Virginia HB 734: Income tax, state; rolling conformity with the Internal Revenue Code.

Bill Text

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2021 SESSION

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20107000D 

HOUSE BILL NO. 734 

AMENDMENT IN THE NATURE OF A SUBSTITUTE 

(Proposed by the House Committee on Finance 

on January 29, 2020) 

(Patrons Prior to Substitute--Delegates Watts and McNamara [HB 
48]) 

A BILL to amend and reenact � 58.1-301 of the Code of 
Virginia, relating to income tax; rolling conformity with the Internal Revenue 
Code; nonconformance with certain amendments. 

Be it enacted by the General Assembly of Virginia:

1. That � 58.1-301 of the Code of Virginia is amended and 
reenacted as follows:

� 58.1-301. Conformity to Internal Revenue Code.

A. Any term used in this chapter shall have the same meaning 
as when used in a comparable context in the laws of the United States relating 
to federal income taxes, unless a different meaning is clearly required.

B. Any reference in this chapter to the laws of the United 
States relating to federal income taxes shall mean the provisions of the 
Internal Revenue Code of 1954, and amendments thereto, and other provisions of 
the laws of the United States relating to federal income taxes, as they 
existed on December 31, 2018, except for:

1. The special depreciation allowance for certain property 
provided for under �� 168(k), 168(l), 168(m), 1400L, and 1400N of the Internal 
Revenue Code;

2. The carry-back of certain net operating losses for five 
years under � 172(b)(1)(H) of the Internal Revenue Code;

3. The original issue discount on applicable high yield 
discount obligations under � 163(e)(5)(F) of the Internal Revenue Code;

4. The deferral of certain income under � 108(i) of the 
Internal Revenue Code. For Virginia income tax purposes, income from the 
discharge of indebtedness in connection with the reacquisition of an 
"applicable debt instrument" (as defined under � 108(i) of the 
Internal Revenue Code) reacquired in the taxable year shall be fully included 
in the taxpayer's Virginia taxable income for the taxable year, unless the taxpayer 
elects to include such income in the taxpayer's Virginia taxable income ratably 
over a three-taxable-year period beginning with taxable year 2009 for 
transactions completed in taxable year 2009, or over a three-taxable-year 
period beginning with taxable year 2010 for transactions completed in taxable 
year 2010 on or before April 21, 2010. For purposes of such election, all other 
provisions of � 108(i) of the Internal Revenue Code shall apply mutatis 
mutandis. No other deferral shall be allowed for income from the discharge of 
indebtedness in connection with the reacquisition of an "applicable debt 
instrument"; and

5. For taxable years beginning on and after January 1, 2019, 
the provisions of � 11046 of the federal Tax Cuts and Jobs Act, P.L. 115-97 (2017), 
related to the suspension of the overall limitation on it