Tax Type
Corporation Income Tax
Description
Permission to file a consolidated return denied
Topic
Returns/Payments/Records
Date Issued
12-14-1984
December 14, 1984
Re: Virginia Code § 58-151.079-
- Permission to File a Consolidated Return
Dear ****
This is in reply to your letter of October 11, 1984 requesting permission for the parent corporation to file a consolidated income tax return with its affiliated subsidiary corporations for taxable year 1984. All affiliates are multistate corporations having income from both within and without Virginia. They all allocate income using the "three factor formula." They have filed consolidated federal returns and separate Virginia returns in prior years.
The three subsidiary corporations are merging into the parent corporation and their stock will be canceled at various dates in the last quarter of 1984. For federal income tax purposes, no short period income tax returns will be required to be filed, since all taxable income of the subsidiaries will be transferred to the parent. The resulting merged corporation will file in subsequent years as a single corporation.
In a consolidated return inter-affiliate transactions are eliminated and the apportionment factors of multistate corporations are combined. As a result the income subject to Virginia income tax on a consolidated return may be significantly different than the total shown on separate returns, especially if any of the affiliates do business in more than one state. For this reason the Department of Taxation very rarely grants permission for corporations to change to or from consolidated returns once an election has been made.
Accordingly, permission to file a consolidated return for the calendar year 1984 is denied.
Virginia Code § 58-151.078 requires that a corporation's return be filed, " . . . on or before the fifteenth day of the fourth month following the close of its taxable year." In cases where taxpayers file consolidated federal returns and separate Virginia returns, they should file the Virginia returns as if they were filing separate federal returns. The parent corporation and its subsidiaries must file their Virginia returns accordingly.
Sincerely,
W. H Forst
State Tax Commissioner-
Rulings of the Tax Commissioner