Page:United States Statutes at Large Volume 100 Part 3.djvu/789

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2597

"(1) IN GENERAL.—Each individual to whom subsection (a) applies for the taxable year shall pay the applicable percentage of the taxes imposed by this chapter for such taxable year (determined without regard to paragraph (3)) to the Virgin Islands. "(2) APPLICABLE PERCENTAGE.—

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"(A) IN GENERAL.—For purposes of paragraph (1), the term 'applicable percentage' means the percentage which Virgin Islands adjusted gross income bears to adjusted gross income. "(B) VI R G I N ISLANDS ADJUSTED GROSS INCOME.—For pur-

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poses of subparagraph (A), the term 'Virgin Islands adjusted gross income' means adjusted gross income determined by taking into account only income derived from sources within the Virgin Islands and deductions properly apportioned or allocable thereto. "(3) A M O U N T S PAID ALLOWED AS CREDIT.—There shall be al-

lowed a s a credit against the tax imposed by this chapter for the taxable year a n a m o u n t equal to the taxes required to be paid to the Virgin Islands under paragraph (1) which a r e so paid. "(c) T R E A T M E N T OF VI R G I N ISLANDS R E S I D E N T S. —

"(1) APPLICATION OF SUBSECTION.—This subsection shall apply to a n individual for the taxable year if— "(A) such individual is a bona fide resident of the Virgin Islands a t the close of the taxable year, or "(B) such individual files a joint r e t u r n for the taxable year with a n individual described in subparagraph (A). "(2) F I L I N G REQUIREMENT.—Each individual to whom this subsection applies for the taxable year shall file his income tax r e t u r n for the taxable year with the Virgin Islands. "(3) E X T E N TO F INCOME TAX LIABILITY.—In the case of a n

individual to whom this subsection applies in a taxable year for purposes of so m u c h of this title (other than this section and section 7654) a s relates to the taxes imposed by this chapter, the Virgin Islands shall be t r e a t e d as including the United States. "(4) RESIDENTS O F THE VIRGIN ISLANDS.—In the case of a n

individual w h o is a bona fide resident of the Virgin Islands a t the close of the taxable year and who, on his r e t u r n of income tax to the Virgin Islands, reports income from all sources and identifies the source of each item shown on such r e t u r n, for purposes of calculating income tax liability to the United States gross income shall not include any a m o u n t included in gross income on such r e t u r n. "(d) SPECIAL RULE FOR JOINT R E T U R N S. — I n the case of a joint

r e t u r n, this section shall be applied on the basis of the residence of the spouse w h o has the g r e a t e r adjusted gross income (determined without regard to community property laws) for the taxable year. "(e) SECTION N O T TO A P P L Y TO T A X IMPOSED I N VI R G I N ISLANDS.—

This section shall not apply for purposes of determining income tax liability incurred to the Virgin Islands." (b) AUTHORITY

TO IMPOSE

NONDISCRIMINATORY

LOCAL

INCOME

TAXES.—Nothing in any provision of Federal law shall prevent the Virgin Islands from imposing on any person nondiscriminatory local income taxes. Any taxes so imposed shall be t r e a t e d in the s a m e m a n n e r a s State and local income taxes under section 164 of the I n t e r n a l Revenue Code of 1954 and shall not be t r e a t e d a s taxes to which section 901 of such Code applies.

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