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Virginia Administrative Code
Title 23. Taxation
Agency 10. Department of Taxation
Chapter 120. Corporation Income Tax
11/21/2024

23VAC10-120-240. Motor carriers; apportionment.

A. In general.

1. Motor carriers do not use the three factor formula to apportion Virginia taxable income but instead apportion solely on the basis of vehicle miles traveled. The ratio is vehicle miles in Virginia to vehicle miles everywhere.

2. Foreign source income is excluded from Virginia taxable income. However, income from vehicle miles traveled in a foreign country is not one of the categories of foreign source income qualifying for exclusion. Therefore, all income from such vehicle miles is included in Virginia taxable income and such vehicle miles are included in the denominator, but not the numerator.

3. "Motor carrier" means all corporations licensed by the Interstate Commerce Commission or the Virginia State Corporation Commission as motor carriers of property or passengers which use the highways of Virginia.

4. a. "Vehicle miles" means miles traveled on a scheduled route or, in any case, while carrying property or passengers for a charge. A scheduled route is any route for which the motor carrier has been granted operating authority by the Interstate Commerce Commission, State Corporation Commission or similar agency. The miles traveled by all vehicles operated by the taxpayer shall be included, regardless of whether they are owned or leased by the taxpayer.

b. Vehicle miles shall not include travel for repairs or service whether the vehicle is normally used for carrying property or passengers or is normally used to service such vehicles.

B. Exception.

1. A motor carrier shall not be subject to Virginia income tax if the corporation:

a. neither owns nor rents real or tangible personal property in Virginia except vehicles, and

b. the vehicle miles in Virginia are not more than 5% of the total vehicle miles annually traveled in all states, and

c. the corporation either: (i) has made no pick-ups or deliveries in Virginia and has traveled less than 50,000 miles in Virginia, or (ii) has made no more than twelve round trips into Virginia.

2. A motor carrier which is not subject to Virginia income tax because of this exception may still be required to file a Virginia income tax return reporting its qualification for the exception.

Statutory Authority

§§ 58.1-203 and 58.1-417 of the Code of Virginia.

Historical Notes

Derived from VR630-3-417, eff. January 1, 1985.

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