Tax Type
Corporation Income Tax
Description
Permission to file a consolidated return denied
Topic
Returns/Payments/Records
Date Issued
05-27-1988
May 27, 1988
Re: Virginia Code §58.1-442
Permission to File a Consolidated Return
Dear*****************
This is in reply to your letter of January 25, 1988, requesting permission for the above-referenced taxpayers to file a consolidated return.
Facts
On January 1, 1985, the parent acquired all of the shares of Subsidiary 1 and 44.47% of the shares of Subsidiary 2. The remaining shares of Subsidiary 2 were owned by Subsidiary 1. on the parent's initial return for the year ended November 2, 1985, it made an election to file a federal consolidated return.
The parent states that it inadvertently failed to file a request with the department to file a consolidated return for state income tax purposes. It requests permission to file a consolidated return with its two subsidiaries for years beginning January 1, 1985, and thereafter. Subsidiary 2 has been filing separately in Virginia since 1973.
Both the parent and Subsidiary 1 are holding companies and are headquartered out of state. Neither of the two do business in Virginia and are consequently not subject to Virginia income tax.
Determination
Virginia Code §58.1-442 authorizes the filing of a consolidated or a combined return for affiliated corporations subject to Virginia income tax. A group of affiliated corporations may not file a consolidated or combined return unless each corporation is itself subject to Virginia income tax and each meets certain criteria. Virginia Corporation Income Tax Regulations §630-3-302 and §630-3-442 (copies enclosed). Because only Subsidiary 2 is subject to Virginia income tax, permission to file a consolidated return is denied. Subsidiary 2 must file a separate Virginia income tax return.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner