CHAPTER 407

An Act to amend and reenact § 58-78 as amended of the Code of Virginu,
which section defines gross income.
Be it enacted by the General Assembly of Virginia:

1. That § 58-78 as amended of the Code of Virginia be amended and re-
enacted as follows:

§ 58-78. (a) General definition—The term “gross income”, 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, businesses, commerce or sales
or dealings in property, whether real or personal, growing out of the owner-
ship, 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 bene-
ficiaries thereof, whether as distributive or as distributable shares.

The term includes compensation received 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 in-
strumentality 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.

(b) Exclusions from gross income.—The following items shall not be
included in gross income and shall be exempt from taxation under this
chapter:

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

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

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

(4) Any amount received through accident or health insurance or
under * acts or workmen’s compensation acts or under ordinances in the
nature of workmen’s compensation acts, as compensation for personal in-
juries or sickness and the amount of any damages received, whether by suit
or agreement, on account of such injuries or sickness.

(5) Interest upon obligations of the United States or of this State and
interest upon securities issued under the provisions of the Federal Farm
Loan Act.

(6) 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 mar-
riage.

(7) Amounts received as pensions, annuities, or similar allowances for
personal injury or sickness resulting from active service in the armed forces
of the United States or of this State.

(8) Benefits received under Federal and State Social Security Acts.

(c) Alimony, etc., income.—In the case of a wife who is divorced or
legally separated from her husband under a decree of divorce or of separate
maintenance, periodic payments (whether or not made at regular intervals)
received subsequent to such decree in discharge of, or attributable to prop-
erty transferred (in trust or otherwise) in discharge of, a legal obligation
which, because of the marital or family relationship, is imposed upon or in-
curred by such husband under such decree or under a written instrument
incident to such divorce or separation shall be includible in the gross in-
come of such wife, and such amounts received as are attributable to prop-
erty so transferred shall not be includible in the gross income of such hus-
band. This subsection shall not apply to that part of any such periodic pay-
ment which the terms of the decree or written instrument fix, in terms of
an amount of money or a portion of the payment, as a sum which is payable
for the support of minor children of such husband. In case any such
periodic payment is less than the amount specified in the decree or written
instrument, for the purpose of applying the preceding sentence, such pay-
ment, to the extent of such sum payable for such support, shall be con-
sidered a payment for such support. Installment payments discharging
a part of an obligation the principal sum of which is, in terms of money or
property, specified in the decree or instrument shall not be considered
periodic payments for the purposes of this subsection; except that an in-
stallment payment shall be considered a periodic payment for the purposes
of this subsection if such principal sum, by the terms of the decree or in-
strument, may be or is to be paid within a period ending more than ten years
from the date of such decree or instrument, but only to the extent that
such installment payment for the taxable year of the wife (or if more than
one such installment for such taxable year is received during such taxable
year, the aggregate of such installment payments) does not exceed ten per
centum of such principal sum. For the purposes of the preceding sentence,
the portion of a payment of the principal sum which is allocable to a period
after the taxable year of the wife in which it is received shall be considered
an installment payment for the taxable year in which it is received. (In
cases where such periodic payments are attributable to property of an estate
or property held in trust, see § 58-121.1.)

(d) Definition of “adjusted gross income”.—As used in this chapter
the term “adjusted gross income” means the gross income minus:

(1) Trade and business deductions.—The deductions allowed by § 58-81
which are attributable to a trade or business carried on by the taxpayer, if
such trade or business does not consist of the performance of services by the
taxpayer as an employee;

(2) Expenses of travel and lodging in connection with employment.—
The deductions allowed by § 58-81 which consist of expenses of travel,
meals, and lodging while away from home, paid or incurred by the taxpayer
in connection with the performance by him of services as an employee;

(3) Reimbursed expenses in connection with employment.—The de-
ductions allowed by § 58-81 (other than expenses of travel, meals, and
lodging while away from home) which consist of expenses paid or incurred
by the taxpayer, in connection with the performance by him of services as
an employee, under a reimbursement or other expense allowance arrange-
ment with his employer;

(4) Deductions attributable to rents and royalties——The deductions
(other than those provided in paragraphs (1), (5), or (6)) allowed by
§ 58-81 which are attributable to property held for the production of rents
or royalties ; |

(5) Certain deductions of life tenants and income beneficiaries of prop-
erty.—The deductions (other than those provided in paragraph (1)) for
depreciation and depletion, allowed by § 58-81 (i) and (j) to a life tenant
of property or to an income beneficiary of property held in trust,

(6) Losses from sales or exchange of property.—The deductions (other
than those provided in paragraph (1)) allowed by § 58-81 as losses from
the sale or exchange of property; and

(7) Dividend deductions.—The deductions allowed by § 58-81 (k) and

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_ This section, as hereby amended, shall be in force for the taxable year
nineteen hundred and fifty-two and for every taxable year thereafter.