Tax Type
Corporation Income Tax
Description
DISC dividends; Foreign source income
Topic
Subtractions and Exclusions
Date Issued
11-07-1986
November 7, 1986
Re: §58.1-1821 Application; Corporation Income Tax
§58.1-402 Virginia Taxable Income
DISC dividends; Foreign Source Income
Dear **********************
This is in response to your application dated May 16, 1986, and your payment dated October 1, 1986, of the amount of tax not in dispute.
After a field audit an assessment of additional tax was made for the taxable years ended June 30, 1983 and 1984. The assessments were based on changes to the apportionment factor, which you do not dispute, and disallowance of subtractions for DISC dividends and foreign source income.
The DISC dividends were received from a Virginia corporation which was 100% assessable in Virginia. Therefore the dividends received from this DISC qualify for the subtraction in §58.1-402.C.3. After reviewing the license agreement furnished with your application it appears that the income in question consists of royalties from sources without the United States and qualifies for the subtraction for Foreign Source Income in §58.1-402.C.8.
Accordingly the assessment of additional tax will be abated to the amount of tax you have paid. You will shortly receive an updated bill reflecting any accrued interest due.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner