Tax Type
Corporation Income Tax
Description
Consolidated return
Topic
Returns/Payments/Records
Date Issued
05-22-1989
May 22, 1989
Re: Virginia Code §58.1-442
Permission to File a Consolidated Return
Dear**************
This is in reply to your letter dated February 2, 1989, requesting permission for the above-referenced taxpayers to file a consolidated income tax return for the taxable period August 4, 1988 through December 31, 1988 and taxable years thereafter.
FACTS
On November 4, 1986, Subsidiary 1 purchased 100% of the issued and outstanding stock of Subsidiary 2 and elected to begin filing consolidated Virginia corporate income tax returns. Both corporations met all of the criteria set forth under Virginia Code §58.1-442 and Virginia Regulation (VR) 630-3-442 to file a consolidated Virginia corporate income tax return. Effective August 4, 1988, Parent acquired the controlling interest in Subsidiary 1. Parent owns 100% of Subsidiary 1, which owns 100% of Subsidiary 2. Both Subsidiary 1 and Subsidiary 2 are included in the affiliated group of corporations included in Parent's consolidated federal income tax return.
You are requesting permission for Parent to file a consolidated income tax return for itself and Subsidiary 1 and Subsidiary 2.
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. VR 630-3-302 and VR 630-3-442 (copies enclosed). Based upon the facts as presented, the Parent is not subject to Virginia income tax; therefore, permission to join in the filing of a consolidated Virginia income tax return with its subsidiaries is denied.
Subsidiary 1 and Subsidiary 2 may continue to file consolidated Virginia income tax returns under the name and FEIN of the designated lead affiliate.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner