W. Va. Code R. § 110-24-5

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

Section 110-24-5 - Corporations Exempt From Tax

5.1. Corporations exempt from the corporation net income tax in accordance with the provisions of W. Va. Code §§ 11-24-1, et seq., including, but not limited to, W. Va. Code § 11-24-5, or exempt from the corporation net income tax under any other provision of the W. Va. Code or under any provision of superseding federal code or federal law are exempt from the corporation net income tax. However regulated investment companies and real estate investment trusts subject to the provisions of W. Va. Code § 11-24-4b are subject to tax as specified in that section.

5.1.a. Corporations which by reason of their purposes or activities are exempt from federal income tax are exempt from the corporation net income tax. However regulated investment companies and real estate investment trusts subject to the provisions of W. Va. Code § 11-24-4b are subject to tax as specified in that section.

5.1.a.1. This exemption shall not apply to the unrelated business income, as defined in the Internal Revenue Code, of any corporation if the income is subject to federal income tax.

5.1.a.1.1. Example. -- A corporation exempt from federal income taxation under IRC 501(c)(3) receives $1,000,000 in cash donations and is bequeathed an unrelated business during the year. The tax-exempt corporation operates the business for the remainder of its tax year. The income from operating this business is considered unrelated business taxable income by the Internal Revenue Service. The income would also be taxed under the West Virginia Corporation Net Income Tax. However, the donations would be exempt.

5.1.a.2. Insurance companies which pay this State a tax upon premiums, and insurance companies that pay the surcharge imposed by W. Va. Code §§ 23-2C-3(f)(1) or (3) are exempt from the corporation net income tax.

5.1.a.2.1. This exemption is available if an insurance company actually paid an insurance premium tax imposed by West Virginia law or the surcharge imposed by W. Va. Code §§ 23-2C-3(f)(1) or (3) for any year in which an exemption is claimed or would have paid the premium tax but for the use by the taxpayer of any tax credits allowed or allowable against the premium tax.

5.1.a.3. Corporations otherwise exempted from the corporation net income tax by superseding state or federal law are exempt from the corporation net income tax, (e.g. racing associations, W. Va. Code § 19-23-12; hospital service corporations, W. Va. Code § 33-24-4; farmer's mutual fire insurance companies, W. Va. Code § 33-22-16; and licensed fraternal benefit societies, W. Va. Code § 33-23-29).

W. Va. Code R. § 110-24-5