Tax Type
Corporation Income Tax
Description
Request for Affiliates to Join Consolidated Group for Filing Purposes
Topic
Returns and Payments
Date Issued
10-09-2001
October 9, 2001
Re: Request for Ruling: Corporate Income Tax
Dear *****
This will respond to your letter in which you request permission for ***** (the "Taxpayer") to file a Virginia consolidated corporate income tax return for the taxable year ended January 31, 2000. I apologize for the delay in the department's response.
FACTS
The Taxpayer and several affiliates have filed a consolidated Virginia corporate income tax return for a number of years. The consolidated return included only those affiliates that used the three-factor formula to apportion income. Presently, the Taxpayer has three other affiliates that use a single factor formula to apportion income and which file separate Virginia returns. The Taxpayer requests that the affiliates using the single factor formula be allowed to join in the consolidated return and seeks an explanation of the procedure to be used in converting the single factor into a three- factor apportionment formula.
RULING
The Taxpayer has previously filed on the consolidated basis, thereby electing a consolidated filing status for all subsequent years. Because an election to file on a consolidated basis was made by the Taxpayer, any new affiliates that become subject to the Virginia corporate income tax are required to join in the Taxpayer's consolidated return pursuant to Title 23 of the Virginia Administrative Code ("VAC") 10-120-320, copy enclosed.
Effective for taxable years beginning on and after January 1, 1990, Chapter 619 of the 1990 Acts of Assembly allows affiliated corporations utilizing different apportionment factors to be included in a Virginia consolidated return.
The Taxpayer has been filing a consolidated return with the affiliates using the three-factor formula and separate returns for the affiliates using the one-factor formula. Consequently, the affiliates using the one-factor formula must be converted to a three factor equivalent for purposes of inclusion in the Virginia consolidated return. Enclosed is 23 VAC 10-120-326, which should be utilized in the conversion.
If you have any questions regarding this ruling, you may contact ***** in the department's Office of Policy and Administration, Appeals and Rulings, at ******.
Sincerely,
Danny M. Payne
Tax Commissioner
ARO/26180P
Rulings of the Tax Commissioner