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TAX NEWS - may 2010

Income/Franchise Tax - West Virginia: New finalized rules implement combined reporting law enacted during 2007 & 2008

Rules 110-24-1 through 110-24-13, W. Va. State Tax Dept. (eff. 5/11/10). The department has issued final rules repealing the State's previous corporate net income tax rules and replacing them with a version that blends the requirements of West Virginia's corporate net income tax with the combined reporting requirements enacted in 2007 under SB 749, and in 2008 under SB 680.

The new regulatory guidance addresses combined reporting issues such as:
- How to reconcile reporting periods for corporations belonging to the same combined group that have different tax reporting years,
- How to treat intercompany transactions so that they are not subject to manipulation to decrease net taxable income,
- How to compute apportionment factors based on the combined group, and
- How to determine a combined group for a particular tax year when there have been corporate mergers, acquisitions, split-ups and divestitures during the reporting period.

The rules also provide example calculations.

Note that West Virginia's unitary combined reporting regime became effective for tax years beginning on or after January 1, 2009.
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