Tax Type
Corporation Income Tax
Description
Returns of affiliated corporations; Initial election
Topic
Returns and Payments
Date Issued
01-04-1995
January 4, 1995
Re: Request for Ruling: Corporate Income Tax
Dear**************
This will reply to*******letter of May 24, 1994, requesting permission for*********(the "Taxpayer") to become part of a Virginia consolidated return for the fiscal year ended October 31, 1993.
FACTS
The Taxpayer acquired two subsidiaries on May 1,1993, which had been filing Virginia consolidated returns. Taxpayer requested to file a consolidated return for the fiscal year ended October 31, 1993, but did not do so since permission had not been granted by the department. The Taxpayer now requests permission to file a consolidated return for the fiscal year ended October 31, 1994.
RULING
Code of Virginia §58.1-442 allows corporations to elect to file returns on the basis of one of three (3) filing statuses (separate, combined, or consolidated) regardless of how the corporations filed their federal income tax return. Once an affiliated group has made an election, the group may not change its filing status unless permission is granted by the department.
The filing of the first return for a 12 month taxable year beginning on or after the acquisition of new corporations which creates the affiliated group will be deemed the filing which elects a return filing status. See Virginia Regulation (VR) 630-3-442 (copy enclosed).
Prior to the Taxpayer's acquisition on May 1, 1993, there was no affiliated group for Virginia purposes. Accordingly, an election had not been made, and the Taxpayer is free to elect any filing method it chooses for the newly created affiliated group in its initial 12 month return.
Since the first 12 month return for the newly created affiliated group would be for the fiscal year ended October 31, 1994, the Taxpayer may elect the consolidated or another filing method by merely filing the affiliated group returns using the desired method.
Elections as to filing method are deemed to be made by the affiliated group as a whole. Changes in membership of an affiliated group do not affect the original election by the group, and new members must assume the filing status previously elected by the group.
If you have any questions about this ruling, please contact******************.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP8750P
Rulings of the Tax Commissioner