1. A. A beneficiary of a trust whose Virginia taxable income includes all or part of an accumulation distributed by such trust is allowed a credit against the tax otherwise due under these regulations for all or a proportionate part of any tax paid by the trust under these regulations which would not have been payable if the trust had in fact made distributions to its beneficiaries at the times and in the amounts specified in the laws of the United States relating to federal income taxes. The proportion of Virginia income tax paid by the trust which is attributable to the accumulation distribution is deemed to be the same as the proportion of federal income tax paid which is attributable to the accumulation distribution.

2. B. The credit under this section shall not reduce the tax otherwise due from the beneficiary to an amount less than would have been due if the accumulation distribution or his part thereof were excluded from his Virginia taxable income.

   Example: Trust T accumulates income in the amount of $10,000 for each of the years 1978 through 1981 for which it pays an aggregate Virginia income tax of $1,480 ($370 for each of 1978 through 1981). In 1982 it distributes the accumulated income of $38,520 ($40,000 less $1,480) to the sole beneficiary who has no other income. The sole beneficiary owes a tax of $1,845, but receives a credit of $1,480, for a net tax liability of $365. If the amount of the credit had exceeded the sole beneficiary's tax liability, he would not have been entitled to a refund.

Statutory Authority

§§ 58.1-203 and 58.1-370 of the Code of Virginia.

Historical Notes

Derived from VR630-5-370, eff. January 1, 1985.