premiums.

7.4. Production credit associations organized under the provisions of the federal "Farm Credit Act of 1933": Provided, That this exemption shall not apply to corporations or associations organized under the provisions of Section '19-4-1 of the West Virginia Code.

7.5. Any trust established pursuant to Section 186, Chapter 7, Title 29 of the Code of the Laws of the United States (enacted as Section 302(c) of the Labor Management Relations Act of 1947), as amended prior to the first day of January, 1985.

7.6. Any credit union organized under the provisions of Chapter 31 or any other Chapter of the West Virginia Code provided that this exemption shall not apply to corporations or cooperative associations organized under the provisions of Section '19-4-1 et seq. of the West Virginia Code.

7.7. Any corporation organized under the West Virginia Code which is a political subdivision of the State of West Virginia, or is an instrumentality of a political subdivision of the State of West Virginia, and was created pursuant to the West Virginia Code.

7.8. Any corporation or partnership engaged in the activity of agriculture and farming as defined in Section 3.10 of these regulations: Provided, That if such corporation or partnership is also engaged in other business activities, its tax base for purposes of the Business Franchise Tax shall be apportioned and only that portion attributable to the activity of agriculture and farming shall be exempt from the Business Franchise Tax.

7.9. Any corporation or partnership licensed under W. Va. Code '19-23-12 to conduct horse or dog racing meetings or a pari-mutuel system of wagering: Provided, That if such corporation or partnership is also engaged in other business activities, its tax base for purposes of the Business Franchise Tax shall be apportioned and only that portion attributable to the conducting of horse or dog racing meetings or a pari-mutuel system of wagering shall be exempt from the Business Franchise Tax.

W. Va. Code R. § 110-23-7