Tax Type
Corporation Income Tax
Description
Permission to file consolidated return denied
Topic
Returns/Payments/Records
Date Issued
09-07-1984
September 7, 1984
Re: Virginia Code § 58-151.079-
- Permission to File a Consolidated Return
Dear *************
This is in response to your letter of July 31, 1984 requesting permission for the above referenced taxpayers to file a consolidated Virginia corporation income tax return. All corporations are eligible affiliates subject to Virginia income tax and utilize the same taxable year. Separate returns have been filed in prior years. Each corporation reports income to Virginia using the three-factor apportionment formula.
In a consolidated return inter-affiliate transactions are eliminated and the apportionment factors of multistate corporations are combined. As a result the income subject to Virginia income tax on a consolidated return may be significantly different than the total shown on separate returns, especially if the affiliates do business in more than one state. For this reason the Department of Taxation very rarely grants permission for corporations to change to or from consolidated returns once the election has been made.
Accordingly, permission to file a consolidated return for the taxable year ending March 31, 1984 is denied.
§ 58-151.079 has been amended to permit affiliated corporations to file a combined return for taxable years beginning on or after January 1, 1981. A change from separate returns to a combined return does not affect the computation or apportionment of income except that losses of one corporation may offset the income of an affiliated corporation.
Permission is hereby granted to file a combined return for the taxable year ending March 31, 1984 and subsequent years. The combined return shall include the affiliated corporations noted above which are subject to taxation in Virginia and shall be prepared in accordance with the following conditions:-
- 1. Schedules shall be filed with the combined return which contain all information which would be contained in a separate Virginia return for each and every eligible member of the affiliated group. See §§ 58-151.079 and 58-151.081.
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- 2. In computing the Virginia taxable income of each eligible member of the affiliated group there shall be added to federal taxable income the amount of any net operating loss deduction or other deduction which has been recognized for Virginia income tax purposes and offset other income in a Virginia consolidated or combined return for other taxable years. See, for example, Federal Income Tax Regulation 1.1502-79.
Sincerely,
W. H. Forst
State Tax Commissioner-
Rulings of the Tax Commissioner