                                 CODE OF VIRGINIA

EXCLUSIONS AND DEDUCTIONS FROM &#8220;GROSS RECEIPTS.&#8221; (§ 58.1-3732)

A. Gross receipts for license tax purposes shall not include any amount not
derived from the exercise of the licensed privilege to engage in a business or
profession in the ordinary course of business.
			The following items are excluded:

   1. Amounts received and paid to the United States, the Commonwealth or any
   county, city or town for the Virginia retail sales or use tax, for any local
   sales tax or any local excise tax on cigarettes, or amounts received for any
   federal or state excise taxes on motor fuels.

   2. Any amount representing the liquidation of a debt or conversion of another
   asset to the extent that the amount is attributable to a transaction
   previously taxed (e.g., the factoring of accounts receivable created by sales
   which have been included in taxable receipts even though the creation of such
   debt and factoring are a regular part of its business).

   3. Any amount representing returns and allowances granted by the business to
   its customers.

   4. Receipts which are the proceeds of a loan transaction in which the licensee
   is the obligor.

   5. Receipts representing the return of principal of a loan transaction in
   which the licensee is the creditor, or the return of principal or basis upon
   the sale of a capital asset.

   6. Rebates and discounts taken or received on account of purchases by the
   licensee. A rebate or other incentive offered to induce the recipient to
   purchase certain goods or services from a person other than the offeror, and
   which the recipient assigns to the licensee in consideration of the sale goods
   and services shall not be considered a rebate or discount to the licensee, but
   shall be included in the licensee&#8217;s gross receipts together with any
   handling or other fees related to the incentive.

   7. Withdrawals from inventory for purposes other than sale or distribution and
   for which no consideration is received and the occasional sale or exchange of
   assets other than inventory whether or not a gain or loss is recognized for
   federal income tax purposes.

   8. Investment income not directly related to the privilege exercised by a
   business subject to licensure not classified as rendering financial services.
   This exclusion shall apply to interest on bank accounts of the business, and
   to interest, dividends and other income derived from the investment of its own
   funds in securities and other types of investments unrelated to the licensed
   privilege. This exclusion shall not apply to interest, late fees and similar
   income attributable to an installment sale or other transaction that occurred
   in the regular course of business.

B. The following shall be deducted from gross receipts or gross purchases that
would otherwise be taxable:

   1. Any amount paid for computer hardware and software that are sold to a
   United States federal or state government entity provided that such property
   was purchased within two years of the sale to said entity by the original
   purchaser who shall have been contractually obligated at the time of purchase
   to resell such property to a state or federal government entity. This
   deduction shall not occur until the time of resale and shall apply to only the
   original cost of the property and not to its resale price, and the deduction
   shall not apply to any of the tangible personal property which was the subject
   of the original resale contract if it is not resold to a state or federal
   government entity in accordance with the original contract obligation.

   2. Any receipts attributable to business conducted in another state or foreign
   country in which the taxpayer (or its shareholders, partners or members in
   lieu of the taxpayer) is liable for an income or other tax based upon income.

HISTORY: Code 1950, § 58-266.1; 1950, p. 155; 1956, c. 242; 1964, c. 424; 1968,
c. 619; 1970, cc. 231, 547; 1974, cc. 196, 438; 1975, cc. 23, 621; 1976, cc.
521, 719; 1977, c. 320; 1978, cc. 772, 799, 817; 1979, cc. 565, 568, 570; 1980,
cc. 318, 736; 1981, cc. 419, 636; 1982, cc. 348, 548, 552, 554, 558, 633; 1983,
c. 554; 1984, cc. 247, 675, 695; 1992, c. 632; 1996, cc. 715, 720; 2002, c. 346;
2007, cc. 85, 834.