Q. My question is whether and HOW to report the basis portion of the nonqualified distribution for recapture on the Virginia state income tax return.
A. You don't report that at all. That is, there is no adjustment on the VA return.
The taxable portion has been calculated on the federal return. That amount transferred to the VA return with the federal AGI. That is, the same amount is taxed on the VA return. There is no adjustment on the VA return.
Had you qualified for a penalty exception, on the federal return, there would be a subtraction adjustment on the VA return.
