Document Number
84-168
Tax Type
Corporation Income Tax
Description
State tax effect of I.R.C. Section 338(h)(9)
Topic
Taxable Income
Date Issued
09-26-1984

  • September 26, 1984

    Re: State Tax Effect of I.R.C. Section 338(h)(9)


    Dear ****

    This is in response to your letter of June 6, 1984 requesting a ruling from the Department of Taxation on the Virginia treatment of corporate taxpayers who make an election under Internal Revenue Code Section 338(h)(9). Under Section 338, a purchasing corporation which acquires at least 80 percent of the stock of a target corporation within a 12-month period may elect to treat the stock purchase as a purchase of assets.

    As you are well aware, we begin the computation of Virginia taxable income with federal taxable income. To reach Virginia taxable income, certain explicit statutorily defined modifications must be made to federal taxable income. Absent any specific modification required by the Code of Virginia, we accept the federal treatment of any item that is a component of federal taxable income.

    There is no provision in the Code of Virginia to make a modification for any of the provisions of I.R.C. Section 338. Therefore, the Department of Taxation has no basis for requiring any special treatment for an election made under I.R.C. Section 338(h)(9).

    Sincerely,

    W. H. Forst
    State Tax Commissioner

Rulings of the Tax Commissioner

Last Updated 08/25/2014 16:46