Tax Type
Corporation Income Tax
Description
Net Operating Loss carried back with ACRS modifications
Topic
ACRS Modifications
Date Issued
01-08-1993
January 8, 1993
Re: Refund Request:
Dear ****
This will reply to **** letter of October 27, 1992, in which she requested correction of a Virginia Department of Taxation adjustment to the refund requested by **** (the "Taxpayer") for the period ending March 31, 1990.
FACTS
The Taxpayer incurred a net operating loss for the year ending March 31, 1992 and carried back the loss to the Taxpayer's 1989 and 1990 taxable years. When it originally filed its 1989 return, the Taxpayer took a subtraction for ACRS adjustments. As a result of the application of the NOLD to the 1989 return, the Taxpayer's federal taxable income was reduced to zero. Since the Taxpayer had no income against which to offset the ACRS adjustments originally taken in 1989, it carried the ACRS adjustment over to 1990. The ACRS carryover was disallowed when the loss carryback was processed and a portion of the refund was denied.
RULING
Section 5.B of Virginia Regulation ("V.R.") 630-3-323.1.5.B. permits a corporation with insufficient income to offset the full amount of a post-1987 ACRS subtraction to carry the amount not offset over to the following taxable year. Had the Taxpayer's 1989 taxable income been insufficient to absorb the ACRS subtraction, it is clear the Taxpayer would have been permitted the carryover. The fact that the Taxpayer's 1989 taxable income is rendered insufficient by the carryback of a federal NOLD does not alter the above result.
Although V.R. 630-3-323.1.5.B does contain a flat prohibition of a carryover to years beyond 1993, this regulation does not reflect an amendment to Virginia Code §58.1-323.1 deferring full recovery to 1997.
There being no reason to deny the Taxpayer's ACRS carryover from 1989 to 1990, the requested relief is hereby granted. Accordingly, a refund in the amount of $***, plus the appropriate interest, will be issued to the Taxpayer in due course.
Sincerely,
W. H. Forst
Tax Commissioner
OTP/6535L
Rulings of the Tax Commissioner