If you also received a notice from the State of Virginia asking for additional information regarding Code 52 having been reported on the Sch ADJ for Capital Gains, here is the explanation from the Virginia return instructions:
"Provided the long-term capital gain or investment services partnership income is attributable to an investment in a “qualified business” as defined in Va. Code §58.1-339.4 or any other technology business approved by the Secretary of Technology or the Secretary of Commerce and Trade, it may be allowed as a subtraction.
The business must have its principal facility in Virginia and less than $3 million in annual revenues for the fiscal year preceding the investment.
The investment must be made between the dates of April 1, 2010, and June 30, 2020. Taxpayers claiming the Qualified Equity and Subordinated Debt Credit cannot claim this subtraction relating to investments in the same business. In addition, no investment is “qualified” for this deduction if the business performs research in Virginia on human embryonic stem cells and no subtraction would be allowed to an individual taxpayer who claimed the Venture Capital Investment subtraction for the same investment."
They are asking if the income item you reported meets these criteria needed in order to qualify for a subtraction from income on the Virginia return.
See here for another discussion of this issue.
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