Chap. 430.—An ACT to amend and re-enact section 59 of the Tax Code of Vir-
ginia, in relation to the income taxation of parent and subsidiary corporations.

[H B 433]
Approved March 30, 1936

1. Be it enacted by the General Assembly of Virginia, That section
fifty-nine of the Tax Code of Virginia be amended and re-enacted so
as to read as follows:

Section 59. Parents and subsidiaries—-Where any corporation
liable to taxation under this chapter, by agreement or otherwise con-
ducts the business of such corporation in such manner as either di-
rectly or indirectly to benefit the members or stockholders of the
corporation, or any of them, or any person or persons directly or
indirectly interested in such business, by either buying or selling its
products or the goods or commodities in which it deals at more or less
than a fair price which might be obtained therefor, or where such a
corporation sells its products, goods, or commodities to another corpora-
tion or acquires and disposes of the products, goods, or commodities
of another corporation, in such manner as to create a loss or improper
net income, and such other corporation by stock ownership, agree-
ment, or otherwise, controls or is controlled by the corporation lable
to taxation under this chapter, the Department of Taxation may re-
quire such facts as it deems necessary for the proper computation
provided by this chapter, and may for the purpose determine the
amount which shall be deemed to be the entire net income of the busi-
ness of such corporation for the taxable year, and in determining such
entire net income, the department shall have regard to the fair profits
which, but for any agreement, arrangement or understanding, might
be, or could have been obtained from dealing in such products, goods
or commodities.

Any corporation liable to taxation under this chapter, and either
owned or controlled by, or owning or controlling, either directly or
indirectly, another corporation, may be required by the Department of
Taxation to make a report consolidated with such other corporation
showing the combined gross and net income, and such other informa-
tion as the Department of Taxation may require, but excluding inter-
corporate stock holdings and the inter-corporate accounts. In case it
shall appear to the Department of Taxation that any arrangements
exist in such a manner as improperly to reflect the business done, or
the entire net income earned from business done in this State, the
Department of Taxation is authorized and empowered, in such manner
as it may determine, equitably to adjust the tax. In all cases men-
tioned in this paragraph, such other corporations, not otherwise liable
to taxation under this chapter, shall, for the purposes of this chapter,
be deemed to be doing business in Virginia through the agency of the
corporation liable to taxation under this chapter.