Instructions for Filing Unified Nonresident Individual Income Tax … · 2019. 5. 29. ·...

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Explanation of Forms • Every pass-through entity (PTE) doing business in Virginia or having income from Virginia sources is required to file a return of income for each taxable year with the Department of Taxation. This is done on the Form 502. The Form 502 is not optional. It must be filed by every PTE doing business in Virginia or having income from Virginia sources. • Effective January 1, 2008, every PTE doing business in Virginia or having income from Virginia sources is required to pay a withholding tax equal to five percent of its nonresident owners’ shares of income from Virginia sources. This tax is reported on the Form 502W. Please see the Form 502W Instructions for more information. • When a PTE is required to file a Virginia return of income, the owners of the entity will usually have a Virginia filing requirement also. For owners who are not residents of Virginia, filing may be simplified through the use of the Form 765. Form 765 is an optional unified return that is filed by the PTE on behalf of its qualified nonresident owners. These owners are thereby relieved of the requirement that each file a return and pay tax separately. The PTE is not required to pay the withholding tax for nonresident owners who are included on the Form 765. Who May File A partnership, S Corporation, or other PTE that transacts business in Virginia and has two or more nonresident individual owners may file a unified nonresident individual income tax return (unified return) on behalf of all of its qualified nonresident individual owners (participants) provided certain conditions are met. In addition, certain estates and trusts which qualify and have income passed through to their nonresident beneficiaries may elect to file a unified return. These filers will complete Form 765 in a similar manner as a PTE filer. A unified return is an alternative to the filing of a nonresident individual income tax return by each nonresident individual owner of the PTE. The unified return is filed in the name of the PTE, using the PTE’s federal employer identification number (FEIN) and Virginia account number. An owner, officer or 2011 Virginia Form 765 Instructions for Filing Unified Nonresident Individual Income Tax Return GENERAL INSTRUCTIONS employee of the PTE who is authorized to act on behalf of the PTE in tax matters (authorized representative) must sign the unified return. By signing the return, the signer is declaring that he or she is the authorized representative of the PTE and that each participant has signed a consent form authorizing the PTE to act on the participant’s behalf in the matter of unified returns and acknowledging the participant’s understanding and acceptance of all of the terms and conditions of participation in a unified return as described in these instructions. The consent form must continue in force indefinitely until revoked in writing by the participant and must permit the PTE to file amendments or take other actions concerning the unified return without additional authorization from the participant. The consent forms must be maintained by the PTE and provided to the Virginia Department of Taxation (the Department) for inspection upon demand. All owners of the PTE who qualify to participate must participate in the unified return, if the unified filing is elected. If any qualified owner declines to participate, the other qualified owners may not file a unified return. By filing a unified return, the participants join in a collective return, which is prepared and submitted by the PTE on behalf of the participants. The unified return satisfies the requirement that each participant file a separate Virginia nonresident individual income tax return with respect to the PTE income, but it does not transform the PTE into a taxable entity or transfer the tax liability of the participants to the PTE. A unified return may be filed without prior approval from the Department provided the PTE and the participants agree to comply with the Department’s rules described in these instructions. If all of the rules described in these instructions cannot be met, the PTE must receive written approval from the Tax Commissioner before submitting a unified return. All requests must be submitted in writing to: Tax Commissioner Virginia Department of Taxation P.O. Box 2475 Richmond, VA 23218-2475 The Department may deny any PTE permission to file a Page 1 2601042 Rev. 09/11

Transcript of Instructions for Filing Unified Nonresident Individual Income Tax … · 2019. 5. 29. ·...

Page 1: Instructions for Filing Unified Nonresident Individual Income Tax … · 2019. 5. 29. · individual income tax apply to unified returns. Use Form 770ES, Estimated Tax Payment Voucher,

Explanation of Forms• Every pass-through entity (PTE) doing business inVirginia or having income from Virginia sources isrequiredtofileareturnofincomeforeachtaxableyearwiththeDepartmentofTaxation.ThisisdoneontheForm502.TheForm502isnotoptional.ItmustbefiledbyeveryPTEdoingbusinessinVirginiaorhavingincomefromVirginiasources.

• EffectiveJanuary1,2008,everyPTEdoingbusinessinVirginiaorhavingincomefromVirginiasourcesisrequiredtopayawithholdingtaxequaltofivepercentofitsnonresidentowners’sharesofincomefromVirginiasources.ThistaxisreportedontheForm502W.PleaseseetheForm502WInstructionsformoreinformation.

•When a PTE is required to file aVirginia return ofincome, the owners of the entitywill usually have aVirginiafilingrequirementalso.ForownerswhoarenotresidentsofVirginia,filingmaybesimplifiedthroughthe use of the Form 765. Form 765 is an optionalunifiedreturnthatisfiledbythePTEonbehalfofitsqualifiednonresidentowners.Theseownersaretherebyrelievedoftherequirementthateachfileareturnandpaytaxseparately.ThePTEisnotrequiredtopaythewithholdingtaxfornonresidentownerswhoareincludedontheForm765.

Who May FileApartnership,SCorporation,orotherPTEthattransactsbusiness inVirginia and has two ormore nonresidentindividualownersmayfileaunifiednonresidentindividualincometaxreturn(unifiedreturn)onbehalfofallofitsqualified nonresident individual owners (participants)providedcertainconditionsaremet.Inaddition,certainestatesandtrustswhichqualifyandhaveincomepassedthrough to their nonresident beneficiariesmay elect tofile a unified return.These filerswill complete Form765inasimilarmannerasaPTEfiler.AunifiedreturnisanalternativetothefilingofanonresidentindividualincometaxreturnbyeachnonresidentindividualownerofthePTE.TheunifiedreturnisfiledinthenameofthePTE,usingthePTE’sfederalemployeridentificationnumber(FEIN)andVirginia account number. An owner, officer or

2011 Virginia Form 765InstructionsforFiling

UnifiedNonresidentIndividualIncomeTaxReturn

GENERAL INSTRUCTIONS

employeeofthePTEwhoisauthorizedtoactonbehalfofthePTEintaxmatters(authorizedrepresentative)mustsigntheunifiedreturn.Bysigningthereturn,thesignerisdeclaringthatheorsheistheauthorizedrepresentativeofthePTEandthateachparticipanthassignedaconsentformauthorizingthePTEtoactontheparticipant’sbehalfin thematter of unified returns and acknowledging theparticipant’sunderstandingandacceptanceofallof thetermsandconditionsofparticipationinaunifiedreturnasdescribedintheseinstructions.TheconsentformmustcontinueinforceindefinitelyuntilrevokedinwritingbytheparticipantandmustpermitthePTEtofileamendmentsortakeotheractionsconcerningtheunifiedreturnwithoutadditionalauthorizationfromtheparticipant.TheconsentformsmustbemaintainedbythePTEandprovidedtotheVirginiaDepartment ofTaxation (theDepartment) forinspectionupondemand.Allownersof thePTEwhoqualify toparticipatemustparticipate in the unified return, if the unifiedfiling iselected. If anyqualifiedownerdeclines toparticipate,theotherqualifiedownersmaynotfileaunifiedreturn.By filing a unified return, the participants join in acollective return,which is prepared and submitted bythePTEonbehalfoftheparticipants.TheunifiedreturnsatisfiestherequirementthateachparticipantfileaseparateVirginia nonresident individual income tax returnwithrespecttothePTEincome,butitdoesnottransformthePTEintoataxableentityortransferthetaxliabilityoftheparticipantstothePTE.AunifiedreturnmaybefiledwithoutpriorapprovalfromtheDepartment provided thePTE and the participantsagree to complywith theDepartment’s rulesdescribedintheseinstructions.Ifalloftherulesdescribedintheseinstructionscannotbemet,thePTEmustreceivewrittenapprovalfromtheTaxCommissionerbeforesubmittingaunifiedreturn.Allrequestsmustbesubmittedinwritingto:

Tax CommissionerVirginia Department of TaxationP.O. Box 2475Richmond, VA 23218-2475

TheDepartmentmaydenyanyPTEpermissiontofilea

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unifiedreturn. Inaddition, theDepartmentmayrefuseacceptance of any unified return not filed in a timelymanner or in accordancewith the prescribed rules andprocedures. Insuchcases, theDepartmentwillrequireeach owner to file his or her own separate return inaccordancewithVirginialawandregulations.

Who Qualifies to ParticipateAqualifiedownerisanaturalpersonwhois:1. AdirectownerofthePTEfilingthereturn;and2. AnonresidentofVirginiawithVirginiasourceincome

forthetaxableyearfromthePTEfilingthereturn.IfanindividualnonresidentownerhasotherincomefromVirginiasourcesinadditiontoPTEincome,heorshemustfileaNonresidentIndividualIncomeTaxReturn(Form763)toaccountforthatincome.TheindividualmaydeductincomereportedonForm765.

If thePTEfilesaunifiedreturn,allownersof thePTEwhomeetbothconditionslistedabovemustparticipateintheunifiedreturn.

How Taxable Income and Amount of Tax are DeterminedFor the unified return,Virginia taxable income is theaggregateofeachparticipant’sincomefromthePTE,asallocated and apportioned toVirginia, adjusted by anymodificationsapplicabletoVirginiaindividualincometax,withoutbenefitofanypersonalexemptionsoritemizedorstandarddeductions.Virginiataxableincomecannotbe reducedbycarryovers fromanyother taxableyearsorreturnsofthePTEoranyparticipantfornetoperatinglosses, charitable contributions, InternalRevenueCode§179expenses,orotherdeductions.Inaddition,Virginiataxable income cannot be reduced by deductions orsubtractions normay any tax be offset by credits thatdid notflow through from thePTE to the participants.OnlyVirginiamodifications and credits reported ontheparticipants’SchedulesVK-1 that are applicable toindividual income taxmay be claimed on the unifiedreturn.AlthoughVirginiacreditsmaynotbecarriedovertoothertaxableyearsonthePTE’sreturn(Form502),theownersmaybeabletocarryoverunusedcreditsontheirVirginiareturns. Refer to the section titledWhat Forms and Schedules to Use for instructionsonclaimingVirginiacreditsandcarryovercreditsontheunifiedreturn.TheamountoftaxiscomputedontheVirginiaTaxableIncomebyapplyingthetaxratesforindividualincometaxspecifiedinVa.Code §58.1-320orbyreferencetothetaxtablespublishedbytheDepartment,withoutregardtothenumberofparticipants.

NOTE:TheunifiedreturnisanoptiontheDepartmentprovidestoqualifyingnonresidentindividualownersofaPTEtosimplifythereturnfilingprocess.ItsusemayresultinthelossofcertainbenefitsandtaxadvantagesavailabletononresidentindividualsfilingseparateVirginiareturns.Inaddition,theamountoftaxcomputedonaunifiedfilingbasismayexceed theaggregateof theparticipants’ taxliabilitieshadeachparticipantfiledhisorherownreturn.ThequalifyingownersofeachPTEmustdecidewhethertofileaunifiedreturn.Iftheunifiedreturnoptionisnotelected, each nonresident owner should consult a taxprofessionaltodetermineifheorsheisrequiredtofileaseparateVirginiareturn.

When the Return is DueIfthePTE’staxableyearis:• Calendar year (January 1 -December 31), then

the unified return for taxable year 2011must bepostmarkednolaterthanMay1,2012,toavoidlatefilingpenaltiesandinterest;or

• Fiscal year or short year,thentheunifiedreturnisdueonor before the 15thdayof the fourthmonthfollowingthecloseofthePTE’staxableyear.

TheunifiedreturnmustbesubmittedtotheDepartmentatthesametimeorafter thePTEsubmitsitsVirginiareturn(Form502).

Automatic Extension to FileAnautomaticextensionoftimetofileisgrantedtothedatesixmonthsaftersuchduedateor30daysaftertheextendeddateforfilingthefederalincometaxreturn,whicheverislater,providedthefullamountestimatedasthetaxduehasbeenpaidonorbeforetheoriginalduedate.Ifsufficientpaymentshavebeenmade,nofurtheractionisrequiredtoobtaintheextensiontofile.Ifanadditionaltaxpaymentisneededtoensurethetaxliabilityhasbeenpaid,useForm770-IP,VirginiaFiduciaryandUnifiedNonresidentExtensionPayment, to remit the payment.The requestmustbemadeinthenameofthePTE,usingthePTE’sFederalEmployerIdentificationNumber(FEIN).MailForm770-IPto:

Virginia Department of TaxationP.O. Box 760Richmond, VA 23218-0760

FortaxableyearsbeginningonandafterJanuary1,2005,anautomaticsixmonthextensionislikewisegrantedtothePTE(Form502).Penaltiesareassessedforreturnsfiledaftertheextendedduedate.SeetheForm502instructionsforfurtherinformation.

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How to Make Estimated PaymentsThe rules and procedures for payment of estimatedindividual income tax apply to unified returns. UseForm770ES,EstimatedTaxPaymentVoucher,tosubmitestimatedtaxpayments.PaymentsoftheestimatedtaxmustbemadeinthenameofthePTE,usingthePTE’sFEIN.Theestimatedtaxiscomputed using the estimatedVirginia taxable incomefor the unified return,without regard to the number ofparticipants.Estimatedtaxpaidbyaparticipanttohisorherownaccountmaynotbeappliedtoaunifiedreturn,andestimatedtaxpaidbyaPTEforuseonaunifiedreturnmaynotbeappliedtoaparticipant’sindividualaccount.

Where the Department will Mail Refunds, Assessments, and CorrespondenceThe Department will issue correspondence and allassessmentsoftax,penalty,andinterestinthenameofthePTE.AlthoughthePTEisrequiredtomakeallpaymentsoftax,penalty,andinterest,andisauthorizedtoactonthe participants’ behalf, eachparticipant remains liablefor his or her respective share of any tax, penalty andinterestowed.TheDepartmentwillrefundoverpaidtaxtothePTE.

What Forms and Schedules to UseForm765may not be filed unless the entity has alsofiledForm502.Form502isaseparatereturnandnotanattachment.DonotmailForm765withForm502.Aunifiedreturnmustinclude:• A completed and signedVA Form 765, Unified

NonresidentIndividualIncomeTaxReturn;and• AScheduleL,List ofParticipatingOwners,which

includes the name, home address, Social SecurityNumber, allocation percentage and guaranteedpaymentamountofeachparticipant.

ScheduleL canbe substitutedwith an8 1/2”X11”

spreadsheet or word processing document in eitherportraitorlandscapeorientation.Thedocumentshouldbeintableformatandmustcontaingridlines,thesamefour columns and the same information in the sameorder as shownonScheduleL. The substitute formcannotcontainadditionalcolumnsofdata.Theyear,the title “ScheduleL,” thenameof thepass-throughentityandtheFEINofthepass-throughentitymustbeclearlyprintedatthetopofthesubstituteversion.Thedatamustbein10pointfontorlarger.AnexampleofasubstituteScheduleLisprovidedabove.IfanyVirginiacreditsareclaimedontheunifiedreturn,thentheunifiedreturnmustalsoinclude:• AScheduleCR,CreditComputationSchedule;and• Therequiredformsanddocumentation,asdescribedin

theScheduleCRinstructions,foreachcreditclaimed;and

• If any carryover credit is claimed, a reconciliationoftheavailablecarryovercreditaccountingforanychangeintheparticipantsfromtheprioryear.

Credits: Whenclaiminganoriginalcredit,sumthecreditamountallocatedtoeachparticipant(fromtheparticipants’SchedulesVK-1)andenteritontheappropriatelineonScheduleCR. If a credit reported on the participants’SchedulesVK-1isnotlistedontheScheduleCR,itmaynot be used as a credit to lower an individual incometaxliability. Forinstance,acredit limitedbytheCode of Virginia to corporationsmaynot be used to reduceindividualincometax,eitheronaunifiedreturnoronaseparateindividualincometaxreturn.Refundablecreditsmaynotbeclaimedonaunifiedreturn.Creditforincometaxpaidtoanotherstatemaynotbeclaimedonaunifiedreturn.Ifanycreditisunusedandthecreditallowsforcarryover,report the carryover on ScheduleCR.Unused creditsmay be carried over in accordancewith each credit’s

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2011VirginiaScheduleL(Form765)UnifiedNonresidentIncomeTaxReturn

ListofParticipantsNameofPass-ThroughEntity: ______________________________________________________FederalEmployerIDNumber:______________________________________________________

IdentifytheParticipants Column1 Column2 Column3 Column4 SSN Name/Address Allocation% GuaranteedPaymentAmt. 111-22-3344 JohnDoe 10.00% $1.00 123MainStreet Richmond,VA23220

Schedule L Example

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specific carryover provisions. If a participantwhodidnotpreviouslyqualifytoparticipateinaunifiedfilinghascarryovercredit,thatparticipant’scarryovercreditmaybeincludedontheunifiedreturn,providedsuchcreditwasoriginallypassedthroughtotheparticipantbythePTEandthecarryovercreditiswithinthecarryoverperiodallowedfor that credit. Conversely, anyportionof a carryovercreditallocatedtoanownerwhoqualifiedtoparticipateinaunifiedfilingforapriortaxableyearbutwhonolongerqualifiesmaynot be includedon the unified return, asthatportionofthecarryovercreditmayonlybeusedbythatownerwhenfilinghisorherseparateVirginiareturn.Ifanycarryovercreditisclaimed,attachtotheScheduleCR,alongwithallrequiredformsanddocumentation,areconciliationoftheavailablecarryovercreditaccountingforanychangeintheparticipantsfromtheprioryear.Thereconciliationmustincludethetypeofcredit,amountandtaxableyear earned, andamount(s) and taxableyear(s)usedorpartiallyusedforeachparticipanthavingacarryover.Amended Returns:When filing an amended unifiedreturn,alwaysprovideanamendedreturnreconciliationand a statement substantiating the reason for theamendment.Refertotheinstructionsforfilinganamendedunifiedreturnprovidedbelow.

When and How to File an Amended Unified ReturnIf the PTEfiles an amended federal return reflectingchanges to the taxable income amount or any otheramounts that flow through to the owners, the PTE isrequired to file an amendedForm502 and issue eachowner an amendedScheduleVK-1within one year offiling theamended federal return. If thePTE’s federalreturn is adjustedby the InternalRevenueService, thePTEisrequiredtofileanamendedForm502andissueeachowneranamendedScheduleVK-1withinoneyearfollowingthefinaldeterminationofsuchfederalchange,correction,orrenegotiation.Inaddition,thePTEmustamendtheunifiedreturn,Form765,withinoneyearoffilingitsamendedfederalreturnorwithinoneyear following thefinaldeterminationofsuchfederalchange,correctionorrenegotiation.Whenamending a unified return,whether the amendment istheresultofthePTEfilinganamendedreturn,afederalchangeoranyotherreason,alwaysattachastatementtotheamendedunifiedreturnsubstantiatingthereasonfortheamendment.To amend the unified return, complete a new unifiedreturnusingthecorrectedfigures,as if the return were the original return.Marktheamendedreturncheckbox

locatedonthetopleftofForm765,Page1.Inaddition,attach a reconciliationof any tax due amounts paid orrefundsreceivedbasedontheoriginalreturnfilingtotheamountoftaxdueorrefundcomputedfortheamendedunifiedreturn.Iftheamendedunifiedreturnincreasesthetaxliabilityandresultsinanettaxdue,attachacheckormoneyorderforthenettaxduetothereturnandmailtotheDepartmentwiththeamendedunifiedreturn.If the amended unified return reduces the tax liabilityandresultsinanetoverpaymentoftax,theDepartmentbylawmayissuearefundonlyiftheamendedreturnisfiledwithin:• threeyearsfromtheduedateoftheoriginalreturn,

includingvalidfilingextensions;• oneyearfromthefinaldeterminationoftheamended

federal returnor federalchange,whichever is later,providedthattheallowablerefundisnotmorethanthedecreaseinVirginiataxattributabletothefederalchangeorcorrection;

• twoyearsfromthefilingofanamendedVirginiareturnresultinginthepaymentofadditionaltax,providedthatthecurrentamendedreturnraisesissuesrelatingsolelytotheprioramendedreturnandthattherefunddoesnotexceedtheamountoftaxpaymentmadeasaresultoftheprioramendedreturn;or

• twoyearsfromthepaymentofanassessment,providedtheamendedreturnraisesissuesrelatingonlytothepriorassessmentandtherefunddoesnotexceedtheamountoftaxpaidonthepriorassessment.

Where To Mail The Unified ReturnSubmittheunifiedreturnwithpaymentofanytaxdueto:

Virginia Department of TaxationP.O. Box 760Richmond, VA 23218-0760

MakeyourcheckpayabletotheVirginiaDepartmentofTaxationandstapletotheleftfrontofForm765.DonotmailtheunifiedreturnwiththePTE’sreturntotheDepartmentinthesameenvelope.Followtheinstructionsformailing thePTE return,Form502, provided in theForm502instructions.How to Contact Customer Services

Tenemos servicios disponible en EspanolForforms,instructions,andinformation,ortoemailtheDepartmentaquestion,payabill,orfileanextension,visitourwebsite:

www.tax.virginia.gov

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Customer Service InquiriesDepartment of TaxationP. O. Box 1115Richmond, VA 23218-1115Phone: (804) 367-8031

Forms RequestsDepartment of TaxationP. O. Box 1317Richmond, VA 23218-1317Phone: (804) 440-2541Fax: (804) 236-2759

RETURN PREPARATION INSTRUCTIONSStep 1Fiscal or Short Year Filer: ThetaxableperiodfortheunifiedreturnisthesameasthetaxableperiodforthePTE.Ifthetaxableperiodisotherthanacalendaryear,enterthebeginningandendingdatesofthePTE’staxableyear.Name and Address: EnterthenameandaddressofthePTE.FEIN:EnterthePTE’sFederalEmployerIdentificationNumber.Virginia Account Number: Enter thePTE’sVirginiaAccountNumber.Change in Address or Legal Name Change:IfthePTE’slegalnameoraddresshaschanged,checktheappropriatebox.Amended Return:RefertotheinstructionsprovidedintheWhen and How to File an Amended Unified Return section.Form 760C: If Form 760C is attached claiming anexceptionorprovidingtheadditiontotaxcomputation,checktheappropriatebox. Step 2Complete Page 2, the summary of the participants’incomeandVirginiamodifications,asreportedoneachparticipant’sScheduleVK-1.Determine the Participants’ Income: CompleteLines1through5.Line1andLine4areaggregateamounts,computedbytotalingthecorrespondingamountsreportedon the participants’SchedulesVK-1. Line2 is not anaggregate number; it is theVirginiaApportionmentPercentagereportedtoeachparticipantonScheduleVK-1,Line7.FollowthelineinstructionsonForm765.Determine the Participants’ Additions to Income:CompleteLines6through11.ForeachLineitem,entertheaggregateamountinColumnA,computedbytotaling

thecorrespondingamountsreportedontheparticipants’SchedulesVK-1.MultiplyanyamountreportedinColumnAbytheVirginiaApportionmentPercentage,Line2,andentertheresultinColumnB.EnterguaranteedpaymentstopartnersonLine10,useCode99andattachanexplanationtothereturn.OnlythoseadditionsthatflowthroughfromthePTEtotheparticipantsandarerequiredbyVirginiainthecomputationofindividualincometaxmaybereportedontheunifiedreturn.TheadditionsapplicabletoindividualincometaxarelistedonForm765(Lines6,7,and9)orreportedontheForm765(Line10)usingtheadditioncodeslistedbelow.

10 Interest on Federally Exempt U.S. obligations. Entertheamountofinterestordividendsexempt

fromfederalincometax,buttaxableinVirginia,lessrelatedexpenses.(Va. Code§58.1-322B.2)

17 Cancellation of Debt Income (Fixed Date Conformity Adjustment).

Entertheamountofcancellationofdebtincomethat was excluded from your federal returnpursuantto§108(i)oftheIRC.Youmustincludeallcancellationofdebtincomefromtransactionsin2011.IncludetheamountofcancellationofdebtincomefromtransactionsbeforeApril21,2010thatmustbereportedin2011.Additionally,ifyouelectedtoreporttheamountofcancellationofdebtincomefromtransactionsin2009asanadditioninequalamountsoverthreetaxableyears(2009,2010and2011),includetheamountofcancellationofdebtincomefrom2009thatmustbereportedin2011.(Va. Code§58.1-301B.4)

18 Income from Dealer Disposition of Property Enter the amount thatwouldbe reportedunder

theinstallmentmethodfromcertaindispositionsofproperty.If,inaprioryear,thetaxpayerwasallowed a subtraction for certain income fromdealerdispositionsofpropertymadeonorafterJanuary1,2009,intheyearsfollowingtheyearofdisposition,thetaxpayerisrequiredtoaddbacktheamountthatwouldhavebeenreportedundertheinstallmentmethod.Eachdispositionmustbetrackedseparatelyforpurposesofthisadjustment.(Va. Code§58.1-322H)

19 Domestic Production Deduction Enter 1/3 of the total amount of the domestic

production deduction claimed on your federalreturnpursuanttoIRC§199.Fortaxableyears2010andthereafter,VirginiadoesnotconformtothedomesticproductiondeductionallowedunderIRC§199.Insteadofallowingthisdeductionto

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flowthrough,Virginiaallowsadeductionequaltotwo-thirdsofthefederaldeduction.(Va. Code§58.1-301B.5)

99 Other(AttachExplanation) Entertheamountofanyotherincomenotincluded

infederaladjustedgrossincomethatistaxableinVirginia.Attachanexplanationoftheaddition.Refer to the Form760 instructions for furtherinformation.

Determine the Participants’ Subtractions from Income:Complete Lines 12 through 17. For eachLine item,enter the aggregate amount, computed by totaling theamounts reportedon the participants’SchedulesVK-1.MultiplyanyamountreportedinColumnAbytheVirginiaApportionmentPercentage,Line2,andentertheresultinColumnB.OnlythosesubtractionsthatflowthroughfromthePTEtotheparticipantsandareallowedbyVirginiainthecomputationofindividualincometaxmaybereportedontheunifiedreturn.ThesubtractionsapplicabletoindividualincometaxarelistedonForm765(Lines12,13,and15)orreportedonForm765(Line16)usingthesubtractioncodeslistedbelow.

20 Income from Virginia Obligations Enter the amount of income fromVirginia

obligationsincludedinyourfederaladjustedgrossincome.(Va. Code§58.1-322C.2)

21 Federal Work Opportunity Tax Credit Wages Entertheamountofwagesorsalarieseligiblefor

theFederalWorkOpportunityTaxCreditthatisincluded in federal adjustedgross income. Donot enter the federal credit amount.(Va. Code §58.1-322C.6)

41 Tobacco Settlement Fund Income Enter the amount of payments received under

theTobaccoMaster SettlementAgreement andtheNationalTobaccoGrowerSettlementTrustprovidedtheyhavenotbeendeductedforfederaltaxpurposes.(Va. Code§58.1-322C.27)

42 Gain on the Sale of Land for Open-Space Use Enter the amount of any gain on the sale or

exchangeofrealpropertyoraneasementtorealpropertywhichresultsinthepropertyoreasementbeingdevotedtoopen-spaceuseasdefinedinVa. Code§58.1-3230 foraperiodnot less than30years.Totheextentthissubtractionistaken,notax credit for donating land for its preservationshallbeallowedforthreeyearsfollowingtheyear

inwhichthesubtractionisclaimed.(Va. Code§58.1-322C.22)

51 Gains from Land Preservation Entertheamountofgainorlossrecognizedonthe

saleortransferofaLandPreservationTaxCreditthatwasincludedinfederaladjustedgrossincome.(Va. Code§58.1-513(D))

52 Long-termCapitalGain For taxableyearsbeginningonorafterJanuary

1,2011,enterany income taxedasa long-termcapitalgainforfederalincometaxpurposes,oranyincometaxedasinvestmentservicespartnershipinterestincome(otherwiseknownasinvestmentpartnership carried interest income) for federalincometaxpurposes.Toqualifyforthissubtraction,theincomemustbeattributabletoaninvestmentina“qualifiedbusiness,”asdefinedinVa. Code§58.1-339.4,orinanyothertechnologybusinessapprovedbytheSecretaryofTechnology,providedthebusinesshasitsprincipalofficeorfacilityintheCommonwealthandlessthan$3millioninannualrevenuesinthefiscalyearpriortotheinvestment.TheinvestmentmustbemadebetweenthedatesofApril1,2010,andJune30,2013.Notaxpayerwhohasclaimeda taxcredit foran investmentina“qualifiedbusiness”underVa. Code§58.1-339.4shallbeeligibleforthissubtractionunderthis subdivision for an investment in the samebusiness.(Va. Code58.1-402C.24)

99 Other(AttachExplanation) Enter the amount of any other subtractions

from federal adjusted income as allowed forVirginiaindividualincometaxpurposes.Attachan explanation and supporting documentationfor each subtraction. Refer to the Form 760instructionsforfurtherinformation.

Step 3 CompleteForm765,Page1,Lines1through17.LinesnotlistedbelowareexplainedonForm765.Line 6 Amount of Tax: Use the amount on Line 5,VirginiaTaxableIncome,tocomputethetaxamountasfollows:IfLine5isnotover$3,000,thetaxis2%ofLine5.IfLine5isover$3,000butnotover$5,000,thetaxis$60plus3%oftheexcessover$3,000.IfLine5isover$5,000butnotover$17,000,thetaxis$120plus5%oftheexcessover$5,000.IfLine5isover$17,000,thetaxis$720plus5.75%oftheexcessover$17,000.

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Tax tables can be downloaded at www.tax.virginia.gov.

Line 7 Estimated Payments: Enter the total of theestimatedtaxpayments,ifany,madebythePTEonbehalfoftheparticipants.Line 8 Extension Payment:Entertheextensionpayment,ifany,madebythePTEonbehalfoftheparticipants.Line 9 Total Credits:AttachacompletedScheduleCRand all requireddocumentation. Refer to theScheduleCRinstructionsfordetailsandread thesection in theseinstructions titledWhat Forms and Schedules to Use.IfthetotalofallcreditamountsclaimedonScheduleCRexceedstheamountoftaxreportedonForm765,Part1,Line6,entertheamountoftaxfromLine6.Line 13 Overpayment Credited to Next Year: Entertheamountofoverpayment thePTEwould likecredited tonextyear’sestimatedtaxes.Line 15a Addition to Tax: Anadditiontotaxisnotowedif:• Allestimatedtaxpaymentsforthetaxableyearwere

madetimely;• Theamount,ifany,onForm765,Line11,islessthan

$150;and• Total estimatedpaymentswere at least 90%of the

unifiedfilers’ 2011 tax liability after nonrefundablecredits or 100% of the 2010 tax liability afternonrefundablecredits.

Use Form 760C to compute theAddition to Tax, ifapplicable.BesuretochecktheboxintheupperleftcornerofForm765ifForm760Cisattached.Line 15b Late Filing Penalty or Extension Penalty:Late Filing Penalty.Ifataxduereturnisfiledaftertheextendedduedate,itissubjecttoalatefilingpenalty.Thepenaltyis30%ofthetaxdue.Extension Penalty.Ifthereturnisfiledonorbeforetheextendedduedate,anextensionpenaltyisassessedifthetaxdue(Form765,Line11)isgreaterthan10%ofthetaxamount(Form765,Line6).Theextensionpenaltyis2%permonthorpartofamonthfromtheoriginalduedateofthereturnuntilthedatethetaxispaid.Themaximumextensionpenaltyisequalto12%ofthetaxdue.Ifataxdue return is submittedafter theextendedduedate, theextensionisinvalidandtheLateFilingPenaltyisassessed.

NOTICE: A Late Payment Penalty may be assessed if a tax due return is filed and full payment is not made when the return is filed. TheLatePaymentPenaltyis6%permonthorpartofamonthduringwhichanytaxdueamountremainsunpaid,nottoexceed30%.ForanymonththattheLateFilingPenaltyapplies,theLatePaymentPenaltywillnotapply.The totalofanyLateFilingPenaltyandLatePaymentPenaltycannotexceed30%ofthetaxdue.Line 15c Interest: Ifa taxdue return isfiledafter theoriginalduedate,interestisassessedontheamountoftaxduefromtheoriginalduedatetothedatethereturnisfiled.Interestisassessedevenifthereturnissubmittedbytheextendedduedate.Toobtainthedailyinterestfactor,visitwww.tax.virgina.gov orcall(804) 367-8031.Line 17 Refund: Refundsarepaid to thePTE,exceptthat (1) theDepartmentmay apply the overpayment toanyoutstanding amounts related to unified returnsfiledbythesamePTE,withoutregardtotheidentitiesoftheparticipants;and(2)anoverpaymentmaybeappliedtotheestimatedtaxforthefollowingtaxyear.Step 4CompleteScheduleL,ListofParticipants(seeinstructionsforScheduleLonpage3undertheheading“WhatFormsandSchedulestoUse”).ScheduleLisarequiredattachmentandmustincludethename,homeaddress,SocialSecurityNumber, allocationpercentage andguaranteedpaymentamountofeachparticipant.Step 5Assembletheunifiedreturnasfollows:• Form765,UnifiedReturn• Schedule CR, Credit Computation Schedule, if

applicable, alongwithall supportingdocumentationandthecarryoverreconciliation

• ScheduleL,ListofParticipantsForataxdueunifiedreturn,makethecheckpayabletotheVirginiaDepartmentofTaxationandstapletothefrontleftofthereturn.

Mail the return to: Virginia Department of Taxation

P.O. Box 760Richmond, VA 23218-0760

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