Document Number
95-149
Tax Type
Corporation Income Tax
Description
Returns of affiliated corporations; Request to change filing status
Topic
Returns and Payments
Date Issued
06-09-1995
June 9, 1995


Re: Request for Ruling: Corporate Income Tax


Dear **************

This will reply to your letter of March 14, 1995, in which you request permission for******** (the "Taxpayer") and affiliates to change from filing separate Virginia corporation income tax returns to filing a consolidated Virginia corporation income tax return beginning with the taxable Year ended December 31 1 994.
FACTS

The Taxpayer and several affiliates filed separate Virginia corporation income tax returns prior to the taxable year ended December 31, 1994, while filing on a consolidated basis for federal income tax purposes. The Taxpayer now requests that it be allowed to change from separate Virginia filings to a consolidated Virginia return.
DETERMINATION

Code of Virginia §58.1-442 allows corporations to elect to file returns on the basis of one of three statuses (separate, combined, or consolidated) regardless of how the corporations filed their federal income tax return. Virginia Regulation (VR) 630-3-442, §1 B provides that in the first year two or more members of an affiliated group of corporations are required to file Virginia returns, the group may elect to file separate returns, a combined return, or a consolidated return. All returns for subsequent years must be filed on the same basis unless permission to change is granted by the department. Permission to change to or from the consolidated filing method is generally not granted by the department, because this change can effect the allocation and apportionment factors, and possibly distort the reporting of the portion of business done in Virginia.

The Taxpayer was a member of an affiliated group of corporations within the meaning of VR 630-3-302 prior to the taxable year ending December 31, 1994. These corporations filed their Virginia returns on a separate basis, thereby electing the separate filing status for all subsequent years. In accordance with VR 630-3-442, §1 B, the affiliated group must follow the filing method previously elected in its initial election year.

Based on the facts as presented, no extraordinary circumstances exist to warrant granting permission to change to a consolidated basis. Accordingly, your request for permission to change from filing separate returns to filing a consolidated return must be denied.

If you have any questions regarding this ruling, you may contact**********.

                    • Sincerely,



                      Danny M. Payne
                      Tax Commissioner

OTP/9689P

Rulings of the Tax Commissioner

Last Updated 08/25/2014 16:46