Tax Type
Corporation Income Tax
Description
Custodian account--money market
Topic
Basis of Tax
Exemptions
Taxability of Persons and Transactions
Date Issued
12-28-1982
December 28, 1982
Re: § 58-1118 Application
Capital Not Otherwise Taxed
For the Years 1979, 1980 and 1981
Dear ***********************
This is in reply to your letter of September 3, 1982, in which you, on behalf of your client, applied pursuant to § 58-1118 of the Code of Virginia for relief from additional state capital taxes assessed for the years 1979, 1980 and 1981.
In my letter to you dated September 30, 1982, I informed you that I would discuss the matter in question with my staff and advise you accordingly. As a result of that discussion, I have come to the conclusions below.
You contend that the department is erroneous in that it includes in taxable capital short-term investments in bank-sponsored master notes which you consider to be the equivalent of cash.
§ 58-411(4) exempts money on deposit from capital tax, but this is a very restricted exemption and does not include short-term or long-term investments or notes receivable of any kind. The item in question is described in audit as "custodian account--money market." In your letter, you state that these short-term investments represent banksponsored master notes which are held by the ******* of Washington. We realize that in many circumstances such investments may be considered by taxpayers as the equivalent of cash, but the law nevertheless makes no provision for exemption.
Accordingly, I find no basis for any change in the determination. previously expressed in our audit report. This determination is made without benefit of the usual taxpayer conference. If after reviewing this letter you desire a conference, please let me know within 30 days.
Sincerely,
W. H. Forst
State Tax Commissioner
Rulings of the Tax Commissioner