Tax Type
Corporation Income Tax
Description
Request for alternative method of allocation and apportionment
Topic
Allocation and Apportionment
Date Issued
03-18-1985
March 18, 1985
RE: §58.1-421 Request for Alternate Method of Allocation and Apportionment Corporation Income Tax; FYE 4/30/84
Dear ****
The taxpayer has requested permission to use an alternative method of allocation and apportionment for the taxable year ended April 30, 1984. The taxpayer is a construction contractor using the completed contract method of accounting and filed its Virginia return apportioning income under §58-151.050.2 (recodified as §58.1-419 effective January 1, 1985).
The taxpayer had only one construction project in Virginia and its accounting records show that the Virginia project lost money. significant portion of the loss is attributable to overhead expenses assigned to the Virginia project based on the percentage of Virginia receipts over all receipts. The requested alternative method is a separate accounting for the Virginia project.
Determination
The policy applicable to requests for an alternative method is set forth in Virginia Regulation §630-3-421 (copy attached). After reviewing taxpayer's request and the return for the year in question, I do not find that the statutory method is either inequitable or unconstitutional as applied to the taxpayer.
The General Assembly has provided a statutory method of allocation and apportionment that applies to all corporations. Neither the taxpayer nor the Department may elect to use a different method. I construe §58.1-421 as authorizing me to allow use of an alternative method only in extraordinary circumstances where the need for relief has been demonstrated by clear and cogent evidence.
The only evidence presented in support of this request is that Virginia's share of the taxpayer's taxable income under the statutory formula exceeded Virginia's share under separate accounting Such a showing is insufficient. Department of Taxation v. Lucky Stores, 217 Va. 121 (1976).
Accordingly, r must deny your request for permission to use an alternative method of allocation and apportionment.
Sincerely,
W. H. Forst
State Tax Commissioner
RE: §58.1-421 Request for Alternate Method of Allocation and Apportionment Corporation Income Tax; FYE 4/30/84
Dear ****
The taxpayer has requested permission to use an alternative method of allocation and apportionment for the taxable year ended April 30, 1984. The taxpayer is a construction contractor using the completed contract method of accounting and filed its Virginia return apportioning income under §58-151.050.2 (recodified as §58.1-419 effective January 1, 1985).
The taxpayer had only one construction project in Virginia and its accounting records show that the Virginia project lost money. significant portion of the loss is attributable to overhead expenses assigned to the Virginia project based on the percentage of Virginia receipts over all receipts. The requested alternative method is a separate accounting for the Virginia project.
Determination
The policy applicable to requests for an alternative method is set forth in Virginia Regulation §630-3-421 (copy attached). After reviewing taxpayer's request and the return for the year in question, I do not find that the statutory method is either inequitable or unconstitutional as applied to the taxpayer.
The General Assembly has provided a statutory method of allocation and apportionment that applies to all corporations. Neither the taxpayer nor the Department may elect to use a different method. I construe §58.1-421 as authorizing me to allow use of an alternative method only in extraordinary circumstances where the need for relief has been demonstrated by clear and cogent evidence.
The only evidence presented in support of this request is that Virginia's share of the taxpayer's taxable income under the statutory formula exceeded Virginia's share under separate accounting Such a showing is insufficient. Department of Taxation v. Lucky Stores, 217 Va. 121 (1976).
Accordingly, r must deny your request for permission to use an alternative method of allocation and apportionment.
Sincerely,
W. H. Forst
State Tax Commissioner
Rulings of the Tax Commissioner