Tax Type
Corporation Income Tax
Description
Returns of affiliated corporations; Change in method of filing
Topic
Returns and Payments
Date Issued
12-12-1996
December 12, 1996
Re: Request for Ruling: Corporate Income Tax
Dear*************
This will respond to your letter requesting permission for*********************(the "Taxpayer") and its affiliates to change from filing a consolidated Virginia corporation income tax return to separate returns for the taxable year ended December 31, 1995. 1 apologize for the delay in responding to your letter.
FACTS
The Taxpayer and its affiliates have historically filed a consolidated Virginia corporation income tax return. The Taxpayer is now in bankruptcy and the Trustee requests that the Taxpayer be allowed to change its consolidated filing status to file on a separate company basis.
RULING
Virginia Regulation (VR) 630-3-442 1.B, copy enclosed, 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 consolidated return, or a combined return. All returns for subsequent years must be filed on the same basis unless permission to change is granted by the department. Absent extraordinary circumstances, permission to change from the consolidated filing method is generally not granted by the department.
The Bankruptcy Trustee states that the Taxpayer's business operations will be terminated in 1995 and final distributions should occur by August 31, 1995 at which time a final return will be filed. The Taxpayer requests to deconsolidate since the financial information for the Taxpayer's subsidiaries will not be available at this time.
Based on the facts presented, no extraordinary circumstances exist to warrant granting permission to change from filing a consolidated return since the Taxpayer's final return can be included in the consolidated return with the remainder of the affiliated group. Accordingly, permission to change to a separate return basis cannot be granted .
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/10294P
Rulings of the Tax Commissioner