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 Alternative Method of Allocation and Apportionment; Corporation Income, FYI 3/84
Dear ****
The taxpayer has requested permission to use an alternative method of allocation and apportionment. In 1983, the taxpayer started new operations in Virginia which resulted in a large loss for that location in its first year of operation. The taxpayer requests permission to allocate income (loss) to Virginia based upon a separate accounting for its Virginia location
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, I must deny your request for permission to use an alternative method of allocation and apportionment.
Sincerely
W. H. Forst
Tax Commissioner
RE: §58.1-421 Request for Alternative Method of Allocation and Apportionment; Corporation Income, FYI 3/84
Dear ****
The taxpayer has requested permission to use an alternative method of allocation and apportionment. In 1983, the taxpayer started new operations in Virginia which resulted in a large loss for that location in its first year of operation. The taxpayer requests permission to allocate income (loss) to Virginia based upon a separate accounting for its Virginia location
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, I must deny your request for permission to use an alternative method of allocation and apportionment.
Sincerely
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner