Tax Type
Bank Franchise Tax
Description
Unified Fiduciary Income Tax Return
Topic
Basis of Tax
Date Issued
11-09-1992
November 9, 1992
Re: Request for Ruling: Fiduciary Income Tax
Dear********************
This will reply to your bank's letter of April 30, 1991 and the meeting on April 26, 1991 with members of my staff, in which the bank requests permission to file a unified fiduciary income tax return for a Provider Trust (the "Trust").
As an interim measure, you noted that a considerable duplication of paper could be reduced if you were not required to attach a federal fiduciary income return to each Virginia return. You indicated that this information could be made available to the Department of Taxation through magnetic tape, since the desired method of filing with the Internal Revenue Service would be on magnetic media.
FACTS
The Trust is a pooled income controlling trust, which is administered by your institution. The Trust consists of member trusts which exist for the purchase and maintenance of cemetery plots. The Trust files approximately 9,000 fiduciary income tax returns with Virginia each year. The returns typically do not show any distributable net income to the respective beneficiaries.
RULING
In order for the department to accept a unified trust tax return and thus relieve the separate nondistributing member trusts of the responsibility of having to file separate Virginia trust returns, the following conditions must be met:
1. A schedule must be provided containing the total income of the Trust and separate nondistributing member trusts, as well as the amounts attributable to Virginia under the Provisions of Va. Code §§58.1-361 and 58.1-362.
2. The unified return must reflect only the income or loss to member trusts who have no distributable.
3. All member trusts without distributable income must elect to join in the filing of such a return and a statement to such effect will be included in the return. Participants which can demonstrate that they are charitable trusts not subject to Virginia income tax may be excluded.
4. The return will include a schedule listing each member trust's name, address, account number, and Virginia taxable income.
5. The income tax will be computed at the rates specified under Va. Code §58.1-320 on the income attributable to the taxable nondistributing trusts.
6. The return will contain a statement indicating the responsibility of each member trust for its share of the total tax and any statements made on its behalf. The statement will be signed by the fiduciary of each trust.
7. A similar unified return will be filed and payment made for the declaration of estimated tax, if required.
If the above conditions are satisfied, the Trust may commence the unified filing. However, we reserve the right to withdraw or modify the foregoing authorization upon reasonable notice to the bank. Each income beneficiary having taxable income for a taxable year must file a Virginia income tax return and may not join in the unified return
If the above conditions are not met each member trust having taxable income for a taxable year must file a Virginia return.
Sincerely,
W. H. Forst
Tax Commissioner
TPD/5314O
Rulings of the Tax Commissioner