Tax Type
Corporation Income Tax
Description
Corporate Returns
Topic
Returns and Payments
Date Issued
08-02-1999
August 2, 1999
Re: Request for Ruling: Corporate Income Tax
Dear***
This will respond to your letter in which you request permission for ***** (the "Taxpayer') to file a Virginia consolidated corporation income tax return with its subsidiary, ***** ("S').
FACTS
S has been subject to Virginia tax and filing a separate return in Virginia for a number of years. Beginning with the taxable year ending December 31, 1998, the Taxpayer became subject to Virginia tax. The Taxpayer requests that it be allowed to file a consolidated return with S beginning with the taxable year ending December 31, 1998.
RULING
Code of Virginia Sec. 58.1-442 allows corporations to elect to file as separate, combined, or consolidated entities regardless of how the corporations filed their federal income tax return. 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 filing status unless permission is granted by the department. A taxpayer need not make a request to the department in order to make the initial filing status election. Rather, Virginia law requires written permission only when a taxpayer desires to change the initial election.
In order to file on a consolidated basis for Virginia purposes, the corporations must be affiliated within the meaning of Code of Virginia Sec. 58.1-302. "Affiliated' means two or more corporations subject to Virginia incomes taxes whose relationship to each other is such that (i) one corporation owns at least eighty percent of the voting stock of the other or others, or (ii) at least eighty percent of the voting stock of two or more corporations is owned by the same interests.
You have represented that the Taxpayer and S are affiliated within the meaning of Code of Virginia Sec. 58.1-302 with respect to the 1998 taxable year. Therefore, because 1998 would be the initial year that both the Taxpayer and S are subject to Virginia income tax, they may elect to file a Virginia consolidated return for 1998.
Please be aware that the department will not grant permission to change to or from the consolidated status absent extraordinary circumstances. Such a change can affect allocation and apportionment factors and distort business done in Virginia and income from Virginia sources. See Title 23 of the Virginia Administrative Code 10-120-324, copy enclosed.
If you have any questions regarding this ruling, please contact ***** of the Office of Tax Policy at********
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/21984P
Re: Request for Ruling: Corporate Income Tax
Dear***
This will respond to your letter in which you request permission for ***** (the "Taxpayer') to file a Virginia consolidated corporation income tax return with its subsidiary, ***** ("S').
FACTS
S has been subject to Virginia tax and filing a separate return in Virginia for a number of years. Beginning with the taxable year ending December 31, 1998, the Taxpayer became subject to Virginia tax. The Taxpayer requests that it be allowed to file a consolidated return with S beginning with the taxable year ending December 31, 1998.
RULING
Code of Virginia Sec. 58.1-442 allows corporations to elect to file as separate, combined, or consolidated entities regardless of how the corporations filed their federal income tax return. 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 filing status unless permission is granted by the department. A taxpayer need not make a request to the department in order to make the initial filing status election. Rather, Virginia law requires written permission only when a taxpayer desires to change the initial election.
In order to file on a consolidated basis for Virginia purposes, the corporations must be affiliated within the meaning of Code of Virginia Sec. 58.1-302. "Affiliated' means two or more corporations subject to Virginia incomes taxes whose relationship to each other is such that (i) one corporation owns at least eighty percent of the voting stock of the other or others, or (ii) at least eighty percent of the voting stock of two or more corporations is owned by the same interests.
You have represented that the Taxpayer and S are affiliated within the meaning of Code of Virginia Sec. 58.1-302 with respect to the 1998 taxable year. Therefore, because 1998 would be the initial year that both the Taxpayer and S are subject to Virginia income tax, they may elect to file a Virginia consolidated return for 1998.
Please be aware that the department will not grant permission to change to or from the consolidated status absent extraordinary circumstances. Such a change can affect allocation and apportionment factors and distort business done in Virginia and income from Virginia sources. See Title 23 of the Virginia Administrative Code 10-120-324, copy enclosed.
If you have any questions regarding this ruling, please contact ***** of the Office of Tax Policy at********
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/21984P
Rulings of the Tax Commissioner