Tax Type
Corporation Income Tax
Description
Consolidated return
Topic
Returns/Payments/Records
Date Issued
04-28-1989
April 28, 1989
Re: Request for Ruling; Corporation Income Tax
§58.1-442 Consolidated Return
Dear****************
This is in response to your letter of January 12, 1989, in which you requested permission to file a combined Virginia return for the affiliated group. In a telephone conversation********** informed a member of my staff that the letter was intended to request a consolidated Virginia return.
The corporations have previously filed separate Virginia returns and on March 11, 1988, the group was granted permission to file a combined return for the 52/53 week fiscal year ending on October 2, 1987 (copy enclosed). Your request describes a two step transaction occurring on September 27, 1987, in which the taxpayer and its subsidiaries were acquired by a corporation, then the corporation was merged into the taxpayer. You state that:
-
- Pursuant to the provisions of the IRC Regulation 1.1502, a new consolidated group was formed, thus [taxpayer] is required to make an election to file a consolidated return for the tax period ending 9/30/88 and obtain consent from all subsidiaries to be included in this return.
- Pursuant to the provisions of the IRC Regulation 1.1502, a new consolidated group was formed, thus [taxpayer] is required to make an election to file a consolidated return for the tax period ending 9/30/88 and obtain consent from all subsidiaries to be included in this return.
Although you state that a new group was formed for federal purposes, under Treasury Reg. §1.1502-75(d) and the brief description of the transaction, it appears that the consolidated group would continue in existence. There is no indication that the Commissioner of the I.R.S. has found that good cause exists for allowing the federal consolidated return election to be terminated under paragraph (c) of that regulation.
Furthermore, without a copy of federal form 851 (Affiliations Schedule) and a more complete description of the transaction we cannot determine if good cause exists to grant permission for the affiliated group to switch from filing a combined Virginia return to filing a consolidated Virginia return. We note, in particular, that the January 21, 1988, letter requesting permission to file a combined return did not mention the merger and acquisition even though the request was made almost four months after the acquisition and was for the taxable year which included the acquisition.
Accordingly, permission for the group to change from filing a combined Virginia return to filing a consolidated Virginia return is denied. The affiliated group shall continue to file a combined Virginia return.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner