Tax Type
Corporation Income Tax
Description
Change filing status; separate corporation income tax returns to combined return
Topic
Corporate Distributions and Adjustments
Date Issued
08-24-2004
August 24, 2004
Re: Request for Ruling: Corporate Income Tax
Dear *****:
This will respond to your request for permission for the subsidiaries of ***** (the "Taxpayer") to change from filing separate Virginia corporation income tax returns to filing a combined return beginning with the taxable year ended March 3, 2002. I apologize for the delay in the Department's response.
FACTS
Several subsidiaries of the Taxpayer have been filing separate Virginia corporation income tax returns for several years. In addition, another subsidiary became subject to Virginia income tax during the taxable year ended March 3, 2002. You represent that these subsidiaries (collectively, the "Virginia Group") are affiliated within the meaning of Va. Code § 58.1-302 and file using the same taxable year. You also state that all members of the Virginia Group use the same "52/53 week" taxable year in accordance with Internal Revenue Code ("IRC") § 441(f). You request permission for the Virginia Group to change to the combined filing status beginning with the taxable year ended March 3, 2002.
RULING
Virginia Code § 58.1-442 allows corporations to elect to file returns as separate, combined, or consolidated entities regardless of how the corporations file their federal income tax returns. Title 23 of the Virginia Administrative Code ("VAC") 10-120-320 provides that in the first year two or more members of an affiliated group of corporations are required to file Virginia returns, the group may elect to file separate returns, a combined return, or a consolidated return. All returns for subsequent years must be filed on the same basis unless permission to change is granted by the Department.
Title 23 VAC 10-120-324 provides that changes between separate and combined filing are generally allowed because allocation and apportionment among members of the affiliated group are unaffected by either filing method. Pursuant to Public Document 91-271 (10/23/91), the Department may grant permission to change filing methods commencing with a given taxable year so long as the request is made prior to that taxable year's extended due date.
In this case, the Taxpayer complied with the Department's policy for requesting permission to change filing methods and the request was made prior to the extended due date for the taxable year. Accordingly, permission is granted for the Virginia Group (each member subject to Virginia income tax and on the same 52/53 week taxable year end) to file a combined Virginia corporation income tax return for the taxable year ended March 3, 2002. In accordance with the federal 52/53 week election, the 2002 fiscal year under this election will end March 3, 2002. The combined return should be filed with *****, as the lead corporation, and a copy of this letter should be attached to each combined return filed.
Copies of the Code of Virginia sections, regulations, and public document cited are available on-line in the Tax Policy Library section of the Department's web site, located at www.tax.state.va.us. If you have any questions regarding this letter, you may contact ***** in the Office of Policy and Administration, Appeals and Rulings, at *****.
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- Sincerely,
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- Kenneth W. Thorson
Tax Commissioner
- Kenneth W. Thorson
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AR/43679E
Rulings of the Tax Commissioner