Tax Type
Corporation Income Tax
Description
Sales factor; Mortgaged property
Topic
Allocation and Apportionment
Date Issued
06-18-1985
June 18, 1985
RE: Ruling Request: Corporation Income Tax
Dear ****
This will reply to your letter of April 24, 1985, concerning applicability of Virginia corporation income tax to ***** (Taxpayer").
Facts
Taxpayer, a District of Columbia corporation engaged in real estate financing, performs its services through its corporate office in the District of Columbia. Evidently, in its returns for the fiscal years ended ***** 1983 and 1984, Taxpayer had included in the sales factor for Virginia property located in Virginia which secured a mortgage. Taxpayer allocated all property and payroll to the District of Columbia.
Determination
As Section 630-3-401 of the Virginia Corporation Income Tax Regulations provides, any corporation which is subject to federal income tax and has some income from Virginia sources will generally also be subject to Virginia income tax. However, there would be no income from Virginia sources in the case of a foreign corporation whose only connection with Virginia is the receipt of interest on notes, bonds, or other instruments secured by deeds of trust on property located in Virginia. But if the corporation were to acquire real or tangible personal property in Virginia by foreclosure or any other means, the corporation would have property in Virginia and would be required to file a Virginia income tax return. (See enclosed copy of Va. Regs. 630-3-302, part 3b under definition of "income and deductions from Virginia sources.")
Accordingly, if Taxpayer had no property or payroll in Virginia, the mere holding of a mortgage secured by Virginia property would not subject Taxpayer to Virginia income tax.
This ruling is based on the facts as you have presented them, and may be relied on as representing the position of the Department of Taxation. However, any change in the facts or in applicable federal or state law will nullify this ruling.
Sincerely,
W. H. Forst
Tax Commissioner
RE: Ruling Request: Corporation Income Tax
Dear ****
This will reply to your letter of April 24, 1985, concerning applicability of Virginia corporation income tax to ***** (Taxpayer").
Facts
Taxpayer, a District of Columbia corporation engaged in real estate financing, performs its services through its corporate office in the District of Columbia. Evidently, in its returns for the fiscal years ended ***** 1983 and 1984, Taxpayer had included in the sales factor for Virginia property located in Virginia which secured a mortgage. Taxpayer allocated all property and payroll to the District of Columbia.
Determination
As Section 630-3-401 of the Virginia Corporation Income Tax Regulations provides, any corporation which is subject to federal income tax and has some income from Virginia sources will generally also be subject to Virginia income tax. However, there would be no income from Virginia sources in the case of a foreign corporation whose only connection with Virginia is the receipt of interest on notes, bonds, or other instruments secured by deeds of trust on property located in Virginia. But if the corporation were to acquire real or tangible personal property in Virginia by foreclosure or any other means, the corporation would have property in Virginia and would be required to file a Virginia income tax return. (See enclosed copy of Va. Regs. 630-3-302, part 3b under definition of "income and deductions from Virginia sources.")
Accordingly, if Taxpayer had no property or payroll in Virginia, the mere holding of a mortgage secured by Virginia property would not subject Taxpayer to Virginia income tax.
This ruling is based on the facts as you have presented them, and may be relied on as representing the position of the Department of Taxation. However, any change in the facts or in applicable federal or state law will nullify this ruling.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner