Tax Type
Corporation Income Tax
Description
Permission to file a combined return
Topic
Returns/Payments/Records
Date Issued
06-20-1988
June 20, 1988
Re: Virginia Code §58.1-442
Permission to File a Combined Return
Dear**************
This is in reply to your letter of April 27, 1988, requesting permission for the above-referenced taxpayers to file a combined return for taxable years beginning with the fiscal year ended February 29, 1988.
All of the corporations appear to have been organized in 1979. The parent elected to file a consolidated Virginia income tax return with Subsidiary 1. Subsidiary 2 is ineligible to be included in the consolidated return because it uses the apportionment factor for completed contracts pursuant to Va. Code §58.1-419. See VR 630-3-442 (copy enclosed). Thus, Subsidiary 2 has been filing a separate Virginia income tax return.
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, particularly if any of the affiliates do business in more than one state. For this reason, the Department of Taxation very rarely grants permission to change to or from consolidated returns once the election has been made. VR 630-3-442.
Accordingly, permission to file a combined return for taxable years beginning with the fiscal year ended February 29, 1988, is denied.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner