Tax Type
Corporation Income Tax
Description
Consolidated return
Topic
Returns/Payments/Records
Date Issued
10-14-1987
October 14, 1987
Re:Va. Code §8.1-442/Permission to File a Consolidated Return
Dear ************************
This will reply to your letter of July 15, 1987 requesting permission for Subsidiary 1 to file a consolidated return with the old Parent, effective January 1, 1984.
Facts
You have indicated the following in your letter and by telephone conversation of September 28, 1987 with a member of my Tax Policy Division staff. The old Parent, a foreign corporation, was incorporated January 19, 1983 to acquire Subsidiary 1. Subsidiary 1 acquired Subsidiary 2 July 1, 1984. For 1983, Subsidiary 1 and Subsidiary 2 each filed separate returns. The Old Parent did not file because it had no operations in Virginia. In 1984 and 1985, Subsidiary 1 and Subsidiary 2 filed a consolidated return with the old Parent. The Old Parent merged into the New Parent on August 29, 1986. An extension has been requested for calendar year 1986.
Our records indicate that the New Parent is not registered with the Department. The Department's records also indicate that the beginning liability date for Subsidiary 1 and Subsidiary 2 was before January 1, 1984.
Determination
Virginia Corporation Income Tax Regulations VR 630-3-442 A (copy enclosed) provides that the first year two or more members of an affiliated group are required to file Virginia returns, the group may elect to file on a separate, combined or consolidated basis. All subsequent returns must be filed on the same basis, unless permission to change has been received from the Department of Taxation. VR 630-3-442 E.4. states that "the filing of the first return for a 12 month taxable year beginning on or after the date of organization or acquisition of a new corporation which creates the affiliated group will be deemed the filing which elects a return filing status."
Based on the facts you have presented, the 1984 consolidated return filed by the old Parent, Subsidiary 1 and Subsidiary 2 represents the initial required Virginia filing by the affiliated group for a 12 month taxable year, and thus an election of consolidated filing status. Accordingly, all returns for subsequent years must be filed on the same basis.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner