Tax Type
Intangible Personal Property Tax
Description
Capital not otherwise taxed
Topic
Property Subject to Tax
Date Issued
10-31-1984
October 31, 1984
Re: Capital Not Otherwise Taxed
Years 1981 and 1982
Dear ****
This will acknowledge receipt of a protest of tax on capital not otherwise taxed assessed and 1982 for the years 1981 and 1983.
FACTS
Taxpayer is the owner and operator of real estate for rental in Virginia. Taxpayer filed a return of capital not otherwise taxed for the year 1982, but did not file such returns for the years 1981 and 1983.
As a result of audit, the Department issued the following assessments on *****.
The assessments resulted entirely from the Department's inclusion in taxable capital of notes receivable from officers in each of the years involved.
In protest, you question the applicability of the tax to Taxpayer since you contend that Taxpayer operates no business and simply holds real estate for investment purposes.
You further content that the specific property at issue should not be subject to tax even if the operations of Taxpayer are held to constitute a trade or business subject to tax on capital not otherwise taxed. You support this conclusion by stating that some of the loans to officers were in effect, inter-company advances, and that the loan balances were in effect, cash reserves of the corporation.
DETERMINATION
§ 58-410 provides that all capital of any trade or business of any person, firm or corporation shall be deemed to be intangible personal property subject to tax on capital not otherwise taxed unless such capital is otherwise specifically taxed or specifically exempt from taxation.
Taxpayer, a corporation organized and authorized to conduct business in Virginia, does in fact conduct business through the ownership and operation of substantial rental real estate in Virginia. The business is not specifically exempt from taxation, nor is the property at issue otherwise taxed or otherwise exempt.
While you have contended that some of the loans to officers were in effect, inter-company advances, and that the loan balances were in effect, cash reserves of the corporation you have submitted no evidence or details in support of the contention.
For these reasons, your protest and appeal for correction of assessments is denied. Assessments with additional interest accrued to date are now due and payable.
Sincerely,
W. H. Forst
State Tax Commissioner
Rulings of the Tax Commissioner