Tax Type
Corporation Income Tax
Description
Returns of affiliated corporations; Request to change filing status from separate to consolidated.
Topic
Returns and Payments
Date Issued
03-18-1998
March 18, 1998
Dear**********
This will respond to your letter of December 11, 1997, in which you request permission for ***** (the ``Taxpayer') and an affiliated company to change from filing separate Virginia corporation income tax returns to filing on a consolidated basis for the taxable year ending March 31, 1997.
FACTS
The Taxpayer and its affiliate have filed separate returns in Virginia for a number of years. The group is affiliated within the meaning of Code of Virginia Sec. 58.1-302 and files using the same taxable year. The Taxpayer requests that it be allowed to change from filing separate Virginia returns to a consolidated Virginia return.
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 VAC 10-120-320 of the Virginia Administrative Code (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 department will generally not grant permission to change to a consolidated filing status absent extraordinary circumstances.
The Taxpayer and its affiliate were members of an affiliated group of corporations within the meaning of Code of Virginia Sec. 58.1-302 prior to the taxable year ending March 31, 1997. These corporations filed their Virginia returns on a separate basis, thereby electing the separate filing status for all subsequent years. In accordance with VAC 10-120-320, the members of the group must follow the filing method previously elected by the group.
Based on the facts presented, no extraordinary circumstances exist to warrant granting permission to file 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 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 method prospectively beginning with the taxable year ending March 31, 1997, if you so desire.
If you have any questions regarding this ruling, please contact ***** of the Office of Tax Policy at *****.
Dear**********
This will respond to your letter of December 11, 1997, in which you request permission for ***** (the ``Taxpayer') and an affiliated company to change from filing separate Virginia corporation income tax returns to filing on a consolidated basis for the taxable year ending March 31, 1997.
FACTS
The Taxpayer and its affiliate have filed separate returns in Virginia for a number of years. The group is affiliated within the meaning of Code of Virginia Sec. 58.1-302 and files using the same taxable year. The Taxpayer requests that it be allowed to change from filing separate Virginia returns to a consolidated Virginia return.
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 VAC 10-120-320 of the Virginia Administrative Code (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 department will generally not grant permission to change to a consolidated filing status absent extraordinary circumstances.
The Taxpayer and its affiliate were members of an affiliated group of corporations within the meaning of Code of Virginia Sec. 58.1-302 prior to the taxable year ending March 31, 1997. These corporations filed their Virginia returns on a separate basis, thereby electing the separate filing status for all subsequent years. In accordance with VAC 10-120-320, the members of the group must follow the filing method previously elected by the group.
Based on the facts presented, no extraordinary circumstances exist to warrant granting permission to file 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 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 method prospectively beginning with the taxable year ending March 31, 1997, if you so desire.
If you have any questions regarding this ruling, please contact ***** of the Office of Tax Policy at *****.
Rulings of the Tax Commissioner