Chap. 197.—-An ACT to amend and re-enact Section 24 of the Tax Code of Vir-
ginia, as amended, in relation to income taxation. [S B 220]

Approved March 11, 1942

I. Be it enacted by the General Assembly of Virginia, That section
twenty-four of the Tax Code of Virginia, as amended, be amended and
re-enacted, as follows:

Section 24. Definition of gross income-—The term “gross_ in-
come’’, as used herein, includes gains, profits and income derived from
salaries, wages or compensation for personal services of whatever kind
and in whatever form paid, or from professions, vocations, trades, busi-
nesses, commerce, or sales or dealings in property, whether real or per-
sonal, growing out of the ownership, or use, or interest in such property ;
also from rent, interest, dividends, securities or transactions of any
business carried on for gain or profit, or gains or profits and income
derived from any source whatever, including gains or profits and income
derived through estates or trusts by the beneficiaries thereof, whether as
distributive or as distributable shares. For the taxable year nineteen
hundred and thirty-nine and for every taxable year thereafter, the term
“gross income”, as used herein, includes compensation, received after
December thirty-first, nineteen hundred and thirty-eight, for personal
service as an officer or employee of the United States, any territory or
possession or political subdivision thereof, the District of Columbia, or
any agency or instrumentality of any one or more of the foregoing ; and
the term “officer or employee” includes a member of a legislative body,
a judge or officer of a court, and a person in the armed forces.

The amount of all such items shall be included in the gross income
for the taxable year in which received by the taxpayer, unless under the
methods of accounting permitted herein, such amounts are to be properly.
accounted for as of a different period; but the term “gross income” does
not include the following items, which shall be exempt from taxation
under this chapter :

(a) The proceeds of life insurance policies and contracts paid upon
the death of the insured.

(b) The amount received by the insured as a return of premium.
or premiums paid by him under life insurance, endowment or annuity
contracts, either during the term or at the maturity of term mentioned in
the contract, or at the surrender of the contract. 7

(c) The value of property acquired by gift, bequest, devise or
inheritance received during the year, but the income received from such
gifts, bequests, devises, and inheritances shall be assessed under the
provisions of this chapter.

(d) Any amount received through accident or health insurance
or under the workmen’s compensation act as compensation for personal
injuries or sickness, and the amount of any damages received, whether by
suit or agreement, on account of such injuries or sickness.

(e) Interest upon obligation of the United States or of this State,
and interest upon securities issued under the provisions of the Federal
farm loan act.
(f) Salaries, wages and other compensation received from the
United States by officers or employees thereof in any taxable year prior
to the taxable year nineteen hundred and thirty-nine. |

(g) Pensions received from the United States or this State on
account of military or naval service in armed forces, whether such service
was rendered by the recipient of the pension or by a relative by blood or
marriage. .

(h) Pay and allowances received from the United States by a
person in the armed forces of the United States for active service in such
forces. in the taxable years nineteen hundred and forty-two and nineteen
hundred and forty-three to an amount not exceeding five hundred dollars
in either taxable year, but any amount so received in excess of five hun-
dred dollars in either taxable year shall be included in gross income to the
extent of such excess.

(i) Persons in the armed forces of the United States stationed on
military or naval reservations within Virginia who are not domiciled in
Virginia and who maintain no place of abode in Virginia shall not be held
liable to income taxation on the ground that they are so stationed and
perform services on such reservations or elsewhere in this State. This
paragraph shall be in force for the taxable year nineteen hundred and
forty-one and for every taxable year thereafter until otherwise provided
by law.