Instructions for Preparing 2017 Form 500 ... - Virginia Tax

1 Instructions for Preparing 2017 form 500. Virginia corporation income Tax return Commonwealth of Virginia Department of Taxation Richmond, Virginia 2601005 Rev. 08/17. Contents What's 1. Advancement of Virginia 's Fixed Date Conformity with the Internal Revenue 1. Modified Method of Apportionment for Taxpayers with Enterprise Data Center 1. New Administrative 1. General 2. Corporations Required to 2. Exempt 2. Period to be Covered by 3. Accounting 3. When to 3. How to 3. Electronic 3. Extension of Time to 4. Penalties and Interest .. 4. return Forms and 5. Consolidated or Combined 5. In-State 6. Multistate Corporations .. 6. Report of Change in Federal Taxable 6. Net Operating Loss Deductions .. 7. Estimated income Tax .. 7. Virginia Taxable income .. 7. form 500 Line 7. Instructions for Schedule 10. Fixed Date Conformity Updates for 10. Section A - Additions to Federal Taxable 11. Section B - Subtractions from Federal Taxable Section C - Amended 14.

2 Section D - Schedule of VK-1 14. Tax Credits .. 14. What's New Advancement of Virginia 's Fixed Date Conformity with the Internal Revenue Code Virginia 's date of conformity with the Internal Revenue Code (IRC) was advanced from December 31, 2015 to December 31, 2016, with limited exceptions. Virginia will continue to deconform from the bonus depreciation allowed for certain assets under federal law; the five-year carryback of certain federal net operating loss (NOL) deductions generated in Taxable Year 2008 or 2009; the federal income tax treatment of applicable high yield discount obligations; and the federal income tax treatment of cancellation of debt income realized in connection with certain business debts. At the time these Instructions went to print, the only required fixed date conformity adjustments were those mentioned above. However, if legislation is enacted that results in changes to the IRC for the 2017 taxable year, taxpayers may need to make adjustments to their Virginia returns that are not described in these Instructions .

3 Information about any such adjustments will be posted on the Department's website at Modified Method of Apportionment for Taxpayers with Enterprise Data Center Operations A taxpayer with an enterprise data center operation that enters into a memorandum of understanding with the Virginia Economic Development Partnership Authority ( VEDP ) to make a new capital investment of at least $150 million in an enterprise data center in Virginia is required to apportion Virginia taxable income using a single sales factor method of apportionment. This modified method of apportionment is phased in as follows: From July 1, 2016 until July 1, 2017 , qualifying corporations are required to use a quadruple-weighted sales factor; and From July 1, 2017 and thereafter, qualifying corporations are required to use the single sales factor method of apportionment. New Administrative Fees Legislation enacted by the 2017 General Assembly imposes administrative fees for each request for: An offer in compromise with respect to doubtful collectibility under Va.

4 Code ;. A letter ruling under Va. Code ;. A local business tax advisory opinion under Va. Code or ; and A corporate income tax filing status change request under Va. Code The fees are effective July 1, 2017 and must be paid at the time the request is made. Taxpayers may request waivers from these administrative fees. Waivers will be granted only if the Tax Commissioner finds that the fee creates an unreasonable burden on the person making the request. For further information, see the Instructions on the relevant fee form . Additional information is available on the Department's website at Assistance The Department's website contains valuable information to help you. Online Services - Link to online registration, filing, payment, and other electronic services. Laws, Rules, & Decisions Access the Code of Virginia , Tax Regulations, Legislative Summaries, Rulings by the Tax Commissioner, Tax Bulletins, and Attorney General Opinions. Email Updates Sign up and stay informed.

5 By subscribing, you will periodically receive automatic email notifications regarding legislative changes, filing reminders, and other relevant information. Customer Service Inquiries Forms Requests Department of Taxation Department of Taxation Box 1115 Box 1317. Richmond, Virginia 23218-1115 Richmond, Virginia 23218-1317. Phone: (804) 367-8037 Phone: (804) 367-8037. Fax: (804) 254-6111 or visit Page 1. Instructions for Preparing 2017 form 500, Virginia corporation income Tax return (References are to the Code of Virginia , unless otherwise noted). General Information (iii) more than 25% of the income of the REIT consists of rents from real property. Corporations Required to File Exceptions are provided to ensure that an affiliated group Every corporation organized under the laws of Virginia , every of REITs will not be considered captive REITs unless the foreign corporation registered with the State corporation ultimate ownership of the group is by a single corporate Commission for the privilege of doing business in Virginia , entity.

6 Also, entities organized under the laws of Australia and and every corporation having income from Virginia sources, other foreign countries that are similar to REITs will not be aside from corporations that qualify for an exception, must considered a captive REIT, if they are widely held. In addition, (with the exceptions stated in these Instructions ) file a for taxable years beginning on or after January 1, 2016, any return through the Federal/State e-File program. The return voting power or value of the beneficial interests or shares should be submitted and accepted on or before the 15th in a REIT that are held in a separate asset account of a life day of the 4th month (15th day of the 6th month for nonprofit insurance corporation are excluded from consideration for corporations) following the close of its taxable year. purposes of determining whether the REIT is a captive REIT. Receivers, trustees in dissolution, trustees in bankruptcy, and for purposes of the addition.

7 Assignees, operating the property or business of corporations Electing small business corporations, not taxable as must make returns of income for such corporations. If a corporations under Va. Code , are required to file receiver has full custody of and control over the business form 502, Pass-Through Entity return of income and return or property of a corporation , he is deemed to be operating of Nonresident Withholding Tax. such business or property, whether he is carrying on the Exempt Corporations business for which the corporation was organized or is only in marshaling, selling, or disposing of its assets for purposes Corporations not organized for pecuniary profit, which of liquidation (Va. Code 441). are also exempt from income tax under IRC 501(c), are taxed only on their unrelated business taxable income and A Foreign Sales corporation (FSC) and any income must report that unrelated business income on form 500;. attributable to an FSC are exempt under Virginia law.

8 Otherwise, no returns are required. however, it may be necessary for an FSC to file an information return if it meets the provisions of Va. Code and Public service corporations that pay a state franchise tax or the regulations thereunder. license tax upon gross receipts, insurance companies that pay a state license tax on gross premiums and reciprocal Any electric supplier, pipeline distribution company, gas utility, or inter insurance exchanges that pay a premium tax to or gas supplier that is subject to federal income tax is also the state are not required to file an income tax return . subject to the Virginia corporation income tax and should file Additionally, state and national banks, banking associations, a Virginia corporation income Tax return , form 500. trust companies, and credit unions organized and conducted Electric suppliers may be subject to a minimum tax instead as banking institutions are not taxed on their income by of the corporate tax for any taxable year that their minimum Virginia and are not required to file an income tax return .

9 Tax liability is greater than their corporate income tax liability. In addition, effective for taxable years beginning on or after Schedule 500EL is used to compute the minimum tax and January 1, 2014, Interest-Charged Domestic International determine which tax applies. Sales Corporations (IC DISCs) are exempt from Virginia Electric Cooperatives are subject to tax on all modified corporation income Tax and are not required to file an income net income derived from nonmember sales and must file tax return (Va. Code ). a form 500EC even if no tax is due. Electric cooperatives Nonprofit Hospitals may be subject to a minimum tax instead of the modified net Nonprofit hospitals are required to provide the Department income tax if their minimum tax liability is greater than their with a copy of the hospital's federal form 990 or form 990 EZ. modified net income tax liability. See Schedule 500MT. (or the successor form to such form ) that was filed with the A Captive REIT is required to add back any federal deduction Internal Revenue Service for the relevant year.

10 Nonprofit for dividends paid to its shareholders. It will then allocate and hospitals are not required to file a form 500; therefore, a apportion income , and pay Virginia income tax, in the same paper copy of the federal form 990 or form 990 EZ must be manner as other corporations. A Captive REIT is defined as mailed directly to the Department. A paper copy of the form a REIT: must be provided to the Department within 30 days following (i) whose shares are not publicly traded, the filing of the federal form 990 or form 990 EZ tax form with the Internal Revenue Service. In addition, such hospital (ii) 50% or more of the shares are owned by a corporate must provide the Department a copy of any interim tax form , entity, and Page 2. report, or return that the hospital filed with or provided to the Apportionment for Certain Enterprise Data Center Internal Revenue Service for the relevant year pursuant to Operations Title 26 of the United States Code or the rules and regulations A taxpayer with an enterprise data center operation that thereunder.