Tax Type
Corporation Income Tax
Description
Capital gain; Alternative method of allocation and apportionment
Topic
Allocation and Apportionment
Date Issued
02-25-1987
February 25, 1987
Re: Section 58.1-421 Request for Alternative Method of
Allocation and Apportionment: Capital Gain
Dear **********************
This will reply to your recent letter requesting an alternative method of allocation and apportionment.
Facts
The Taxpayer, a Virginia corporation, sold real property located in West Virginia. West Virginia requires the resulting capital gain to be allocated to West Virginia.
The Taxpayer seeks permission to allocate the capital gain to West Virginia for Virginia income tax purposes. The Taxpayer says that the property was used strictly as nonbusiness rental property and did nothing to promote its sales in Virginia. The Taxpayer alleges that failure to grant an alternative method will result in Virginia taxation of a greater part of its net income than is reasonably attributable to business or sources within Virginia.
Determination
This issue has been given extensive consideration on a number of occasions. I am enclosing a copy of a ruling letter dated October 13, 1983 which explains the Department's policy on requests for an alternative method of allocation and apportionment. The provisions of Corporation Income Tax Circular No. 1 have been replaced by VR §630-3-421, a copy of which is also enclosed.
After reviewing the facts presented, I conclude that the Taxpayer has not shown the extraordinary circumstances that would justify the use of an alternative method of allocation and apportionment. Accordingly, permission to include capital gains in allocable income is denied.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner