Tax Type
Corporation Income Tax
Description
Combined return denied, Affiliated corporations not subject to Virginia tax
Topic
Returns and Payments
Date Issued
08-09-1999
August 9, 1999
Re: Request for Ruling: Corporate Income Tax
Dear *****
This will respond to ***** letter in which he requested permission on behalf of ***** (the ``Taxpayer') to consolidate its accounts with five affiliated corporations pursuant to Code of Virginia Sec. 58.1-445. I apologize for the delay in responding.
FACTS
The Taxpayer became liable to file a Virginia corporation income tax return effective for the taxable year ending December 31, 1996. None of the other five affiliates are subject to Virginia corporate income tax. Citing the unitary nature of the affiliated group, the Taxpayer requests that it be allowed to consolidate the accounts of the group in order to make an accurate apportionment of income, deductions, etc. among the related businesses.
RULING
Code of Virginia Sec. 58.1-445 provides that in any case where two or more related trades or businesses liable to taxation in Virginia are owned or controlled directly or indirectly by the same interests in order to make an accurate distribution or apportionment of gains, profits, income, deductions or capital between or among such trades or businesses, the department may consolidate the accounts of such related trades or businesses. The statute also permits a taxpayer to request such a consolidation from the department.
Title 23 of the Virginia Administrative Code (``VAC') 10-120-350, copy enclosed, provides that consolidation of this nature is appropriate in situations in which federal taxable income is accurately stated, but the income from Virginia sources taxable by Virginia is inaccurately stated. However, it further states that to be applicable a corporation must be liable to taxation in Virginia, i.e., subject to the Virginia income tax.
In the instant case, the Taxpayer is subject to Virginia tax, however, the other five affiliates are not. As such, the affiliated group does not satisfy the requirements of 23 VAC 10-120-350. Therefore, the request to consolidate the accounts of the affiliated corporations is denied.
If you have any questions regarding this ruling, you may contact ***** of the Office of Tax Policy at ****
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/13897P
Re: Request for Ruling: Corporate Income Tax
Dear *****
This will respond to ***** letter in which he requested permission on behalf of ***** (the ``Taxpayer') to consolidate its accounts with five affiliated corporations pursuant to Code of Virginia Sec. 58.1-445. I apologize for the delay in responding.
FACTS
The Taxpayer became liable to file a Virginia corporation income tax return effective for the taxable year ending December 31, 1996. None of the other five affiliates are subject to Virginia corporate income tax. Citing the unitary nature of the affiliated group, the Taxpayer requests that it be allowed to consolidate the accounts of the group in order to make an accurate apportionment of income, deductions, etc. among the related businesses.
RULING
Code of Virginia Sec. 58.1-445 provides that in any case where two or more related trades or businesses liable to taxation in Virginia are owned or controlled directly or indirectly by the same interests in order to make an accurate distribution or apportionment of gains, profits, income, deductions or capital between or among such trades or businesses, the department may consolidate the accounts of such related trades or businesses. The statute also permits a taxpayer to request such a consolidation from the department.
Title 23 of the Virginia Administrative Code (``VAC') 10-120-350, copy enclosed, provides that consolidation of this nature is appropriate in situations in which federal taxable income is accurately stated, but the income from Virginia sources taxable by Virginia is inaccurately stated. However, it further states that to be applicable a corporation must be liable to taxation in Virginia, i.e., subject to the Virginia income tax.
In the instant case, the Taxpayer is subject to Virginia tax, however, the other five affiliates are not. As such, the affiliated group does not satisfy the requirements of 23 VAC 10-120-350. Therefore, the request to consolidate the accounts of the affiliated corporations is denied.
If you have any questions regarding this ruling, you may contact ***** of the Office of Tax Policy at ****
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/13897P
Rulings of the Tax Commissioner