Tax Type
Corporation Income Tax
Description
Returns of affiliated corporations; Eligibility to file on consolidated basis; Newly acquired subsidiary
Topic
Returns and Payments
Date Issued
02-28-1997
February 28, 1997
Re: Request far Ruling: Corporate Income Tax
Dear*****************
This will respond to your letter of January 15, 1997, in which you request permission for ********** (the "Taxpayer") to file a Virginia consolidated corporation income tax return with its newly acquired subsidiary, **********
FACTS
The Taxpayer acquired the subsidiary effective September 30, 1996. Prior to this date, there were no corporations affiliated with the Taxpayer. The subsidiary, which had filed using a taxable year ending August 31, will file a one month short period return to establish the same taxable year as that of the Taxpayer. You request permission to file a Virginia consolidated return since the Taxpayer and the subsidiary are now affiliated, and will use the same taxable year.
RULING
Code of Virginia § 58.1-442 allows corporations to elect to file returns as separate, combined, or consolidated entities 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.
Your request to file a consolidated return is granted. The Taxpayer and the subsidiary became an affiliated group when the Taxpayer acquired the subsidiary on September 30, 1996. The subsidiary will file a one month short period return to establish the same taxable year as the Taxpayer and include the short year as part of a consolidated return with the Taxpayer. Although this will not constitute an election to file consolidated, when the group files its return for the taxable year ending September 30, 1997, the consolidated method will be elected. All returns for subsequent years following this election must be filed on the same basis unless permission to change is granted by the department.
If you have any questions regarding this ruling, please contact ********at**********.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/12090P
Rulings of the Tax Commissioner