Virginia Law

A. Description. For a combined return the Virginia taxable income or loss is separately determined for each eligible corporation. The Virginia taxable income is then separately allocated and apportioned for each eligible corporation using each corporation's commercial domicile and apportionment factors. The resulting income or loss from Virginia sources is then combined and reported on a single return.

B. Eligible members.

1. Members of an affiliated group are eligible to file a combined return if they are: (i) subject to Virginia income tax if a separate return were to be filed, and (ii) affiliated as defined by § 58.1-302 of the Code of Virginia, and (iii) filing using the same taxable year. For the purpose of determining eligibility to be included in a combined return, a corporation shall not be deemed to be using a different taxable year if it files a return for a period of less than 12 months and all of the months are within the taxable year of the combined group.

2. Members of an affiliated group are eligible to file combined even though they use different apportionment formulas.

C. Filing. A combined return shall contain all of the information that would be contained in a separate return for each corporation. A copy of the federal consolidated return, or the separate federal returns of each corporation included in the combined return, must be filed with the Virginia return. If the federal return is so voluminous that it is impractical to file a complete copy with the Virginia return, the complete federal return shall be made available to the department upon request. In addition, a schedule shall be included with the Virginia return showing the separate income, adjustments, allocation and apportionment factors for each included corporation.

D. Consent. The filing of a combined return requires the consent of all of the corporations eligible to be included. The filing of a combined return will be deemed to be consented to by all eligible corporations included therein. All subsequent returns must also be filed on a combined basis. See 23VAC10-120-380 for requirements as to execution of the combined return and the required consent of each included corporation.