1. A. In general.

   1. 1. The average value of property shall be determined by averaging the value of the beginning and end of the taxable year, but the department may require the averaging of monthly values during the taxable year if reasonably required to reflect properly the average value of the corporation's property.
   2. 2. Averaging by monthly values may be elected by the taxpayer and will generally be required by the Department if there is substantial fluctuation in the values of the property during the taxable year or where a substantial amount of property is acquired after the beginning of the taxable year or disposed of before the end of the taxable year. Taxpayer may elect to average by monthly values whether or not the department requires it.
   3. 3. Substantial fluctuations in the values of property will be deemed to exist if the value for any month is outside a range of values which is the average of the beginning and ending value plus or minus 25%.

   4. 4. The taxpayer may elect to compute the average value of rental property by one of the following methods:

      1. a. the net annual rental rate of property rented at the beginning and end of the taxable year may be averaged and multiplied by eight, or,
      2. b. the net annual rental rate of property rented at the beginning of each month may be averaged and multiplied by eight, or
      3. c. the total rent paid for all property for the taxable year may be multiplied by eight. This method is deemed equivalent to monthly averaging, or
      4. d. the Department may require a taxpayer to determine the average value of property by using method (b) and (c).

2. B. Example. Taxpayer reports on a calendar year. The value of property at the end of the preceding year (and therefore the beginning value for this year) was $1,250. The value of property at the end of each month for this year is as follows:

   
   January                             1,300

   
   February                            1,350

   
   March                               1,500

   
   April                               1,700

   
   May                                 2,000

   
   June                                3,000

   
   July                                5,000

   
   August                              7,500

   
   September                          10,000

   
   October                            12,000

   
   November                            4,000

   
   December                            2,000

   The average of the beginning and ending values is $1,625.

   1,250+ 2,000 = 3,250 ÷ 2 =1,625

   However, there is substantial fluctuation in the monthly values.

   1,625 - 25% = 1,218.75; 1,625 + 25% = 2,031.25

   Because the property values for some of the months is outside the acceptable range of fluctuation ($1,218.75 to $2,031.25) the department requires that the property be averaged monthly.

   The total of the 12 monthly values is $51,350 and the average value is $4,279.

Statutory Authority

§§ 58.1-203 and 58.1-411 of the Code of Virginia.

Historical Notes

Derived from VR630-3-411, eff. January 1, 1985.