Tax Type
Corporation Income Tax
Description
Consolidated or combined returns
Topic
Returns/Payments/Records
Date Issued
04-09-1984
April 9, 1984
Re: Virginia Corporate Income Tax Returns
Dear **************************
This is in response to your letter of March 16, 1984, requesting permission for ***** and its subsidiaries to file Virginia corporate income tax returns on a consolidated basis for 1982 and subsequent years. Separate returns were filed for 1981 and prior years and you advise that a "combined" return was filed for 1982.
In a consolidated return inter-affiliate transactions are eliminated and the apportionment factors of multi-state corporations are combined. As a result the income subject to Virginia income tax on a consolidated return may be significantly different from the total shown on separate returns, especially if any of 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.
Accordingly, permission to file a consolidated return is denied.
§ 58-151.079 was amended for taxable years beginning on and after January 1, 1981 to include combined returns in the initial filing elections available to affiliated corporate groups. The statutory election to file combined returns is applicable only to corporate groups first becoming eligible to file on other than a separate return basis for taxable years beginning on or after January 1, 1981. However, in other circumstances permission to change from separate to combined returns will normally be granted since such change 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 1982 and thereafter which includes the affiliates subject to Virginia income tax upon 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 eligible member of the affiliate group. See §§ 58-151.079 and 58-151.081.
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 1.1501-79.
If a combined return in accordance with the above has been filed for the year 1982, no further action is required. If not, an amended return should be filed.
Sincerely,
W. H. Forst
State Tax Commissioner
Rulings of the Tax Commissioner