Tax Type
Corporation Income Tax
Description
Gross Receipts
Topic
Allocation and Apportionment
Date Issued
05-12-1988
May 12, 1988
Re: Request for Ruling; Corporation Income Tax
§58.1-421 Alternative Method of Allocation & Apportionment
Dear***************
This is in response to your letter of November 18, 1987, in which you requested permission to use separate accounting to determine the taxable income of the taxpayer for 1986.
Facts
In 1986 the taxpayer began hiring a field sales force to sell its product direct to large end-users not effectively served by its distributors. By the end of the taxable year the field sales force had not yielded results representative of the rest of the taxpayer's operations. The statutory three factor apportionment formula results in Virginia taxable income greater than its gross receipts from products sold in Virginia. The requested method of separate accounting would show that the taxpayer's Virginia operations resulted in a loss.
Determination
The policies which apply to requests for an alternative method under §58.1-421 are well established. See Virginia Regulation VR 630-3-421 and Ruling Letter dated September 18, 1986, P.D. No. 86-184 (copies enclosed). After considering the facts set forth, you have not demonstrated by clear and cogent evidence that the statutory method is unconstitutional or inapplicable as applied to your situation. Accordingly, permission to use separate accounting is denied.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner