H. B. 2120
(By Delegate Kiss, By Request)
[Introduced January 23, 1995; referred to the
Committee on Finance.]
A BILL to amend and reenact section seventeen, article
twenty-one, chapter eleven of the code of West Virginia, one
thousand nine hundred thirty-one, as amended, relating to
taxation; personal income tax; and exempting passive family
partnerships from tax liability.
Be it enacted by the Legislature of West Virginia:
That section seventeen, article twenty-one, chapter eleven
of the code of West Virginia, one thousand nine hundred
thirty-one, as amended, be amended and reenacted to read as
follows:
ARTICLE 21. PERSONAL INCOME TAX.
§11-21-17. Resident partners.
(a) Partner's modifications. -- In determining West Virginia
adjusted gross income and West Virginia taxable income of a
resident partner, any modification described in section twelve
(b), (c) or (d) or section fifteen (c), which relates to an item
of partnership income, gain, loss or deduction shall be made in
accordance with the partner's distributive share, for federal
income tax purposes, of the items to which the modifications
relate. Where a partner's distributive share of any such item is
not required to be taken into account separately for federal
income tax purposes, the partner's distributive share of such
item shall be his distributive share for federal income tax
purposes of partnership taxable income or loss generally:
Provided, That no tax shall be imposed under any provision of
this chapter on any family partnership engaged solely in the
passive activity of holding or investing in tangible or
intangible personal property.
(b) Character of items. -- Each item of partnership income,
gain, loss, or deduction shall have the same character for a
partner under this article as for federal income tax purposes. Where an item is not characterized for federal income tax
purposes, it shall have the same character for a partner as if
realized directly from the source from which realized by the
partnership, or incurred in the same manner as incurred by the
partnership.
(c) West Virginia tax avoidance or evasion. -- Where a
partner's distributive share of an item of partnership income,
gain, loss or deduction is determined for federal income tax
purposes by special provision in the partnership agreement with
respect to such item, and where the principal purpose of such
provision is the avoidance or evasion of tax under this article,
the partner's distributive share of such item, and any
modification required with respect thereto shall be determined as
if the partnership agreement made no special provision with
respect to such item.
NOTE: The purpose of this bill is to exempt family
partnerships engaged solely in the passive business activity of
holding or investing in tangible or intangible personal property
from tax liability.
Strike-throughs indicate language that would be stricken
from the present law, and underscoring indicates new language that would be added.