Tax Type
Corporation Income Tax
Description
Consolidated Corporate Return
Topic
Returns and Payments
Date Issued
12-10-1999
December 10, 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 consolidated return with its affiliate ***** ("S') for the taxable year ended December 31, 1999.
FACTS
The Taxpayer formed S, a limited liability company, during 1999 and S elected to be taxed as a corporation for federal income tax purposes. S commenced operations in Virginia in November 1999. You have represented that the Taxpayer and S are affiliated within the meaning of Code of Virginia Sec. 58.1-302 and will file using the same taxable year. You request permission for the Taxpayer and S to file a consolidated return in Virginia for the taxable year ended December 31, 1999.
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 return. 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 are required to file Virginia returns, the group may elect to file separate returns, a combined return, or a consolidated return.
The Taxpayer and S became affiliated within the meaning of Code of Virginia Sec. 58.1302 with respect to the 1999 tax year. 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 organization of a new affiliate which creates an affiliate group will be deemed the filing which elects a return filing status. See Title 23 VAC 10120-324(D).
Therefore, the election would be made when the group files its December 31, 2000 return and prior permission from the department is not required. The taxable year ending December 31, 2000 would be the initial election year for the Taxpayer and S and they may elect to file a Virginia consolidated return.
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 VAC 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/25267P
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 consolidated return with its affiliate ***** ("S') for the taxable year ended December 31, 1999.
FACTS
The Taxpayer formed S, a limited liability company, during 1999 and S elected to be taxed as a corporation for federal income tax purposes. S commenced operations in Virginia in November 1999. You have represented that the Taxpayer and S are affiliated within the meaning of Code of Virginia Sec. 58.1-302 and will file using the same taxable year. You request permission for the Taxpayer and S to file a consolidated return in Virginia for the taxable year ended December 31, 1999.
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 return. 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 are required to file Virginia returns, the group may elect to file separate returns, a combined return, or a consolidated return.
The Taxpayer and S became affiliated within the meaning of Code of Virginia Sec. 58.1302 with respect to the 1999 tax year. 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 organization of a new affiliate which creates an affiliate group will be deemed the filing which elects a return filing status. See Title 23 VAC 10120-324(D).
Therefore, the election would be made when the group files its December 31, 2000 return and prior permission from the department is not required. The taxable year ending December 31, 2000 would be the initial election year for the Taxpayer and S and they may elect to file a Virginia consolidated return.
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 VAC 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/25267P
Rulings of the Tax Commissioner