Virginia HB 1202: Conformity with the Internal Revenue Code; cannabis licensees.

Bill Text

2022SESSION
INTRODUCED
22104011D
1 HOUSEBILLNO.1202
2 OfferedJanuary18,2022
3 A BILL to amend and reenact § 58.1-301 of the Code of Virginia, relating to conformity with the
4 Internal Revenue Code; cannabis licensees.
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Patron––Campbell,J.L.
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7 ReferredtoCommitteeonFinance
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9 Be it enacted by the General Assembly of Virginia:
10 1. That §58.1-301 of the Code of Virginia is amended and reenacted as follows:
11 §58.1-301. Conformity to Internal Revenue Code.
12 A. Any term used in this chapter shall have the same meaning as when used in a comparable context
13 in the laws of the United States relating to federal income taxes, unless a different meaning is clearly
14 required.
15 B. Any reference in this chapter to the laws of the United States relating to federal income taxes
16 shall mean the provisions of the Internal Revenue Code of 1954, and amendments thereto, and other
17 provisions of the laws of the United States relating to federal income taxes, as they existed on
18 December 31, 2020, except for:
19 1. The special depreciation allowance for certain property provided for under §§ 168(k), 168(l),
20 168(m), 1400L, and 1400N of the Internal Revenue Code;
21 2. The carry-back of certain net operating losses for five years under § 172(b)(1)(H) of the Internal
22 Revenue Code;
23 3. The original issue discount on applicable high yield discount obligations under § 163(e)(5)(F) of
24 the Internal Revenue Code;
25 4. The deferral of certain income under § 108(i) of the Internal Revenue Code. For Virginia income
26 tax purposes, income from the discharge of indebtedness in connection with the reacquisition of an
27 "applicable debt instrument" (as defined under § 108(i) of the Internal Revenue Code) reacquired in the
28 taxable year shall be fully included in the taxpayer's Virginia taxable income for the taxable year, unless
29 the taxpayer elects to include such income in the taxpayer's Virginia taxable income ratably over a
30 three-taxable-year period beginning with taxable year 2009 for transactions completed in taxable year
31 2009, or over a three-taxable-year period beginning with taxable year 2010 for transactions completed in
32 taxable year 2010 on or before April 21, 2010. For purposes of such election, all other provisions of
33 § 108(i) of the Internal Revenue Code shall apply mutatis mutandis. No other deferral shall be allowed
34 for income from the discharge of indebtedness in connection with the reacquisition of an "applicable
35 debt instrument";
36 5. For taxable years beginning on and after January 1, 2019, the suspension of the overall limitation
37 on itemized deductions under §68(f) of the Internal Revenue Code;
38 6. For taxable years beginning on and after January 1, 2017, but before January 1, 2018, and for
39 taxable years beginning on and after January 1, 2019, the 7.5 percent of federal adjusted gross income
40 threshold set forth in § 213(a) of the Internal Revenue Code that is used for purposes of computing the
41 deduction allowed for expenses for medical care pursuant to § 213 of the Internal Revenue Code. For
42 such taxable years, the threshold utilized for Virginia income tax purposes to compute the deduction
43 allowed for expenses for medical care pursuant to § 213 of the Internal Revenue Code shall be 10
44 percent of federal adjusted gross income;
45 7. The provisions of §§ 2303(a) and 2303(b) of the federal Coronavirus Aid, Relief, and Economic
46 Security Act, P.L. 116-136 (2020), related to the net operating loss limitation and carryback;
47 8. The provisions of § 2304(a) of the federal Coronavirus Aid, Relief, and Economic Security Act,
48 P.L. 116-136 (2020), related to a loss limitation applicable to taxpayers other than corporations;
49 9. The provisions of § 2306 of the federal Coronavirus Aid, Relief, and Economic Security Act, P.L.
50 116-136 (2020), related to the limitation on business interest; and
51 10. The provisions of §§ 276(a), 276(b)(2), 276(b)(3), 278(a)(2), 278(a)(3), 278(b)(2), 278(b)(3),
52 278(c)(2), 278(c)(3), 278(d)(2), and 278(d)(3) of the federal Consolidated Appropriations Act, P.L.
53 116-260 (2020), related to deductions, tax attributes, and basis increases for certain loan forgiveness and
54 other business financial assistance; and
55 11. For taxable years beginning on and after January 1, 2022, the prohibition on utilizing tax
56 deductions or credits for reasonable and necessary expenditures made in connection with carrying on a
57 trade or business licensed in Virginia pursuant to subtitle II of Title 4.1 (§ 4.1-600 et. seq.) to deal in
58 recreational or medical cannabis under § 280E of the Internal Revenue Code.
INTRODUCED
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59 The Department of Taxation is hereby authorized to develop procedures or guidelines for
60 implementation of the provisions of this section, which procedures or guidelines shall be exempt from
61 the provisions of the Administrative Process A