Tax Type
Corporation Income Tax
Description
Permission to file a combined return
Topic
Returns/Payments/Records
Date Issued
07-11-1986
July 11, 1986
Re: Virginia Code Section 58.1-442
Permission to File a Consolidated/Combined Return
Dear *****************
This will reply to your letter of May 5, 1986 requesting permission for the above-referenced taxpayers to file a consolidated Virginia income tax return for the year ended March 31, 1986.
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 consolidated Virginia return for the year ended March 31, 1986 is denied.
Section 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 March 31, 1986 and thereafter. 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 Section 630-3-442 (copy enclosed).
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner