Tax Type
Corporation Income Tax
Description
ACRS modifications
Topic
ACRS Modifications
Date Issued
03-20-1987
March 20, 1987
Re: Section 58.1-1821 Application: Corporate
Dear ****************
This will reply to your letter of December 3, 1986 in which you seek relief of assessments of Virginia corporate income tax and interest for taxable years ended November 1984 and November 1985 against the Taxpayer.
Facts
The Taxpayer underwent a field audit in which additions to income were made for taxable years ended November 1984 and November 1985 for the ACRS addition, and a subtraction from income for recovery of the ACRS addition was made for taxable year ended November 1985. The Taxpayer is in agreement with the addition for the two years but disputes the amount of the subtraction for the taxable year ended November 1985, arguing that it should be allowed to subtract the entire amount of ACRS additions because it no longer has nexus with Virginia.
Determination
Section 58.1-402 C. 9. of the Code of Virginia provides a subtraction from federal taxable income for "the available portion of the total excess cost recovery as defined in §58.1-323 B." Section 58.1-323 B. defines such phrase as "for each of the first through fifth taxable years beginning after a biennium, twenty percent of the total excess cost recovery included in Virginia taxable income under [the addition requirement] for taxable years beginning during such biennium."
Thus, by statute, 20% is the maximum allowable subtraction for each of the five taxable years. The subtraction properly commenced for the taxable year ended November****1985 and was limited to 20% of the addition for the taxable year ended November 1984.
Va. Code §58-151.013:1 C., in existence at the time of Virginia Tax Bulletin 82-15 dated June 15, 1982, was repealed by Chapter 729 of the 1984 Acts of Assembly, effective for taxable years beginning on and after January 1, 1984. This amendment, copy of which is enclosed, was in effect for the Taxpayer taxable year ended November 1985.
Based on the foregoing, I find no grounds to adjust the ********* assessments, which I understand you have paid in full.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner