                                 CODE OF VIRGINIA

VIRGINIA TAXABLE INCOME OF OWNERS OF A PASS-THROUGH ENTITY (§ 58.1-391)

A. In determining Virginia taxable income of an owner, any modification
described in &#xA7;&#xA7; 58.1-322.01, 58.1-322.02, 58.1-322.03, and 58.1-322.04
that relates to an item of pass-through entity income, gain, loss or deduction
shall be made in accordance with the owner&#8217;s distributive share, for
federal income tax purposes, of the item to which the modification relates.
Where an owner&#8217;s distributive share of any such item is not included in
any category of income, gain, loss or deduction required to be taken into
account separately for federal income tax purposes, the owner&#8217;s
distributive share of such item shall be determined in accordance with his
distributive share, for federal income tax purposes, of pass-through entity
taxable income or loss.

B. Each item of pass-through entity income, gain, loss or deduction shall have
the same character for an owner under this chapter as for federal income tax
purposes. Where an item is not characterized for federal income tax purposes, it
shall have the same character for an owner as if realized directly from the
source from which realized by the pass-through entity or incurred in the same
manner by the pass-through entity.

C. Where an owner&#8217;s distributive shares of an item of pass-through entity
income, gain, loss or deduction is determined for federal income tax purposes by
special provision in the pass-through entity agreement with respect to such
item, and where the principal purpose of such provision is the avoidance or
evasion of tax under this chapter, the owner&#8217;s distributive share of such
item, and any modification required with respect thereto, shall be determined as
if the pass-through entity agreement made no special provision with respect to
such item.

HISTORY: Code 1950, § 58-151.014; 1971, Ex. Sess., c. 171; 1984, c. 675; 2004,
Sp. Sess. I, c. 3; 2017, c. 444.