Tax Type
Corporation Income Tax
Description
Sales factor; Interest income
Topic
Allocation and Apportionment
Date Issued
01-11-1990
January 11, 1990
Re: Request for Ruling/Corporation Income Tax
Dear*****************
This will reply to your letter of November 28, 1989 in which you request a ruling on the application of the corporation income tax to interest earned by a Virginia corporation from Virginia savings accounts and notes arising from sales activity in North Carolina.
The Code of Virginia was amended in 1981 to change and to limit the classes of income that could be classified as allocable income. Virginia Code §58.1-407 specifically states that only dividend income is to be classified as allocable income. All other income, including interest income, is classified as apportionable income by Virginia Code §58.1-408.
Therefore, the interest income will be included in the numerator of the sales factor because more of the income producing activity is in Virginia than in North Carolina or any other state. See Public Document 87-120, 3/31/87 and 630-3-416(B) of the Virginia Corporation Income Tax Regulations (copy enclosed) dealing with "income producing activity." Example 4 parallels the activity of (the Taxpayer).
If you should have any further questions, please feel free to contact the department.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner