Signed on April 1, 2014, S.B. 5001 enacts Virginia’s budget bill, which includes limitations on the state’s subject to tax and unrelated party addback exceptions. The subject to tax exception is generally limited to the ‘portion of income’ received by the related member. The unrelated party exception is generally limited to the ‘portion of income’ derived from license agreements that are comparable to third party agreements.
Both limitations are retroactive to taxable years beginning on and after January 1, 2004.