Tax Type
Corporation Income Tax
Description
Bad Debt Deduction
Topic
Returns/Payments/Records
Taxpayers' Remedies
Date Issued
12-20-1982
December 20, 1982
Re: § 58-1118, Corporation Income Tax
§ 58-151.032:1; Bad Debt Deduction
Dear ************************
Taxpayer is a savings and loan association which owns a service corporation subsidiary and files consolidated federal and Virginia returns. In 1981 the service corporation suffered a substantial loss which was carried back under federal law-to 1978. Taxpayer filed an amended Virginia return for 1978 claiming a refund based on the change in federal taxable income. The refund was reduced by the Department based on a recomputation of the Virginia bad debt deduction. Taxpayer had applied the federal percentage to the separately stated income of the association. The department applied the percentage to the consolidated income of the association and service corporation.
After a thorough review of taxpayer's returns, the department now agrees that taxpayer's computations of the Virginia bad debt deduction were correct. Furthermore, review of other years affected by the net operating loss carrybacks reveal the taxpayer may be entitled to an additional refund. I enclose a worksheet showing the computations. You should receive the refund in six to eight weeks.
Sincerely,
W. H. Forst
State Tax Commissioner
Rulings of the Tax Commissioner