Tax Type
Corporation Income Tax
Description
Returns of Affiliated Corporations
Topic
Returns and Payments
Date Issued
08-09-1998
August 11, 1998
Re: Request for Ruling: Corporate Income Tax
Dear *****
This will respond to your letter in which you requested permission for ***** (the designated ``Lead' corporation) and affiliates to change from filing separate Virginia income tax returns to filing a consolidated Virginia income tax return effective for the taxable year ending January 31, 1998.
FACTS
The Lead corporation became subject to Virginia tax in April, 1996. Prior to this, several affiliated corporations filed separate returns in Virginia. The lead corporation requests that it be allowed to change from separate filings for the group to the consolidated filing status.
RULING
Code of Virginia Sec. 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 returns. Title 23 of the Virginia Administrative Code (VAC) 10-120-320, 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 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.
The Lead and affiliated corporations were members of an affiliated group within the meaning of Code of Virginia Sec. 58.1-302 prior to the taxable year ending January 31, 1998. The affiliates filed their Virginia returns in prior years on a separate basis, thereby electing the separate filing status for all subsequent years. In accordance with VAC 10-120-320, the group must follow the filing method previously elected.
Based on the facts presented, no extraordinary circumstances exist to warrant granting permission to change to filing on a consolidated basis. Accordingly, permission to file a consolidated return cannot be granted.
Code of Virginia Sec. 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 the allocation and apportionment formulas are not affected by changes between these two statuses. Although you have not requested to do so, the department will allow a change to the combined filing method beginning with the taxable year ending January 31, 1998, in lieu of the separate filing if you so desire.
If you have any questions regarding this ruling, you may contact ***** of the Office of Tax Policy at *****.
Sincerely,
Re: Request for Ruling: Corporate Income Tax
Dear *****
This will respond to your letter in which you requested permission for ***** (the designated ``Lead' corporation) and affiliates to change from filing separate Virginia income tax returns to filing a consolidated Virginia income tax return effective for the taxable year ending January 31, 1998.
FACTS
The Lead corporation became subject to Virginia tax in April, 1996. Prior to this, several affiliated corporations filed separate returns in Virginia. The lead corporation requests that it be allowed to change from separate filings for the group to the consolidated filing status.
RULING
Code of Virginia Sec. 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 returns. Title 23 of the Virginia Administrative Code (VAC) 10-120-320, 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 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.
The Lead and affiliated corporations were members of an affiliated group within the meaning of Code of Virginia Sec. 58.1-302 prior to the taxable year ending January 31, 1998. The affiliates filed their Virginia returns in prior years on a separate basis, thereby electing the separate filing status for all subsequent years. In accordance with VAC 10-120-320, the group must follow the filing method previously elected.
Based on the facts presented, no extraordinary circumstances exist to warrant granting permission to change to filing on a consolidated basis. Accordingly, permission to file a consolidated return cannot be granted.
Code of Virginia Sec. 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 the allocation and apportionment formulas are not affected by changes between these two statuses. Although you have not requested to do so, the department will allow a change to the combined filing method beginning with the taxable year ending January 31, 1998, in lieu of the separate filing if you so desire.
If you have any questions regarding this ruling, you may contact ***** of the Office of Tax Policy at *****.
Sincerely,
Rulings of the Tax Commissioner