Tax Type
Corporation Income Tax
Description
Returns of Affiliated Corporations
Topic
Returns and Payments
Date Issued
08-19-1998
August 19, 1998
Re: Request for Ruling: Corporation Income Tax
Dear *****
This will respond to your letter in which you request permission for ***** (the "Taxpayer') to file a combined Virginia corporation income tax return with its newly acquired affiliate, ***** ("S').
FACTS
The Taxpayer and S have filed separate returns in Virginia for a number of years. In April, 1997, the Taxpayer acquired 100% of S and a short period return was filed for the period prior to the acquisition. The Taxpayer is not affiliated with any other corporations subject to Virginia income tax. The Taxpayer requests that a combined return be allowed for the taxable year ending December 31, 1997, and thereafter because the corporations are now affiliated within the meaning of Code of Virginia Sec. 58.1-302 and will use the same taxable year end.
RULING
The first year two or more affiliated corporations are subject to Virginia income tax, the group may elect to file either separate, consolidated, or combined returns. Title 23 of the Virginia Administrative Code (VAC) 10-120-320, 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 acquisition of the corporation creating the affiliated group.
The Taxpayer and S became affiliated within the meaning of Code of Virginia Sec. 58.1-302 with respect to the taxable year ending December 31, 1997. However, the return for this period would include a short period for S and its filing would not constitute an election. Virginia regulations provide that the filing of the first return for a 12 month taxable year beginning on or after the date of acquisition of a new corporation which creates the affiliated group will be deemed the filing which elects a return filing status. See Title 23 VAC 10-120-324 D, copy enclosed. However, this does not preclude the Taxpayer from filing a combined return for the taxable year ending December 31, 1997.
Therefore, the election would be made when the group files its December 31, 1998, return and prior permission from the department is not required. The taxable year ending December 31, 1998, would be the initial election year for the Taxpayer and S and they can elect to file a combined return.
If you have any questions regarding this ruling, you may contact ***** of the Office of Tax Policy at****
Sincerely,
Re: Request for Ruling: Corporation Income Tax
Dear *****
This will respond to your letter in which you request permission for ***** (the "Taxpayer') to file a combined Virginia corporation income tax return with its newly acquired affiliate, ***** ("S').
FACTS
The Taxpayer and S have filed separate returns in Virginia for a number of years. In April, 1997, the Taxpayer acquired 100% of S and a short period return was filed for the period prior to the acquisition. The Taxpayer is not affiliated with any other corporations subject to Virginia income tax. The Taxpayer requests that a combined return be allowed for the taxable year ending December 31, 1997, and thereafter because the corporations are now affiliated within the meaning of Code of Virginia Sec. 58.1-302 and will use the same taxable year end.
RULING
The first year two or more affiliated corporations are subject to Virginia income tax, the group may elect to file either separate, consolidated, or combined returns. Title 23 of the Virginia Administrative Code (VAC) 10-120-320, 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 acquisition of the corporation creating the affiliated group.
The Taxpayer and S became affiliated within the meaning of Code of Virginia Sec. 58.1-302 with respect to the taxable year ending December 31, 1997. However, the return for this period would include a short period for S and its filing would not constitute an election. Virginia regulations provide that the filing of the first return for a 12 month taxable year beginning on or after the date of acquisition of a new corporation which creates the affiliated group will be deemed the filing which elects a return filing status. See Title 23 VAC 10-120-324 D, copy enclosed. However, this does not preclude the Taxpayer from filing a combined return for the taxable year ending December 31, 1997.
Therefore, the election would be made when the group files its December 31, 1998, return and prior permission from the department is not required. The taxable year ending December 31, 1998, would be the initial election year for the Taxpayer and S and they can elect to file a combined return.
If you have any questions regarding this ruling, you may contact ***** of the Office of Tax Policy at****
Sincerely,
Rulings of the Tax Commissioner