Tax Type
Corporation Income Tax
Description
Interest income and capital gains
Topic
Allocation and Apportionment
Date Issued
08-24-1989
August 24, 1989
Re: §58.1-1821 Application; Corporation Income Tax
§58.1-408 Apportionment of Income
Dear****************
This is in response to your letter of May 25, 1989, protesting the assessment of additional corporation income tax for taxable years 1986 and 1987.
FACTS
The taxpayer filed its Virginia corporate income tax returns for taxable years 1986 and 1987 and included certain interest income and capital gains in allocable income. As the result of a field audit, this income was determined to be apportionable income.
The taxpayer operates two horizontally structured divisions under framework of one corporation. one division, with facilities in Virginia, operates as a manufacturer, while the other division, with no facilities in Virginia, invests excess corporate funds. The interest and capital gains at issue were derived from investments of excess corporate funds by the investment division.
On February 16, 1988, the department determined that in taxable years 1981 and 1982 the taxpayer's separate divisions were all part of a single "unitary business." As such, the income from all divisions was properly includible in the computation of Virginia taxable income. (Copy of PD # 88-29 enclosed.)
DETERMINATION
The issue involved in this application is identical to the issue resolved in Public Document # 88-29 for taxable years 1981 and 1982. Accordingly, the assessments for taxable years 1986 and 1987 are correct and are now due and payable.
This issue is currently in litigation. You may wish to preserve the taxpayer's judicial remedies by paying the assessment and filing a protective claim pursuant to Virginia Code §58.1-1824. The protective claim would be held without action pending a final decision in the case styled Lorillard, Inc. v. Department of Taxation filed in the Circuit Court of the City of Richmond.
This determination letter has been issued without a conference because, based on the information that we have, the facts are identical to the facts in the taxpayer's previous protest. Please let me know if you have additional information and still desire a conference. If no request is made within 30 days, this letter will be final.
Sincerely,
W. H. Forst
Tax Commissioner
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