Additional Modification Reducing Federal Adjusted Gross Income

12a.1. In addition to amounts authorized to be subtracted from federal adjusted gross income pursuant to W. Va. Code §11-21-12(c), any payment made under a tuition prepayment contract or tuition trust account, as provided under W. Va. Code §18-30-14, shall also be allowed as a modification reducing federal adjusted gross income to the extent that the amount of such payment is included therein.

12a.1.1. Under W. Va. Code §§11-21-12a and 18-30-14, a purchaser is entitled to a modification decreasing federal adjusted gross income for State personal income tax purposes for the following payments made by such purchaser in the tax year:

(1) The amount of payment made under a tuition prepayment contract or tuition trust account contract, or both; and

(2) The amount of payment made under a contract with a private sector investment manager, broker-dealer or agent, approved by the Securities Division of the West Virginia State Auditor or the federal Securities and Exchange Commission, for the private placement of contracts under Article 30, Chapter 18 of the West Virginia Code, when such contract has been certified and approved by the West Virginia Education Tuition Trust Board of Directors.

12a.1.2. The West Virginia Higher Education Tuition Trust is not authorized to enter into any tuition prepayment contracts or tuition trust account contracts until such time as it has received a ruling or opinion from the Internal Revenue Service regarding the federal tax consequences of any benefits or refunds received from the Trust under the applicable contract. In the event that the Internal Revenue Service determines that any benefits or refunds received from the Trust arising from either type of contract must be included in federal adjusted gross income and thus subject to federal taxation, such benefits and refunds will likewise be subject to State personal income taxation. Payments, however, made to the Trust are exempt from State personal income taxation as provided under Subsection 12a.1.1 of this regulation.