Tax Type
Corporation Income Tax
Description
Returns of Affiliated Corporations; New Corporate Affiliates
Topic
Returns and Payments
Date Issued
03-13-1991
March 13, 1991
Re: Ruling Request: Corporation Income Tax
Dear***************
This will reply to your letters of December 26, 1989, and February 5, 1990, in which you request permission to file a Virginia consolidated corporation income tax return for*********** (the "Parent") and its affiliates.
FACTS
The parent acquired four corporations in January of 1988. Prior to affiliation, the four acquired corporations filed separate Virginia corporation income tax returns; one affiliate's taxable year ended May 31 and three affiliates were on a calendar tax year. The parent's taxable year ends on May 31. You request that the parent be permitted to file a consolidated Virginia corporation income tax return commencing with the first year of affiliation.
RULING
Under the federal consolidated return regulations, acquired corporations are allowed to finish their separate 12 month taxable year and file returns and then file a short year return to change their year end to conform to the parent's and be included in the parent's consolidated return.
Virginia Regulation (VR) 630-3-442(C)(1) requires that a Virginia consolidated return show consolidated net income prepared in accordance with Internal Revenue Code (IRC) § 1502 and the regulations thereunder. Because the federal regulations allow the acquired corporations to finish their separate 12 month taxable year and then file a short year return to change their year end, Virginia allows similar treatment.
The information provided indicates that three affiliates filed separate returns through December 31, 1988 (finishing their 1 month taxable year), and were included in the parent's consolidated return beginning May 31, 1989 (the first year the acquired corporations changed their fiscal year to conform. to the parent). The affiliate on a May 31 taxable year was included in the parent's Virginia consolidated return for the taxable year ended May 31, 1988. This is in accordance with the federal consolidated return regulations and will be allowed for Virginia filing purposes.
Accordingly. the parent shall continue to file consolidated Virginia corporation income tax returns. The returns must include all affiliated corporations subject to Virginia income tax and ail corporations must use the same taxable year. The return should be filed using the name and identification number of the parent. The consolidated return is to be filed in accordance with the requirements set forth in the Virginia Corporation Income Tax Regulations § 630-3-442 (copy enclosed).
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner