Issued By

The State Tax Commissioner

No. 86-003



The following Technical Assistance Advisory is issued pursuantto West Virginia Code § 11-10-5r.


this is in response to a request for a technical assistanceadvisory received by this office, wherein a ruling was requested thatWest Virginia corporation will be taxed on construction contractsreportable under W. Va. Code § 11-13-2e, using the completedcontract method of accounting only for those portions of theconstruction work done prior July 1, 1987, and that the portions orunits of any construction project performed after June

30, 1987, will not be taxable under present statutory language forthe purposes of the business and occupation tax.


This advisory is based upon the following facts:


A West Virginia corporation primarily engaged in thebusiness of asphalt paving has a fiscal year and reports its incomefor business and occupation tax purposes in accordance with itsfederal income tax reporting method using the percentage ofcompletion method. Under the percentage of completion method ofaccounting, the company reports on long-term contracts based upon thenumber of units completed under the contract as of the end of itsfiscal year.


The West Virginia business and occupation tax is set forth inW. Va. Code § 11-13-1 et seq. West Virginia Code §11-13-28 makes inoperative the provisions of W. Va. Code §11-13-2e as of July 1, 1987. That section also provides thattaxpayers using the accrual method of accounting shall file a finalreturn for the short taxable year ending June 30, 1987. WestVirginia Code § 11-13-28 further provides that persons engagedin activities taxable under section 2e of Article 13 prior to thefirst day of July, 1987 are taxable under either Article 13A or 23 ofChapter 11, or both, on and after such date.



In accordance with W. Va. Code § 11-13-28, a business mustfile a business and occupation tax return for its short taxable yearbeginning April 1, 1987, and ending June 30, 1987. The proper amountto report on this return, using the completed contracting method ofaccounting, will be only those portions of construction work doneprior to July 1, 1987. Portions or units of any construction projectperformed after June 30, 1987, will not be taxable under the WestVirginia business and occupation tax, as the statute standscurrently.


The findings, conclusions and rulings herein set forth arebased upon application of statutory provisions to the facts presentedand the documents and material accompanying the request. Should thefacts or the law change in any material respect, or should it appearthat a material factual omission, misrepresentation or mistake hasoccurred, the findings, conclusions and rulings set forth herein mayno longer apply.


This Technical Assistance Advisory has no precendential valueexcept to the taxpayer who requested the advisory. For thattaxpayer, the advisory may be relied upon only for the specifictransaction addressed herein. Any modification of this advisoryshall be prospective only.



Michael E. Caryl

State Tax Commissioner


Date: December 2, 1986