Tax Type
Corporation Income Tax
Description
Consolidated return; Affiliated corporations
Topic
Returns/Payments/Records
Date Issued
06-20-1986
June 20, 1986
Re: Virginia Code § 58.1-442
Permission to File a Consolidated/Combined Return
Dear *************
This will reply to your letter of March 25, 1986 requesting permission for the above-referenced taxpayers to file a consolidated Virginia income tax return for the year ended November 30, 1985 and file an amended return on a consolidated basis for the Year ended November 30, 1984.
You have indicated that the above-referenced taxpayers are members of an affiliated group eligible to file a combined return, but have been filing separate Virginia income tax returns. You further indicate that the above-referenced taxpayers represent all of the members of the affiliated group which are subject to Virginia income tax.
In a consolidated return, inter-affiliate transactions are eliminated and the apportionment factors of multi-state 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, particularly 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 the election has been made. Accordingly, permission to file a 1985 consolidated Virginia return or to file an amended 1984 return on a consolidated basis is denied.
§ 58.1-442 does permit affiliated corporations to file a combined return for taxable years beginning on or after January 1, 1981. A change from separate returns to a combined return does not affect the computation or apportionment of income except that losses of one corporation may offset the income of an affiliated corporation.
Based on your representations set forth in the second paragraph, permission is hereby granted for the above-referenced taxpayers to file a combined return for the taxable year ended November 30, 1985 and thereafter and to file an amended return on a combined basis for the taxable year ended November 30, 1984. The return should be filed using the name and identification number of the Parent. The combined return is to be filed in accordance with the requirements set forth in the Virginia Corporation Income Tax Regulations § 630-3-442 (copy enclosed).
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner