Tax Type
Corporation Income Tax
Description
Acquisition using Section 338 of the Internal Revenue Code
Topic
Accounting Periods and Methods
Returns/Payments/Records
Date Issued
05-07-1987
May 7, 1987
Re: Ruling Request: Corporate Income Tax
Dear ********************
This will reply to your letter of February 23, 1987 in which you request information concerning filing requirements.
Facts
You indicate that ********* (the "Taxpayer") sold *********** (the "Affiliate") to an unrelated corporation on May 29, 1986. After the sale, the new owner changed the Affiliates name but kept its federal identification number. The new owner elected to treat the acquisition in accordance with Section 338 of the Internal Revenue Code, and three returns will be filed for calendar 1986: the Affiliate consolidated with the Taxpayer for the short period January 1 through May 28, 1986; a one-day return for the period May 29, 1986 for the Affiliate; and the Affiliate (under its new name) consolidated with the new owner for the short period May 30 through December 31, 1986.
Determination
For Virginia purposes, three corporate income tax returns must also be filed. The returns filed for the period January 1 through May 28, 1986 and for the period May 29, 1986 will use the apportionment formula based on the property, payroll and sales within Virginia for the period January 1 through May 28, 1986. The Corporation Income Tax Regulations, VR 630-3-408 et sea. (copy enclosed), discusses the three-factor formula. The return filed for the short period May 30 through December 31, 1986 will use the apportionment formula for that period.
The starting point for computing Virginia taxable income is the federal taxable income with certain specified additions, subtractions and exemptions. See VR 630-3-402, copy enclosed.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner