Document Number
95-85
Tax Type
Corporation Income Tax
Description
Returns of affiliated corporations; Change in method of filing
Topic
Returns and Payments
Date Issued
04-25-1995
April 25, 1995



Re: Request for Ruling: Corporation Income Tax


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

This will reply to your letter of September 15, 1994, in which you request permission for *********** (the "Taxpayer") and affiliates to file a consolidated Virginia corporation income tax return, or in the alternative, a combined return beginning with the taxable year ended August 31, 1994.
FACTS

The Taxpayer and several affiliates have filed a Virginia consolidated return for a number of years. On February 10, 1994, this group was purchased by a new parent corporation,*************whose subsidiaries filed separate returns in Virginia. You now request that the new affiliates be allowed to join in the filing of the Virginia consolidated return with original members.
RULING

Code of Virginia §58.1-442 provides that 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. An affiliated group is deemed to have elected its desired filing status by the methodology used in filing its first Virginia return upon becoming taxable in Virginia.

When a company, or group of companies, is purchased, they must adopt the filing status of the purchasing company. In the instant case, the affiliates of the purchasing company had filed separate returns in Virginia. Therefore, the purchased companies must conform to the filing status of the purchasing company and change from filing a Virginia consolidated return to separate Virginia returns.

Code of Virginia §58.1-442 permits affiliated corporations to file a combined return. Permission to change between the separate and combined return filing methods generally will be granted, because allocation and apportionment formulas are not affected by changes between these two statuses. You have requested permission to file a combined return in the event that consolidated filing is denied.

Because the request to change was filed before the extended due date for the taxable year ended August 31,1994, tax return, permission is hereby granted for the taxpayer and affiliates to file a combined return for the taxable year ended August 31, 1994 and thereafter.

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


                        • Sincerely,


                          Danny M. Payne
                          Tax Commissioner

OTP/8512P

Rulings of the Tax Commissioner

Last Updated 08/25/2014 16:46