Tax Type
Corporation Income Tax
Description
Adjustment for DISC
Topic
Computation of Income
Date Issued
01-04-1989
January 4, 1989
Re: §58.1-1821 Application; Corporation Income Tax
§58.1-446 Adjustment for DISC
Dear*********************
This is in response to your letters of August 17, 1988, and October 26, 1988, in which you applied for correction of an assessment of corporation income tax.
Facts
After a field audit the only adjustment made by the auditor was to include the taxpayer's Domestic International Sales Corporation (DISC) in apportionable income. The taxpayer protests two issues related to the adjustment. First, all of the DISC taxable income was included although the taxpayer owns just over 90% of the stock; and second, commissions paid to the DISC by persons other than the taxpayer should be included in the apportionment factor.
Determination
After reviewing the audit workpapers of prior audits, as well as the current audit, the audit report will be adjusted to reflect the percentage of ownership of the DISC and to include the commissions in the sales factor. You will shortly receive an updated bill with interest accrued to date. The bill should be paid within thirty days to avoid the accrual of additional interest.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner