Tax Type
Corporation Income Tax
Description
Consolidated return
Topic
Returns/Payments/Records
Date Issued
03-18-1991
March 18, 1991
Re: Request for Ruling; Corporation Income Tax
Dear******************
This will reply to your letter of July 31, 1990, in which you request permission, on behalf of *************(the "Taxpayer") to file a consolidated Virginia corporate income tax return for the affiliated group for the calendar year ended December 31, 1989.
FACTS
The two affiliated corporations have filed separate Virginia returns in the past. Both are Virginia corporations which operate solely within Virginia. The foreign parent corporation has requested its U.S. subsidiaries file consolidated tax returns in order to facilitate consolidating the information required for tax filing abroad.
RULING
Under Va. Code §58.1-442, once an affiliated group has made an election to file on a separate, consolidated or combined basis, the group may not change its filing status unless permission is granted by the Department of Taxation. It is well established that permission to change to or from consolidated returns will generally not be granted, as the change affects the allocation and apportionment factors and distorts business done in Virginia and income arising from activity in Virginia. VR 630-3-442(E).
Based on the facts as presented, I find no extraordinary circumstances to warrant the granting of permission for the two corporations to change to filing on a consolidated basis. Accordingly, permission is denied.
Va. Code §58.1-442 permits affiliated corporations to file a combined return. A change from separate returns to a combined return does not affect the allocation and apportionment formulas for each corporation.
Permission is granted for the taxpayer and its subsidiary to file a combined return for the taxable year ended December 31, 1989, and for taxable years thereafter if the combined return includes all affiliated corporations subject to Virginia income tax and if they use the same taxable year.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner