Virginia Tax Commissioner Rules on Subject-to-Tax Exception for Intangible Expenses Addback

• Virginia Tax Commissioner issued rulings on subject-to-tax exception to addback requirement
• Taxpayers must add back intangible expenses not subject to tax in Virginia
• Exception applies only to portion of income actually taxed by another state
• Rulings based on Virginia Supreme Court interpretation in Kohl’s Department Stores, Inc. v. Virginia Department of Taxation
• Ruling P.D. 24-18 concerned merchandise buyer service fees and systems licensing fees
• Department reduced exception claimed by taxpayer to correspond to income apportioned to state where tax was paid
• Commissioner analyzed each fee separately to determine addback requirement

Source: grantthornton.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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