Section 9-153. MODIFICATIONS TO INCOME AND DEDUCTIONS

 

153.1Income from annuities and pensions may be modified, and the income may be deducted to arrive at the District adjusted gross income under the following circumstances:

 

(a) If, under the provisions of § 72(d)(1) of the Internal Revenue Code (relating to employees' contributions recoverable in three (3) years), the taxpayer's contribution to a pension or annuity has not been recovered;

 

(b) If amounts received as an annuity or under a pension plan were reported to the District as income under the three percent (3%) rule in effect for years prior to January 1, 1982 (§ 2(b)(2) of title III of the Act); and

 

(c) If a computation to support the deduction provided for under this subsection is submitted with the taxpayer's return.

 

153.2The following example illustrates the application of this subsection (Taxpayer retired December 31, 1979. Taxpayer's contribution to pension $ 15,000.):

 

Year	Pension Income	Included in Federal Gross Income	Included in D.C. Gross Income
1980	$6.000	-0- (Cost not recovered)	$ 450 (3% Rule)
1981	6.400	-0- (Cost not recovered)	$ 450 (3% Rule)
1982	6,900	$ 4,300 (Excess over $ 15,000 cost)	$ 4,300* (Federal Conformity)

 

*The modification to District gross income would be nine hundred dollars ($ 900), since that amount was previously taxable in the District.

 

153.3Income received from retirement plans may be reduced to the extent that contributions to the plans were subject to District income tax in years beginning prior to January 1, 1982.

 

153.4The following example illustrates the application of this subsection: (Taxpayer contributed a total of four thousand dollars ($ 4,000) to an IRA plan for years beginning prior to January 1, 1982. In 1982, taxpayer will be eligible to withdraw the entire amount if he or she elects to do so.)

 

Year	Contrzibutions Included Federal Gross Income	Contributions Included in D.C. Gross Income
Years Prior to 1982	-0-	$ 4,000
1982	$ 4,000	$ 4,000*

 

*The modification to D.C. adjusted gross income would be four thousand dollars ($ 4,000), since this amount has been previously taxed by the District.

 

153.5Interest received on the amount of contribution withdrawn shall be taxable.

 

153.6Carryovers of charitable contributions are allowable in the same manner and to the same extent as permitted under § 170(d)(1) of the Internal Revenue Code; Provided, that no deduction shall be allowed for carryovers of contributions made prior to January 1, 1982.

 

153.7In the case of two (2) earner married couples, the deduction permitted under § 221 of the Internal Revenue Code shall not be applicable to the District of Columbia individual income tax returns, since such deduction serves only to adjust federal tax rates.

 

153.8If a taxpayer is an owner of an entity subject to the unincorporated business franchise tax, the individual taxable income of the taxpayer shall be reduced by his or her share of income taxed to the unincorporated business.

 

153.9The dividend exclusions allowed to corporations under § 243 of the Internal Revenue Code shall not be applicable to the Act.

 

source

Final Rulemaking published at 30 DCR 1255, 1258 (March 18, 1983).