Tax Type
Corporation Income Tax
Description
Financial corporation apportionment factor
Topic
Allocation and Apportionment
Date Issued
10-14-1987
October 14, 1987
Re: §58.1-1821 Application; Corporation Income Tax
§58.1-418 Financial Corporation Apportionment Factor
Dear ****************
This is in response to your letter of March 27, 1987, in which you applied for correction of assessments of corporation income tax for two taxable years.
Facts
The taxpayer filed its return using the statutory three factor apportionment formula. The auditor determined that the taxpayer was a financial corporation required to use the single factor in §58.1-418 of the Code of Virginia which resulted in an assessment of additional tax. Your application protests the assessment on the grounds that the taxpayer does not meet the definition of a financial corporation under §58.1-418 because 70% of its income is not from interest and other financial services when inter-affiliate transactions are considered.
Determination
It appears that the auditor did not consider inter-affiliate transactions in applying the 70% test to the taxpayer's income.
We have reviewed the financial information submitted with your application and agree that the taxpayer is not a financial corporation as defined in §58.1-418. Accordingly the assessments will be abated.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner