Tax Type
Corporation Income Tax
Description
Foreign source income
Topic
Computation of Income
Date Issued
04-05-1991
April 5, 1991
Re: §58.1-1821 Application: Corporation Income Tax.
Dear********************
This will reply to your letter of May 22, 1989, in which you seek correction of corporation income tax assessments for***************(the "Taxpayer").
FACTS
The taxpayer was field audited and numerous adjustments were made to its tax returns for the taxable years ended March 31, 1985 and March 31, 1985. You object to the removal of "other" income and service income from the subtraction for foreign source income.
DETERMINATION
The department has previously ruled on the subtraction of foreign source income classified as "other income". P.D. 90-2 1/2/90) (copy enclosed).
You fail to explain why "other" income should qualify as foreign source income under Virginia law. Without more information detailing the nature of the income, the portion of the subtraction attributable to "other" income must be disallowed.
Service income is not one of the types of income which qualifies as foreign source income under Virginia law. Consequently, the income is not eligible for the foreign source income subtraction, and the auditor's adjustment is correct.
Accordingly, the assessment is correct and is now due and payable. You will shortly receive an updated bill with interest accrued to date. The bill should be paid within 30 days to avoid the accrual of additional interest. To the extent that you can provide the department with detailed information that establishes that the income included as "other" income qualifies under the definition of "foreign source income" under Va. Code §58.1-302, the audit report will be revised to remove such income from Virginia taxable income.
Please send the additional information detailing the types of income included as "other" income to the department's Technical Services Section, P.O. Box 6-L, Richmond, Virginia 23282, within the next 30 days. Although you requested a conference, this letter has been issued without one because the application of the law is clear.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner