Tax Type
Corporation Income Tax
Description
Permission to file a combined return
Topic
Returns/Payments/Records
Date Issued
09-18-1984
September 18, 1984
Re: Virginia Code § 58-151.079
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- Permission to File Combined Return
Dear *******
This is in response to your letter of June 27, 1984, requesting permission for the above mentioned taxpayers to file a combined Virginia income tax return. The corporations are all eligible affiliates subject to Virginia income tax and all utilize the same taxable year. The corporations are currently filing on a consolidated basis for federal income tax purposes.
In filing their initial return for the taxable year ending March 31, 1980, the parent and its first subsidiary (S-l) elected to file on a consolidated basis for Virginia purposes. Later a short period consolidated return was filed to accomplish a change in the taxable year and to reflect the acquisition of three more subsidiaries for the taxable year ending December 31, 1981. The parent and three of the subsidiaries are currently 100% Virginia corporations, therefore, their incomes are not apportionable. However, if their incomes were apportionable, they would be apportionable under Virginia Code §58-151.041 (three factor formula). The fourth subsidiary (S-4) is a multistate motor carrier and its income is taxable under Virginia Code § 58-151.050 (vehicle miles formula).
The Department of Taxation's policy is not to allow corporations whose incomes are apportioned under different apportionment formulas to file consolidated returns. That prohibition would apply even though the parent corporation and three of the subsidiary corporations do not apportion their income currently, because if the did, it would not be done by using the same formula that is used by a multistate motor carrier. Therefore, the election made to file as a consolidated group beginning with the taxable year ending December 31, 1981, was invalid. Recognizing this fact, you have requested permission to change to a combined method of filing.
Permission is hereby granted to file a combined return for the taxable year ending December 31, 1981, and thereafter which includes the affiliates subject to Virginia income tax upon the following conditions:
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- 1. Schedules shall be filed with the combined return which contain all information which would be contained in a separate Virginia return for each 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.
Please attach a copy of this letter to the amended returns when they are filed.
Sincerely,
W. H. Forst
State Tax Commissioner
Rulings of the Tax Commissioner