Current through Register Vol. XLI, No. 38, September 20, 2024
39.1.
General. - The share of a nonresident estate or trust and the share of a
nonresident beneficiary of any estate or trust, in estate or trust income,
gain, loss and deduction from West Virginia sources shall be determined in
accordance with W. Va. Code '11-21-39
and this regulation.
39.1.1. Items Of
Distributable Net Income From West Virginia Sources. - There shall be
determined the items of income, gain, loss and deduction derived from or
connected with West Virginia sources which enter into the definition of federal
distributable net income of the estate or trust for the taxable year (including
such items from another estate or trust of which the first (1st) estate or
trust is a beneficiary). Items of federal distributable net income from West
Virginia sources represent items of income, gain, loss and deduction which are
either attributable to the ownership by the estate or trust of any interest in
real or tangible personal property in West Virginia or attributable to a
business, trade, profession or occupation carried on in this State by the
estate or trust. Such determination of items from West Virginia sources shall
be made in accordance with W. Va. Code '11-21-32
and the rules prescribed in Section 32 of these regulations.
39.1.2. Modifications. - The applicable
modifications, described in Subsections 12.2 and 12.3 of these regulations,
pertaining to items from West Virginia sources shall be first combined into a
single net number. This number, which may be a positive or negative number,
constitutes the net modification. After this number is computed, it is then
allocated in the manner prescribed in Subsection 39.1.3 of this regulation for
allocating distributable net income from West Virginia sources. When, however,
a West Virginia item which would be treated as a modification is already
included in federal distributable net income, no modification which in effect
would duplicate the item shall be made.
39.1.3. Allocation Among Estate Or Trust And
Beneficiaries. - The distributable net income of an estate or trust from West
Virginia sources shall be allocated between the nonresident estate or trust and
its nonresident beneficiaries in proportion to their respective shares of
federal distributable net income, including, solely for the purpose of this
allocation, any share of resident beneficiaries. The share of the estate or
trust in federal distributable net income is the amount, if any, by which the
federal distributable net income exceeds the aggregate of the shares therein of
all its beneficiaries.
39.1.3.1. Character Of
Items. - Each of the estate or trust items of income, gain, loss or deduction
shall have the same character for West Virginia income tax purposes as for
federal income tax purposes. Where such an item is not characterized for
federal income tax purposes, the item shall have the same character as if
realized directly from the source from which realized by the estate or trust,
or incurred in the same manner as incurred by the estate or trust. The same is
true if an estate or trust item is not required to be taken into account for
federal income tax purposes.
39.2. Alternate Methods Of Determining
Shares. - If the estate or trust has no federal distributable net income for
the taxable year, the share of each beneficiary (including, solely for the
purpose of this allocation, resident beneficiaries) in the net amounts
determined under Subsection 39.1 (distributable net income and net
modification) shall be in proportion to his share of the estate or trust income
for such year, under local law or the governing instrument, which is required
to be distributed currently and any other amounts of such income distributed in
such year. Any balance of such net amounts shall be allocated to the estate or
trust.
39.2.1. The Tax Commissioner may allow
the use of other methods of determining the respective shares of the
beneficiaries and of the estate or trust in its income derived from West
Virginia sources, and the modifications related thereto, if such other methods
are fair and equitable to all parties concerned, and if a full disclosure of
the adopted method is made to the Tax Commissioner.
