Administrative Code

Creating a Report: Check the sections you'd like to appear in the report, then use the "Create Report" button at the bottom of the page to generate your report. Once the report is generated you'll then have the option to download it as a pdf, print or email the report.

Virginia Administrative Code
Title 23. Taxation
Agency 10. Department of Taxation
Chapter 120. Corporation Income Tax
1/27/2023

23VAC10-120-140. How dividends allocated.

A. In general. If a corporation is subject to tax in Virginia and at least one other state, as defined in § 58.1-405 of the Code of Virginia, it must allocate and apportion its Virginia taxable income. Dividends are allocated to the commercial domicile of the corporation. All other income is apportioned.

B. Definition of dividend. A distribution to the taxpaying corporation from another corporation shall be allocated if such distribution is treated as a dividend under IRC § 316.

C. Amount allocated. Dividends are allocated only to the extent that they are included in Virginia taxable income. Allocable dividends are gross dividends received reduced by the following:

1. Any dividends exempt from taxation under federal law.

2. The dividends received deduction allowed by federal law.

3. Dividends which are subtracted from federal taxable income in computing Virginia taxable income (e.g. 50% owned corporations, foreign source income, foreign dividend gross up, subpart F income). See 23VAC10-120-102 for details.

D. Commercial domicile. Commercial domicile means the state in which is located the principal office from which the business affairs of the corporation are normally directed or managed. The commercial domicile will normally be the location of the headquarters office of the corporation. If the corporation has no office then the commercial domicile may be where the officers, directors and shareholders regularly meet or where the principal officer or majority shareholder/officer conducts the affairs of the corporation, depending upon the facts and circumstances.

Statutory Authority

§§ 58.1-203 and 58.1-407 of the Code of Virginia.

Historical Notes

Derived from VR630-3-407, eff. January 1, 1985.

Website addresses provided in the Virginia Administrative Code to documents incorporated by reference are for the reader's convenience only, may not necessarily be active or current, and should not be relied upon. To ensure the information incorporated by reference is accurate, the reader is encouraged to use the source document described in the regulation.

As a service to the public, the Virginia Administrative Code is provided online by the Virginia General Assembly. We are unable to answer legal questions or respond to requests for legal advice, including application of law to specific fact. To understand and protect your legal rights, you should consult an attorney.