Administrative Code

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

23VAC10-120-300. Accounting.

A. A corporation shall use the same taxable year for Virginia tax purposes as is used for federal income tax purposes.

B. If a corporation's taxable year is changed for federal income tax purposes, its taxable year for Virginia tax purposes shall be similarly changed.

If a change in a corporation's taxable year results in a taxable period of less than twelve months, no proration is required because the corporate tax rate is a flat 6%. However, if a corporation is required to annualize its federal taxable income and prorate the federal income tax, then the Virginia taxable income shall be similarly annualized and the tax prorated.

C. Virginia taxable income is defined as federal taxable income with certain additions, subtractions and modifications. Therefore, Virginia taxable income will always be based upon the same accounting methods as used for federal purposes.

The allocation and apportionment formulas use information not required in computing federal taxable income. See 23VAC10-120-140 through 23VAC10-120-270.

D. If a corporation's method of accounting is changed for federal income tax purposes, its method of accounting for Virginia tax purposes must be similarly changed. Since Virginia taxable income is based upon federal taxable income, any accounting adjustments for federal purposes for any taxable year shall also apply to the computation of Virginia taxable income.

Statutory Authority

§§ 58.1-203 and 58.1-440 of the Code of Virginia.

Historical Notes

Derived from VR630-3-440, eff. January 1, 1985.

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