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CCH Axcess Tax

Introduction to the Virginia Corporate Return

The Virginia corporate income tax return is prepared for calendar, fiscal, and short-year corporations. Using entries from the federal tax return and Virginia worksheets, the following forms and schedules are prepared for the Virginia return:

Forms:

• 500 - Virginia Corporation Income Tax Return
• 500ES - Virginia Estimated Tax Declaration for Corps
• 500C - Underpayment of Virginia Estimated Tax

Schedules:

• 500FED - Schedule of Federal Line Items
• 500ADJ, P1 - Schedule of Adjustments
• 500ADJ, P2 - Schedule of Adjustments
• 500A - Multi-state Corp Allocation & Apportionment of Income
• 500CR - Credit Computation

A copy of the Federal return is provided for filing with the Virginia return.

Common State Data

The State Common Data forms provide a centralized location to create state returns and enter data common to all states. Following is a description of each series of input forms and how they interact with processing a Virginia return.

General Information Forms

These forms are used to enter data common to all state returns. They provide a centralized location and generic format to simplify entering state data. Not all state data is contained here. Boxes which are unique or not shared by a group of entities are still located on unique state input forms.

When using these forms, an entry is mandatory in the State Code box. Presence of data on this form will not create a state return. These may only be created in two ways:

1. Selecting states or cities on the Common Data worksheet > State/City section or
2. Presence of data on state level input forms

You may designate data to apply to a particular state return, or you can apply it to all the state/city returns present. To flag your entries to a particular statey, enter the state code from the picklist in the State Code box. To apply your input to all of the states present, make an ALL entry in the State Code box.

There are 3 levels of default for the General Information input series. The first level is to the Basic Data entered with the federal return. This applies only to selected boxes. Specifically those followed with the word override on the worksheet. For example, if no entries are made on the General Information input series for date of incorporation, the states will default to the incorporation date on the federal Basic Data worksheet.

The second level is to Common Data input with a state code of ALL. The ALL code means it applies to every state in the return, unless a unique state code is present. For example, if you make an entry for the incorporation date on the State Common Data Worksheet > General Information section , which is different from the federal, all the states will default to the ALL coded date and ignore the federal date. However, if a General Information entry is also present with a different date and a state code of VA, then Virginia will pick up the VA coded date and ignore the federal date and the General Information entry date coded ALL.

The third level is the General Information input with a specific state code. If both an ALL occurrence and a specific state entry is present, data must be present in a particular box of the unique state occurrence, or the default entry of ALL will still take place. For example, if you have entered General Information coded ALL which contains an entry for Telephone Number and you have also entered General Information coded VA and make only one entry to indicate that it is an initial return for Virginia. The Virginia program will pick up your initial return entry and the telephone number from your ALL entry, since no telephone number was entered with the VA occurrence.

State Tax Payments - Form 500

Use the Payment/Penalty Category > State Tax Payments worksheet to enter estimated tax payments, withheld amounts, and various other tax payments for VA.

Override this treatment of the detailed state and city tax payments by making an entry in the Suppress Carrying of Detailed State/City Tax Payments for Cash Basis Taxpayers box on the Return Options worksheet > Processing Options section or by selecting the same option in the Return Configuration Set.

State Estimated Tax Forms - Form 500

Enter the estimated tax information for Virginia on the Payment/Penalty category > Estimates and Application of Overpayment worksheet.

Penalty Forms - Form 500

Late interest and penalty information is entered on the State Interest and Penalty worksheet and underpayment of estimated tax data is entered in the Payment/Penalty Category > State Underpayment Penalty worksheet. Enter VA in the box titled State Code. No assumption to the state code is made by the program. An entry in the State Code box is mandatory. Not all boxes apply to all states. You are only able to make entries in boxes applicable to your entry in the State Code box. Presence of data on this form will not create a state return.

Federal Interview Form Notes and Automatic Features

Fixed-Date Conformity - Form 500

Virginia disallows bonus depreciation allowed for certain assets under federal income taxation and 5-year carryback of net operating losses (NOL) allowed for NOLs generated in either taxable year 2001 or 2002. Refer to Virginia Tax Bulletins 03-1, 04-02, 09-1, and 11-1 for more information. For copies of Tax Bulletins and Fixed-Date Conformity updates, see www.tax.virginia.gov for details.

Virginia's fixed-date conformity with the IRC is December 31, 2010.

Depreciation - Form 500

State depreciation is computed from depreciation entries on the "Federal Depreciation and Amortization" federal depreciation worksheets.

As per the Fixed-Date Conformity rules, bonus depreciation and GO Zone are not included in the computation of Virginia taxable income.

If Virginia depreciation is less than the federal depreciation, then the difference should be recognized as an addition on Schedule 500ADJ, Section A, Lines 1 and 2. If the Virginia depreciation is more than the federal depreciation, then the difference should be recognized as a subtraction on Schedule 500ADJ Section B, Lines 1 and 2. Overrides for the automatic computation are available on the Virginia income and deductions worksheet > Other Adjustments and Overrides section.

FS Codes

FS codes are not required, with the exception of municipal bond interest. All income and expense items from the federal worksheets carry to the Virginia return. Additions and subtractions to federal taxable income are handled through entries on Virginia worksheets.

U.S. Obligations

Interest on obligations of the United States are subtracted on VA Schedule ADJ from federal taxable income.

Municipal Bond Interest

Virginia net income includes municipal bond interest from sources outside the state. Interest from municipal bonds and tax-exempt private activity bonds from states other than Virginia are included on Virginia Schedule ADJ as an addition to federal taxable income.

Foreign Dividend Gross-Up

Foreign dividend gross-up is entered on the Income/Deduction worksheet > Interest section. It is included as a subtraction from federal taxable income on VA Schedule 500ADJ.

State Refund Expectations

To assist Taxpayers and Tax Professionals expecting refunds, Virginia Tax is providing a URL to our "Where's my Refund" online program. Industry partners should use this information to communicate and help set the appropriate expectations with external stakeholders. Providing this information will:

• Help eliminate phone calls from Taxpayers, Tax Professionals and Industry about refunds

• Ensure that Taxpayers and Tax Professionals receive the appropriate message

Virginia Tax Refund URL: https://www.tax.virginia.gov/wheres-my-refund