Tax Type
Corporation Income Tax
Description
Consolidated return filed without permission
Topic
Returns/Payments/Records
Date Issued
05-01-1992
May 1, 1992
Re: Ruling Request: Corporate Income Tax
Dear ****
This will reply to your letter dated September 19, 1991 in which you request permission for * * * (the "Taxpayer") and subsidiary to change to filing a consolidated Virginia return for the 1990 taxable year and prospectively.
FACTS
The subsidiary was formed by the taxpayer in 1984. Separate Virginia returns were filed for the 1988 and 1989 taxable years. A consolidated Virginia return was filed for 1990, although permission has not been granted.
The assets of the subsidiary currently consist of a small amount of cash, and an interest in an aircraft partnership. In future years, the subsidiary will operate a corporate airplane for the taxpayer. The airplane will not be operated for the benefit of any other corporation.
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.
Based on the facts as presented, I find no extraordinary circumstances to warrant the granting of permission for the taxpayer and its subsidiaries to change to filing on a consolidated basis. Accordingly, permission is denied.
Since a 1990 consolidated return was filed without permission from the department, separate Virginia returns for each member of the affiliated group returns have to be refiled on a separate basis, within 30 days of the date of this letter.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner