Tax Type
Corporation Income Tax
Description
Refund request per IRC § 1341
Topic
Payment and Refund
Returns/Payments/Records
Date Issued
09-23-1991
September 23, 1991
Re: §58.1-1821 Application; Corporation Income Tax
Dear********************
This will reply to a letter dated November 6, 1990, written on behalf of**************(the "Taxpayer"), seeking a refund of corporation income tax.
FACTS
During the year ended December 31, 1989, it was determined that income previously reported by the taxpayer for taxable years ended June 30, 1984 through December 31, 1988 was the income of and reportable by another entity. That entity requested repayment of the income from the taxpayer. The taxpayer requests that the department issue a refund for taxes paid on the income under the claim of right doctrine.
DETERMINATION
Virginia's policy of fully conforming to the federal treatment of claim of right repayments under Internal Revenue Code (IRC) §1341 in the context of the individual income tax was explained in P.D. 87-190 (8/5/87) (copy enclosed). This policy is also applicable for corporation income tax purposes.
Accordingly, the department will allow corporations to fully follow the provisions of IRC §1341 for Virginia income tax purposes. The method elected for federal income tax purposes under IRC Sect. 1341 to account for the repayment will determine which method must be used for Virginia income tax purposes.
The return and schedules which have been supplied set forth the application of IRC §1341 to the taxpayer's situation. The return will be reviewed, and the department will issue a refund in due course.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner