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2021 SESSION
20105114DBe it enacted by the General Assembly of Virginia:
1. That § 58.1-442 of the Code of Virginia is amended and reenacted as follows:
§ 58.1-442. Separate, combined or consolidated returns of affiliated corporations.
A. Corporations which are affiliated within the meaning of § 58.1-302 may, for any taxable year, file separate returns, file a combined return or file a consolidated return of net income for the purpose of this chapter, and the taxes thereunder shall be computed and determined upon the basis of the type of return filed. Following an election to file on a separate, consolidated, or combined basis all returns thereafter filed shall be upon the same basis unless permission to change is granted by the Department.
B. For the purpose of subsection A:
1. A consolidated return shall mean a single return for a group of corporations affiliated within the meaning of § 58.1-302, prepared in accordance with the principles of § 1502 of the Internal Revenue Code and regulations promulgated thereunder. Permission to file a consolidated return shall not be denied to a group of affiliated corporations filing a consolidated federal return solely because two or more members of such affiliated group would be required to use different apportionment factors if separate returns were filed. The Tax Commissioner shall promulgate regulations setting forth the manner in which such an affiliated group shall compute its Virginia taxable income.
2. A combined return shall mean a single return for a group of corporations affiliated within the meaning of § 58.1-302, in which income or loss is separately determined in accordance with subdivisions a through d below:
a. Virginia taxable income or loss is computed separately for each corporation;
b. Allocable income is allocated to the state of commercial domicile separately for each corporation;
c. Apportionable income or loss is computed, utilizing separate apportionment factors for each corporation;
d. Income or loss computed in accordance with items a through c above is combined and reported on a single return for the affiliated group.
C. Notwithstanding subsection A, a group of corporations may apply to
the Tax Commissioner for permission elect to change the basis of the type of return filed (i) from
consolidated to separate or combined
or (ii) from separate or combined to consolidated, if such corporations are
affiliated within the meaning of § 58.1-302 and the affiliated group of which
they are members, as it has existed from time to time, has filed on the same
basis for at least the preceding 20 five
years. Permission shall
be granted if:
1. For the
taxable year immediately preceding the taxable year for which the new election
would be applicable, there would have been no decrease in tax liability
computed under the proposed election as compared to the affiliated group's
former filing method; and
2. The
affiliated group agrees to file returns computing its Virginia income tax
liability under both the new filing method and the former method and will pay
the greater of the two amounts for the taxable year in which the new election
is effective and for the immediately succeeding taxable year.