Chap. 139.—An ACT to amend and reenact Sections 38, 50 and 53 of the Tax
Code of Virginia, as heretofore amended, in relation to individual, fiduciary
and corporation income taxes. [H

Approved March 6, 1948

Be it enacted by the General Assembly of Virginia:

1. That sections thirty-eight, fifty and fifty-three of the Tax
Code of Virginia, as heretofore amended, be amended and reenacted
so as to read as follows:
Section 38. Individual income tax rates; residents and non-
residents.—A tax is hereby annually levied for each taxable year
upon every resident individual of this State, upon and with respect
to his entire net income as herein defined for purposes of taxation,
at rates as follows:

Two per centum of the amount of such net income not exceeding
three thousand dollars;

Three per centum of the amount of such net income in excess
of three thousand dollars, but not in excess of five thousand dollars ;
and

Five per centum of the amount of such net income in excess of
five thousand dollars.

A like tax is hereby annually levied for each taxable year at
the rates specified in this section upon and with respect to the
entire net income as herein defined for purposes of taxation, except
as herein provided, from all property owned and from every busi-
ness, trade, profession or occupation carried on in this State by
natural persons not residents of the State. But a nonresident indi-
vidual receiving income from labor performed, business done or
property located in this State, and income from labor performed,
business done or property located outside of this State, shall be
taxable only upon the amount of income received by such taxpayer
from labor performed, business done, or property located within
this State. The remainder of the income received by him shall be
deemed nontaxable by this State.

The taxes levied by this chapter shall be assessed, collected and
paid as provided by law.

This section, as hereby amended, shall be in force for the taxa-
ble year nineteen hundred forty-eight, and for every taxable year
thereafter, until otherwise provided by law.

_ If the taxpayer’s taxable year is a fiscal year ending in nineteen
hundred forty-eight, such taxpayer shall compute his tax liability
as prescribed in this chapter in the following manner: A tax shall
first be computed according to the rates applicable to the calendar
year nineteen hundred forty-seven. A tentative tax shall then be
computed according to the rates applicable to the calendar year
nineteen hundred forty-eight, and the difference between the tax
and tentative tax shall be determined. Such taxpayer’s liability
under this chapter shall be the sum of (a) the tax as computed
according to the rates applicable to the calendar year nineteen
hundred forty-seven, and (b) that proportion of the difference
between the tax and the tentative tax, as defined above, as the
number of months in the taxpayer’s fiscal year or period which
fall in the calendar year nineteen hundred forty-eight bears to the
whole number of months of such fiscal year or period. This para-
graph shall be inapplicable for the calculation of any tax on any
return filed which covers a fiscal year or period ending after
December thirty-first, nineteen hundred forty-eight. This para-
graph shall apply to fiduciaries as well as to individuals.

Section 50. Estates and trusts—(1) The tax imposed by this
chapter upon individuals shall apply to estates and trusts, which
tax is hereby levied annually upon and with respect to the income
of estates or of any kind of property held in trust including:

(a) Income received by estates of deceased persons during
the period of administration or settlement of the estate;

(b) Income accumulated in trust for the benefit of unborn or
unascertained persons or persons with contingent interests;

(c) Income held for future distributions under the terms of
the will or trust ;

(d) Income which is to be distributed to the beneficiaries
periodically, whether or not at regular intervals, and the income
collected by a guardian of an infant to be held or distributed as the
court may direct ; and

(e) Income of an estate during the period of administration or
settlement permitted by subdivision three of this section to be
deducted from the net income upon which the tax is to be paid by
the fiduciary.

(2) The fiduciary shall be responsible for making the return
of income for the estate or trust for which he acts, whether such
income be taxable to the estate or trust or to the beneficiaries
thereof. The net income of an estate or trust shall be computed
in the same manner and on the same basis as provided in this
chapter for individual taxpayers, except that lawful commissions
paid to the fiduciary, bond premiums paid and fees paid to the
commissioners of accounts shall be allowable as deductions, and
except that there shall also be allowed as a deduction any part of
the gross income, without limitation, which pursuant to the terms
of the will or deed creating the trust, is during the taxable year
paid to or permanently set aside for the purposes and in the manner
specified in subsection (m) of section twenty-five of the Tax Code
of Virginia or is to be used exclusively for religious, charitable,
scientific, literary or educational purposes or for the prevention of
cruelty to children or animals; and in cases under paragraphs d
and e of subdivision one of this section the fiduciary shall include
in the return a statement of each beneficiary’s distributive share
of such net income, whether or not distributed before the close
of the taxable year for which the return is made.

(3) In cases under paragraphs a, b and c of subdivision one,
of this section, the tax shall be imposed upon the estate or trust
with respect to the net income of the estate or trust and shall be
paid by the fiduciary, except that in determining the net income
of the estate of any deceased person during the period of adminis-
tration or settlement there may be deducted the amount of any
income properly paid or credited to any legatee, heir or other
beneficiary. In such cases, the estate or trust shall be allowed the
same exemption as is allowed to single persons by this chapter,
and in such cases an estate or trust created by a person not a resi-
dent, and an estate of a person not a resident shall be subject to
tax only to the extent to which individuals other than residents
are liable under this chapter.

(4) In cases under paragraphs d and e of subdivision one of
this section, if the distribution of income is in the discretion of
the fiduciary, either as to the beneficiaries to whom payable or as
to the amounts to which any beneficiary is entitled, the tax shall be
imposed upon the estate or trust in the manner provided in sub-
division three of this section, but without the deduction of any
amounts of income paid or credited to any such beneficiary. In
all other cases under paragraphs d and e of subdivision one of
this section, the tax shall not be paid by the fiduciary, but there
shall be included in computing the net income of each beneficiary
his distributive share whether distributed or not, of the net income
of the estate or trust for the taxable year, or, if his net income
for such taxable year is computed upon the basis of a period differ-
ent from that upon the basis of which the net income of the estate
or trust is computed, then his distributive share of the net income
of the estate or trust for any accounting period of such estate or
trust ending within the fiscal or calendar year upon the basis of
which such beneficiary’s net income is computed. In such cases the
income of a beneficiary, not a resident, derived through such estate
or trust, shall be taxable only to the extent provided in this chapter.

This section, as hereby amended, shall be in force for the taxa-
ble year nineteen hundred forty-eight and for every taxable year
thereafter, until otherwise provided by law.

Section 53. Rate of tax on corporations——The tax imposed by
this chapter for each taxable year on corporations shall be at the
rate of five per centum of the entire net income of the corporation
or the portion thereof taxable within the State, determined as
provided by this chapter.

This section, as hereby amended, shall be in force for the taxa-
ble year nineteen hundred forty-eight, and for every taxable year
thereafter, until otherwise provided by law.

If a corporation’s taxable year is a fiscal year ending in nineteen
hundred forty-eight, such corporation shall compute its tax liability
as prescribed in this chapter in the following manner: A tax shall
first be computed according to the rate applicable to the calendar
year nineteen hundred forty-seven. A tentative tax shall then be
computed according to the rate applicable to the calendar year
nineteen hundred forty-eight, and the difference between the tax
and the tentative tax shall be deterntined. Such corporation’s liabil-
ity under this chapter shall be the sum of (a) the tax as computed
according to the rate applicable to the calendar year nineteen
hundred forty-seven, and (b) that proportion of the difference
between the tax and the tentative tax, as defined above, as the
number of months in the corporation’s fiscal year or period which
fall in the calendar year nineteen hundred forty-eight bears to the
whole number of months of such fiscal year or period. This para-
graph shall be inapplicable for the calculation of any tax on any
return filed which covers a fiscal year or period ending after
December thirty-first, nineteen hundred forty-eight.