Tax Type
Corporation Income Tax
Description
Affiliated corporations requesting change in filing method
Topic
Returns/Payments/Records
Date Issued
06-24-1987
June 24, 1987
Re: Request For Ruling; Corporation Income Tax
Dear ******************
This is in response to your letter of August 20, 1986, requesting a ruling on the filing of a consolidated or combined return.
The taxpayer is an affiliated group of corporations which includes corporations which apportion income using both the single factor for financial corporations and the standard three factor formula. Many years ago the taxpayer elected to file a consolidated Virginia return. In the course of a field audit, the auditor adjusted the return to reflect two consolidated groups for the two types of factors as required by regulation VR 630-3-442 (copy enclosed).
You object to the auditor's method on the grounds that it requires that two returns be filed while under §58.1-442:
-
- A consolidated return shall mean a single return for a group of corporations affiliated within the meaning of §58.1-302, prepared in accordance with the principles of §1502 of the Internal Revenue Code and regulations promulgated thereunder; (emphasis supplied).
- A consolidated return shall mean a single return for a group of corporations affiliated within the meaning of §58.1-302, prepared in accordance with the principles of §1502 of the Internal Revenue Code and regulations promulgated thereunder; (emphasis supplied).
As an alternative, you request permission to change from filing two consolidated returns for the two apportionment groups to filing a single combined return.
Determination
Regulation VR 630-3-442 states that corporations using different apportionment factors may not be included in the same consolidated return. The examples in subsection G indicate that a separate consolidated return may be filed for each group with similar apportionment factors. Therefore the first alternative, a two step consolidation/combination of the two apportionment groups, may not be used.
Once an election has been made to file consolidated returns, permission is generally not granted to change to separate or combined returns. Accordingly, permission to change to filing a combined return is denied.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner