Tax Type
Corporation Income Tax
Description
Permission to file a consolidated return
Topic
Returns/Payments/Records
Date Issued
05-28-1985
May 28, 1985
Re: Virginia Code Section 58.1-442
Permission to File a Consolidated Return
Dear ****
This will reply to your letter of April 4, 1985 requesting permission for the above-referenced taxpayers to file a consolidated Virginia income tax return.
You have indicated that the parent does not itself do business in Virginia and that the above-referenced taxpayers represent all of its subsidiaries doing business in Virginia. The corporations have in the past filed a consolidated federal return and separate Virginia returns.
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 than 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 once the election has been made.
Accordingly, permission to file a 1984 consolidated Virginia return is denied.
Section 58.1-442 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.
All of the above-referenced taxpayers are members of an affiliated group eligible to file a combined return. Permission is hereby granted for such taxpayers to file a combined return for the taxable year ended January 31, 1985 and thereafter. Because the parent corporation is not taxable in Virginia, the return should be filed using the name and identification number of the Designated Lead Affiliate. The combined return is to be filed in accordance with the requirements set forth in the Virginia Corporation Income Tax Regulations § 630-3-442 (copy enclosed).
Sincerely,
W. H. Forst
Tax Commissioner
Re: Virginia Code Section 58.1-442
Permission to File a Consolidated Return
Dear ****
This will reply to your letter of April 4, 1985 requesting permission for the above-referenced taxpayers to file a consolidated Virginia income tax return.
You have indicated that the parent does not itself do business in Virginia and that the above-referenced taxpayers represent all of its subsidiaries doing business in Virginia. The corporations have in the past filed a consolidated federal return and separate Virginia returns.
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 than 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 once the election has been made.
Accordingly, permission to file a 1984 consolidated Virginia return is denied.
Section 58.1-442 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.
All of the above-referenced taxpayers are members of an affiliated group eligible to file a combined return. Permission is hereby granted for such taxpayers to file a combined return for the taxable year ended January 31, 1985 and thereafter. Because the parent corporation is not taxable in Virginia, the return should be filed using the name and identification number of the Designated Lead Affiliate. The combined return is to be filed in accordance with the requirements set forth in the Virginia Corporation Income Tax Regulations § 630-3-442 (copy enclosed).
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner