Tax Type
Corporation Income Tax
Description
Alternative method of apportionment denied
Topic
Allocation and Apportionment
Date Issued
10-29-1990
October 29, 1990
Re: §58.1-1821 Application; Corporation Income Tax
-
- §58.1-409 Property Factor; Government owned Property
§58.1-416 Sales Factor; Time Deposits & Foreign Exchange Cost Plus Contracts
- §58.1-409 Property Factor; Government owned Property
Dear**************************
This is in response to your letter of August 4, 1989, in which you requested reconsideration of the issues addressed in a ruling (letter dated November 30, 1988, and P.D. 89-58, January 4, 1989). You met with members of my staff on March 21, 1989, to discuss the issues and presented additional information. After reviewing the audit report and the information provided, I find no reason to change the department's position.
You cite a California case in which the property factor included the original cost of property owned by the government and used by the taxpayer rent-free. As you note, California's law differs from Virginia, and in this case the difference is crucial. In California and many other states the law grants broad discretion to the tax administrator to allow or require modifications to the apportionment factors. Virginia's law grants the department only limited discretion to allow an alternative method of apportionment if it will reduce the tax and the statutory method is inapplicable or inequitable.
As indicated in P.D. 89-58 (1/4/89) and its November 30, 1988 attachment, Virginia law is specific as to how property is valued if it is not owned, and that "sales" must be included in federal taxable income and used to produce Virginia taxable income. Treating your letter as a request to allow an alternative method of apportionment, I do not find that the statutory method is inapplicable or inequitable.
Accordingly, the assessment is correct as made and is now due and payable. 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. Although you requested another conference, this letter has been issued without one because extensive consideration has already been given to your arguments.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner