23VAC10-120-330: Prohibition of worldwide consolidation or combination

A consolidated or combined return may not include a controlled foreign corporation the income of which is derived from sources without the United States.

1. A controlled foreign corporation is a corporation which:

a. is organized under the laws of a foreign country, and

b. has its commercial domicile in a foreign country, and

c. is an affiliate of one or more corporations having income from Virginia sources.

2. The income of a controlled foreign corporation is derived from sources without the United States if:

a. such controlled foreign corporation is not subject to income tax under the laws of the United States, and

b. dividends paid by such controlled foreign corporation would qualify as "income from foreign sources" under § 58.1-302 of the Code of Virginia.