Tax Type
Corporation Income Tax
Description
Alternative method of allocation and apportionment for S corporation is denied
Topic
Allocation and Apportionment
Date Issued
12-20-1989
December 20, 1989
Re: Request for Ruling; Corporation Income Tax
§58.1-421 Alternative Method of Allocation and Apportionment
Dear**************
This is in response to your letter of May 22, 1989 in which you applied for permission to use an alternative method of allocation and apportionment of income.
Requested Method
The Taxpayer is a foreign S-Corporation operating several restaurants, primarily outside of Virginia. In 1988, the Taxpayer opened its first restaurant in Virginia and has plans underway to open a second. Instead of apportioning all of its income (except dividends) by the statutory method using the three factor (property, payroll and sales) formula, the Taxpayer proposes a method based primarily upon a separate accounting for its Virginia operations.
Determination
The policies which apply to requests for an alternative method under §58.1-421 are well established. See Virginia Regulation VR 630-3-421 and the Ruling Letter dated September 18, 1986, P.D. No. 86-184 (copies enclosed). After considering the facts set forth, you have not demonstrated by clear and cogent evidence that the statutory method is unconstitutional or inapplicable as applied in your situation. Accordingly, permission to use an alternative method of allocation and apportionment is denied.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner