Tax Type
Corporation Income Tax
Description
Returns of affiliated corporations; First year election of affiliated group.
Topic
Returns and Payments
Date Issued
12-12-1997
December 12, 1997
Re: Request for Ruling: Corporate Income Tax
Dear********************
This will respond to your letter of September 11, 1997, in which you request permission for *********(the "Taxpayer") to file a Virginia combined return with its affiliate, ************ ("S").
FACTS
The Taxpayer began operations in Virginia in 1995 and acquired 100% of S's stock during this period. The Taxpayer filed a separate return for this period and S filed a separate short period return for the period of the Taxpayer's ownership. Both corporations file using the same taxable year and are affiliated within the meaning of Code of Virginia § 58.1-302. You request permission to file a combined return for the taxable year ending December 31, 1996.
RULING
The first year two or more affiliated corporations are subject to Virginia tax, the group may elect to file either separate, consolidated, or combined returns. Title 23 VAC 10-120-320 of the Virginia Administrative Code, copy enclosed, provides that the election is made upon the filing of the first return for a 12 month taxable year beginning on or after the date of organization or acquisition of the corporations creating the affiliated group. Once an affiliated group has made an election, all returns for subsequent years must be filed on the same basis and the group may not change its status unless permission is granted by the department.
A taxpayer need not make a request with the department in order to make the initial election. Rather, Virginia law requires written permission when a taxpayer desires to change the initial election.
The Taxpayer and S are affiliated within the meaning of Code of Virginia § 58.1-302 with respect to the 1996 tax year. Therefore, 1996 would be the initial election year for the Taxpayer and S. Accordingly, the Taxpayer and S may elect any of the three corporate filing statuses, including combined, with their 1996 Virginia filing.
If you have any questions regarding this ruling, please contact **** at********.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/13143P
Rulings of the Tax Commissioner