• Virginia Supreme Court Limits Corporate Income Tax Addback Exception
  • September 4, 2017
  • On August 31, 2017, the Virginia Supreme Court issued its opinion in Kohl’s Department Stores, Inc. v. Virginia Department of Taxation, holding that only the portion of royalties that are actually taxed by another state falls within its “subject to tax” exception to Virginia’s addback statute for corporate income tax purposes.

    • The Court interpreted the “subject to tax” standard as an “actual” taxation standard.
    • The Court remanded the case to the Circuit Court to determine the portion of the royalty payments actually taxed by another state.
    • Three justices dissented to this opinion finding that the statute is not ambiguous and favored the taxpayer’s application of the statute.
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