Tax Type
Corporation Income Tax
Description
Capital gains
Topic
Allocation and Apportionment
Date Issued
07-05-1989
July 5, 1989
Re: §58.1-1821 Application; Corporation Income Tax
§58.1-408 Apportionment of Income
Dear **************
This is in response to your letter of May 15, 1989, protesting the assessment of additional corporation income tax for taxable year 1986.
FACTS
The taxpayer filed its Virginia corporate income tax return for taxable year 1986 and included certain capital gains in allocable income. As the result of a field audit, this income was determined to be apportionable income.
The capital gains in issue were derived from the installment sale of stock in a subsidiary corporation. On October 14, 1987, the department determined that in taxable years 1983 and 1984 the capital gains derived from this same installment sale were apportionable income. (Copy of PD # 87-224 enclosed.)
DETERMINATION
The issue involved in this application is identical to the issue resolved in Public Document # 87-224 for taxable years 1983 and 1984. Accordingly, the assessment for taxable year 1986 is correct and is now due and payable.
This issue is currently in litigation. You may wish to preserve the taxpayer's judicial remedies by having your client pay the assessment and file a protective claim pursuant to Virginia Code §58.1-1824. The protective claim would be held without action pending a final decision in the case styled Corning Glass Works, Inc. v. Department of Taxation. on June 23, 1989, Judge Plummer of the Circuit Court of Fairfax County ruled from the bench in favor of the department. However, the decision has not yet become final.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner