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H.B. 359 Enrolled
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TAX CHANGES
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2008 GENERAL SESSION
3
STATE OF UTAH
4
Chief Sponsor: John Dougall
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Senate Sponsor:
Wayne L. Niederhauser
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LONG TITLE
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General Description:
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This bill amends the Corporate Franchise and Income Taxes chapter, the Individual
10
Income Tax Act, the Sales and Use Tax Act, the Transportation Code, and related
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provisions to address the income taxation of individuals, estates, and trusts, including
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real estate investment trusts, a change in a state sales and use tax rate, a sales and use
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tax exemption, and the expenditure of certain state sales and use tax revenues.
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Highlighted Provisions:
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This bill:
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. defines terms;
17
. addresses the income taxation of a real estate investment trust or income from a real
18
estate investment trust;
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. repeals provisions imposing an individual income tax on the basis of graduated
20
brackets and rates;
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. provides that an individual income tax is imposed on the basis of a single tax rate,
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including:
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. modifying and repealing definitions;
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. modifying additions to, subtractions from, and adjustments to adjusted gross
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income;
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. addressing the taxation of a nonresident individual or part-year resident
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individual; and
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. addressing provisions relating to the determination and reporting of income tax
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liability and information;
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. addresses the apportionment of business income for purposes of the individual
31
income tax;
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. modifies the income taxation of estates and trusts, including:
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. providing definitions;
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. providing that the tax is calculated on the basis of unadjusted income;
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. modifying additions to, subtractions from, and adjustments to unadjusted
36
income;
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. addressing the taxation of a nonresident estate or trust; and
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. addressing provisions relating to the determination and reporting of income tax
39
liability and information;
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. addresses the taxation of pass-through entities, including:
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. providing definitions; and
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. renumbering and amending provisions relating to pass-through entities;
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. renumbers and amends provisions relating to tax credits, including tax credits for:
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. a taxpayer;
45
. an investment in the Utah Educational Savings Plan Trust; or
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. retirement income;
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. provides nonrefundable tax credits for:
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. a trust or estate;
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. a contribution to a medical care savings account;
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. capital gain transactions;
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. certain amounts paid for insurance under a health benefit plan; or
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. certain solar projects;
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. requires the Utah Tax Review Commission to study the solar projects tax credits;
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. provides that a person may not claim a nonrefundable renewable energy systems tax
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credit for certain purchases for which the person claims a tax credit for certain solar
56
projects;
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. modifies the refundable renewable energy tax credit to clarify that an estate or trust
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may claim the tax credit;
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. addresses the apportionment of tax credits;
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. addresses the following relating to a medical care savings account:
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. taxation;
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. penalties; and
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. interest;
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. amends provisions relating to the taxation of an investment in the Utah Educational
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Savings Plan Trust;
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. renumbers and amends the individual income tax contribution provisions;
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. addresses the administration of income tax contributions;
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. grants rulemaking authority to:
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. the State Tax Commission; and
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. the Insurance Department;
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. increases a state sales and use tax rate from 4.65% to 4.70%;
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. provides that a .025% tax rate on certain sales and use transactions shall be
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deposited into the Critical Highway Needs Fund and the Transportation Investment
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Fund of 2005;
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. provides that a .025% tax rate on certain sales and use transactions shall be
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deposited into the Transportation Fund to be expended to address chokepoints in
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construction management;
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. extends the expiration date for certain sales and use tax exemptions;
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. provides a sales and use tax exemption for sales of fuel to a common carrier that is a
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railroad for use in a locomotive engine;
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. provides that state sales and use tax revenues deposited into the Transportation Fund
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are not appropriated into the class B and class C roads account;
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. modifies the statutes creating the Transportation Investment Fund of 2005 and the
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Critical Highway Needs Fund to address the sources of revenue that may be
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deposited into the funds; and
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. makes technical changes.
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Monies Appropriated in this Bill:
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None
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Other Special Clauses:
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This bill provides effective dates.
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Utah Code Sections Affected:
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AMENDS:
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9-4-802, as last amended by Laws of Utah 2003, Chapter 132
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9-4-803, as last amended by Laws of Utah 2003, Chapter 132
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23-14-13, as last amended by Laws of Utah 1995, Chapter 211
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23-14-14.1, as enacted by Laws of Utah 2003, Chapter 162
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26-18a-3, as last amended by Laws of Utah 1997, Chapter 1
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26-18a-4, as last amended by Laws of Utah 1997, Chapter 1
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26-48-102, as enacted by Laws of Utah 2006, Chapter 280
100
31A-32a-101, as enacted by Laws of Utah 1999, Chapter 131
101
31A-32a-103, as enacted by Laws of Utah 1999, Chapter 131
102
31A-32a-104, as enacted by Laws of Utah 1999, Chapter 131
103
31A-32a-105, as enacted by Laws of Utah 1999, Chapter 131
104
31A-32a-106, as last amended by Laws of Utah 2001, Chapter 53
105
31A-32a-107, as enacted by Laws of Utah 1999, Chapter 131
106
48-2c-117, as enacted by Laws of Utah 2001, Chapter 260
107
53B-8a-106, as last amended by Laws of Utah 2007, Chapter 100
108
59-7-101, as last amended by Laws of Utah 2004, Chapter 54
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59-7-105, as last amended by Laws of Utah 2007, Chapter 100
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59-7-106, as last amended by Laws of Utah 2007, Chapter 100
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59-7-116.5, as enacted by Laws of Utah 1995, Chapter 311
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59-7-402, as last amended by Laws of Utah 2004, Chapter 54
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59-7-614, as repealed and reenacted by Laws of Utah 2007, Chapter 288
114
59-10-103, as last amended by Laws of Utah 2006, Fourth Special Session, Chapter 2
115
59-10-104, as last amended by Laws of Utah 2007, Chapter 288
116
59-10-104.1, as last amended by Laws of Utah 2006, Fourth Special Session, Chapter 2
117
59-10-110, as renumbered and amended by Laws of Utah 1987, Chapter 2
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59-10-114, as last amended by Laws of Utah 2007, Chapter 100
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59-10-115, as last amended by Laws of Utah 2006, Fourth Special Session, Chapter 2
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59-10-116, as last amended by Laws of Utah 2006, Fourth Special Session, Chapter 2
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59-10-117, as last amended by Laws of Utah 2006, Fourth Special Session, Chapter 2
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59-10-118, as last amended by Laws of Utah 1995, Chapter 311
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59-10-119, as renumbered and amended by Laws of Utah 1987, Chapter 2
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59-10-120, as renumbered and amended by Laws of Utah 1987, Chapter 2
125
59-10-121, as renumbered and amended by Laws of Utah 1987, Chapter 2
126
59-10-122, as renumbered and amended by Laws of Utah 1987, Chapter 2
127
59-10-123, as renumbered and amended by Laws of Utah 1987, Chapter 2
128
59-10-124, as renumbered and amended by Laws of Utah 1987, Chapter 2
129
59-10-125, as renumbered and amended by Laws of Utah 1987, Chapter 2
130
59-10-126, as last amended by Laws of Utah 1995, Chapter 311
131
59-10-201, as last amended by Laws of Utah 2007, Chapter 100
132
59-10-201.1, as last amended by Laws of Utah 2006, Chapter 223
133
59-10-202, as last amended by Laws of Utah 2007, Chapter 100
134
59-10-204, as last amended by Laws of Utah 2006, Chapter 223
135
59-10-205, as last amended by Laws of Utah 2006, Chapter 223
136
59-10-207, as last amended by Laws of Utah 2006, Chapter 223
137
59-10-209.1, as enacted by Laws of Utah 2006, Chapter 223
138
59-10-210, as last amended by Laws of Utah 2006, Chapter 223
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59-10-507, as last amended by Laws of Utah 2003, Chapter 198
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59-10-1014, as last amended by Laws of Utah 2007, Chapters 122 and 288
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59-10-1106, as enacted by Laws of Utah 2007, Chapter 288
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59-12-103, as last amended by Laws of Utah 2007, Chapters 9, 101, 126, 206, and 288
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59-12-104, as last amended by Laws of Utah 2007, Chapters 76, 195, 214, 224, 288,
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295, and 329
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72-2-107, as last amended by Laws of Utah 2007, Chapter 126
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72-2-124, as last amended by Laws of Utah 2006, Chapters 11 and 135
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72-2-125, as enacted by Laws of Utah 2007, Chapter 206
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ENACTS:
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59-7-614.2, Utah Code Annotated 1953
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59-10-1020, Utah Code Annotated 1953
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59-10-1021, Utah Code Annotated 1953
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59-10-1022, Utah Code Annotated 1953
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59-10-1023, Utah Code Annotated 1953
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59-10-1024, Utah Code Annotated 1953
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59-10-1301, Utah Code Annotated 1953
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59-10-1302, Utah Code Annotated 1953
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59-10-1303, Utah Code Annotated 1953
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59-10-1401, Utah Code Annotated 1953
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59-10-1402, Utah Code Annotated 1953
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RENUMBERS AND AMENDS:
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59-10-1002.1, (Renumbered from 59-10-1016, as renumbered and amended by Laws of
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Utah 2006, Chapter 223)
163
59-10-1002.2, (Renumbered from 59-10-1206.9, as enacted by Laws of Utah 2007,
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Chapter 288)
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59-10-1017, (Renumbered from 59-10-1206.1, as enacted by Laws of Utah 2007,
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Chapter 100)
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59-10-1018, (Renumbered from 59-10-1206.2, as enacted by Laws of Utah 2007,
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Chapter 288)
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59-10-1019, (Renumbered from 59-10-1206.3, as enacted by Laws of Utah 2007,
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Chapter 288)
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59-10-1304, (Renumbered from 59-10-551, as last amended by Laws of Utah 2006,
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Chapter 280)
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59-10-1305, (Renumbered from 59-10-530, as last amended by Laws of Utah 1997,
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Chapter 12)
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59-10-1306, (Renumbered from 59-10-530.5, as last amended by Laws of Utah 2003,
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Chapter 132)
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59-10-1307, (Renumbered from 59-10-549, as last amended by Laws of Utah 2005,
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Chapter 208)
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59-10-1308, (Renumbered from 59-10-550, as last amended by Laws of Utah 1997,
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Chapters 1 and 12)
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59-10-1309, (Renumbered from 59-10-550.1, as enacted by Laws of Utah 2003,
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Chapter 162)
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59-10-1310, (Renumbered from 59-10-550.2, as enacted by Laws of Utah 2006,
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Chapter 280)
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59-10-1311, (Renumbered from 59-10-547, as last amended by Laws of Utah 1998,
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Chapter 269)
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59-10-1312, (Renumbered from 59-10-548, as last amended by Laws of Utah 2002,
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Chapters 107 and 256)
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59-10-1403, (Renumbered from 59-10-301, as renumbered and amended by Laws of
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Utah 1987, Chapter 2)
191
59-10-1404, (Renumbered from 59-10-302, as renumbered and amended by Laws of
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Utah 1987, Chapter 2)
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59-10-1405, (Renumbered from 59-10-303, as last amended by Laws of Utah 2006,
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Fourth Special Session, Chapter 2)
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REPEALS:
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59-10-206, as last amended by Laws of Utah 1995, Chapter 345
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59-10-801, as last amended by Laws of Utah 1997, Chapter 159
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59-10-1201, as enacted by Laws of Utah 2006, Fourth Special Session, Chapter 2
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59-10-1202, as last amended by Laws of Utah 2007, Chapters 100 and 288
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59-10-1203, as last amended by Laws of Utah 2007, Chapters 100 and 288
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59-10-1204, as enacted by Laws of Utah 2006, Fourth Special Session, Chapter 2
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59-10-1205, as enacted by Laws of Utah 2006, Fourth Special Session, Chapter 2
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59-10-1206, as enacted by Laws of Utah 2006, Fourth Special Session, Chapter 2
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59-10-1207, as enacted by Laws of Utah 2006, Fourth Special Session, Chapter 2
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Be it enacted by the Legislature of the state of Utah:
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Section 1.
Section
9-4-802
is amended to read:
208
9-4-802. Purposes of Homeless Coordinating Committee -- Uses of Pamela
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Atkinson Homeless Trust Account.
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(1) (a) The Homeless Coordinating Committee shall work to ensure that services
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provided to the homeless by state agencies, local governments, and private organizations are
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provided in a cost-effective manner.
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(b) Programs funded by the committee shall emphasize emergency housing and
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self-sufficiency, including placement in meaningful employment or occupational training
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activities and, where needed, special services to meet the unique needs of the homeless who
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have families with children, or who are mentally ill, disabled, or suffer from other serious
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challenges to employment and self-sufficiency.
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(c) The committee may also fund treatment programs to ameliorate the effects of
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substance abuse or a disability.
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(2) The committee members designated in Subsection
9-4-801
(2) shall:
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(a) award contracts funded by the Pamela Atkinson Homeless Trust Account with the
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advice and input of those designated in Subsection
9-4-801
(3);
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(b) consider need, diversity of geographic location, coordination with or enhancement
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of existing services, and the extensive use of volunteers; and
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(c) give priority for funding to programs that serve the homeless who are mentally ill
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and who are in families with children.
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(3) (a) In any fiscal year, no more than 80% of the funds in the Pamela Atkinson
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Homeless Trust Account may be allocated to organizations that provide services only in Salt
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Lake, Davis, Weber, and Utah Counties.
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(b) The committee may:
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(i) expend up to 3% of its annual appropriation for administrative costs associated with
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the allocation of funds from the Pamela Atkinson Homeless Trust Account, and up to 2% of its
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annual appropriation for marketing the account and soliciting donations to the account; and
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(ii) pay for the initial costs of the State Tax Commission in implementing Section
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[
59-10-530.5
]
59-10-1306
from the account.
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(4) (a) The committee may not expend, except as provided in Subsection (4)(b), an
237
amount equal to the greater of $50,000 or 20% of the amount donated to the Pamela Atkinson
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Homeless Trust Account during fiscal year 1988-89.
239
(b) If there are decreases in contributions to the account, the committee may expend
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funds held in reserve to provide program stability, but the committee shall reimburse the
241
amounts of those expenditures to the reserve fund.
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(5) The committee shall make an annual report to the Economic Development and
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Human Resources Appropriations Subcommittee regarding the programs and services funded
244
by contributions to the Pamela Atkinson Homeless Trust Account.
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(6) The moneys in the Pamela Atkinson Homeless Trust Account shall be invested by
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the state treasurer according to the procedures and requirements of Title 51, Chapter 7, State
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Money Management Act, except that all interest or other earnings derived from the fund
248
moneys shall be deposited in the fund.
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Section 2.
Section
9-4-803
is amended to read:
250
9-4-803. Creation of Pamela Atkinson Homeless Trust Account.
251
(1) There is created a restricted account within the General Fund to be known as the
252
Pamela Atkinson Homeless Trust Account.
253
(2) Private contributions received under this section and Section [
59-10-530.5
]
254
59-10-1306
shall be deposited into the account to be used only for programs described in
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Section
9-4-802
.
256
(3) Money shall be appropriated from the account to the State Homeless Coordinating
257
Committee in accordance with the Utah Budgetary Procedures Act.
258
(4) The State Homeless Coordinating Committee may accept transfers, grants, gifts,
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bequests, or any money made available from any source to implement this part.
260
Section 3.
Section
23-14-13
is amended to read:
261
23-14-13. Wildlife Resources Account.
262
(1) The Wildlife Resources Account [within the General Fund] is established within the
263
General Fund.
264
(2) The following monies shall be deposited into the Wildlife Resources Account:
265
(a) revenue from the sale of licenses, permits, tags, and certificates of registration issued
266
under this title or a rule or proclamation of the Wildlife Board, except as otherwise provided by
267
this title;
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(b) revenue from the sale, lease, rental, or other granting of rights of real or personal
269
property acquired with revenue specified in Subsection (2)(a);
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(c) revenue from fines and forfeitures for violations of this title or any rule,
271
proclamation, or order of the Wildlife Board, minus court costs not to exceed the schedule
272
adopted by the Judicial Council;
273
(d) funds appropriated from the General Fund by the Legislature pursuant to Section
274
23-19-39
;
275
(e) other monies received by the division under any provision of this title, except as
276
otherwise provided by this title; [and]
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(f) contributions made in accordance with Section
59-10-1305
; and
278
[(f)] (g) interest, dividends, or other income earned on account monies.
279
(3) Monies in the Wildlife Resources Account shall be used for the administration of
280
this title.
281
Section 4.
Section
23-14-14.1
is amended to read:
282
23-14-14.1. Wolf Depredation and Management Restricted Account -- Interest --
283
Use of contributions and interest.
284
(1) There is created within the General Fund the Wolf Depredation and Management
285
Restricted Account.
286
(2) The account shall be funded by contributions deposited into the Wolf Depredation
287
and Management Restricted Account in accordance with Section [
59-10-550.1
]
59-10-1309
.
288
(3) (a) The Wolf Depredation and Management Restricted Account shall earn interest.
289
(b) Interest earned on the Wolf Depredation and Management Restricted Account shall
290
be deposited into the Wolf Depredation and Management Restricted Account.
291
(4) (a) Subject to Subsection (4)(b), contributions and interest deposited into the Wolf
292
Depredation and Management Restricted Account shall be used by the Division of Wildlife
293
Resources for:
294
(i) payments for livestock depredation by wolves; or
295
(ii) wolf management.
296
(b) Contributions and interest deposited into the Wolf Depredation and Management
297
Restricted Account may be used for the purposes described in Subsection (4)(a) only to the
298
extent permitted by federal law.
299
Section 5.
Section
26-18a-3
is amended to read:
300
26-18a-3. Purpose of committee.
301
(1) The committee shall work to:
302
(a) provide financial assistance for initial medical expenses of children who need organ
303
transplants;
304
(b) obtain the assistance of volunteer and public service organizations; and
305
(c) fund activities as the committee designates for the purpose of educating the public
306
about the need for organ donors.
307
(2) (a) The committee is responsible for awarding financial assistance funded by the
308
trust account.
309
(b) The financial assistance awarded by the committee under Subsection (1)(a) shall be
310
in the form of interest free loans. The committee may establish terms for repayment of the
311
loans, including a waiver of the requirement to repay any awards if, in the committee's
312
judgment, repayment of the loan would impose an undue financial burden on the recipient.
313
(c) In making financial awards under Subsection (1)(a), the committee shall consider:
314
(i) need;
315
(ii) coordination with or enhancement of existing services or financial assistance,
316
including availability of insurance or other state aid;
317
(iii) the success rate of the particular organ transplant procedure needed by the child;
318
and
319
(iv) the extent of the threat to the child's life without the organ transplant.
320
(3) The committee may only provide the assistance described in this section to children
321
who have resided in Utah, or whose legal guardians have resided in Utah for at least six months
322
prior to the date of assistance under this section.
323
(4) (a) The committee may expend up to 5% of its annual appropriation for
324
administrative costs associated with the allocation of funds from the trust account.
325
(b) The administrative costs shall be used for the costs associated with staffing the
326
committee and for State Tax Commission costs in implementing Section [
59-10-550
]
327
59-10-1308
.
328
(5) The committee shall make an annual report to the Health and Human Services
329
Appropriations Subcommittee regarding the programs and services funded by contributions to
330
the trust account.
331
Section 6.
Section
26-18a-4
is amended to read:
332
26-18a-4. Creation of Kurt Oscarson Children's Organ Transplant Trust
333
Account.
334
(1) There is created a restricted account within the General Fund pursuant to Section
335
51-5-4
known as the Kurt Oscarson Children's Organ Transplant Trust Account. Private
336
contributions received under this section and Section [
59-10-550
]
59-10-1308
shall be
337
deposited into the trust account to be used only for the programs and purposes described in
338
Section
26-18a-3
.
339
(2) Money shall be appropriated from the trust account to the committee in accordance
340
with Title 63, Chapter 38, Budgetary Procedures Act.
341
(3) In addition to funds received under Section [
59-10-550
]
59-10-1308
, the committee
342
may accept transfers, grants, gifts, bequests, or any money made available from any source to
343
implement this chapter.
344
Section 7.
Section
26-48-102
is amended to read:
345
26-48-102. Cat and Dog Community Spay and Neuter Program Restricted
346
Account -- Interest -- Use of contributions and interest.
347
(1) There is created within the General Fund the Cat and Dog Community Spay and
348
Neuter Program Restricted Account.
349
(2) The account shall be funded by contributions deposited into the Cat and Dog
350
Community Spay and Neuter Program Restricted Account in accordance with Section
351
[
59-10-550.2
]
59-10-1310
.
352
(3) (a) The Cat and Dog Community Spay and Neuter Program Restricted Account
353
shall earn interest.
354
(b) Interest earned on the Cat and Dog Community Spay and Neuter Program
355
Restricted Account shall be deposited into the Cat and Dog Community Spay and Neuter
356
Program Restricted Account.
357
(4) The department shall distribute contributions and interest deposited into the Cat and
358
Dog Community Spay and Neuter Program Restricted Account to one or more organizations
359
that:
360
(a) are exempt from federal income taxation under Section 501(c)(3), Internal Revenue
361
Code;
362
(b) operate a mobile spay and neuter clinic for cats and dogs;
363
(c) provide annual spay and neuter services at the mobile spay and neuter clinic
364
described in Subsection (4)(b):
365
(i) to one or more communities in at least 20 counties in the state; and
366
(ii) by veterinarians who are licensed by Title 58, Chapter 28, Veterinary Practice Act;
367
and
368
(d) (i) spay and neuter cats and dogs owned by persons having low incomes; and
369
(ii) have established written guidelines for determining what constitutes a person having
370
a low income in accordance with any rules made by the department as authorized by Subsection
371
(5)(c).
372
(5) (a) An organization described in Subsection (4) may apply to the department to
373
receive a distribution in accordance with Subsection (4).
374
(b) An organization that receives a distribution from the department in accordance with
375
Subsection (4):
376
(i) shall expend the distribution only to spay or neuter dogs and cats:
377
(A) owned by persons having low incomes;
378
(B) by veterinarians who are licensed by Title 58, Chapter 28, Veterinary Practice Act;
379
(C) through a statewide voucher program; and
380
(D) at a location that:
381
(I) is not a mobile spay and neuter clinic; and
382
(II) does not receive any funding from a governmental entity; and
383
(ii) may not expend the distribution for any administrative cost relating to an
384
expenditure authorized by Subsection (5)(b)(i).
385
(c) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
386
department may make rules:
387
(i) providing procedures and requirements for an organization to apply to the
388
department to receive a distribution in accordance with Subsection (4); and
389
(ii) to define what constitutes a person having a low income.
390
Section 8.
Section
31A-32a-101
is amended to read:
391
31A-32a-101. Title and scope.
392
(1) This chapter is known as the "Medical Care Savings Account Act."
393
(2) (a) This chapter applies only to a medical care savings [accounts] account
394
established for the purpose of seeking a tax [deduction] credit under Section [
59-10-114
]
395
59-10-1021
.
396
(b) This chapter does not apply to a medical care savings [accounts that will not be
397
subject to tax deductions under Section
59-10-114
] account with respect to which a tax credit is
398
not claimed under Section
59-10-1021
.
399
Section 9.
Section
31A-32a-103
is amended to read:
400
31A-32a-103. Establishing medical care savings accounts.
401
[(1) For tax years beginning 1995, both of the following apply:]
402
(1) For a taxable year beginning on or after January 1, 1995:
403
(a) an employer, except as otherwise provided by contract or a collective bargaining
404
agreement, may offer a medical care savings account program to the employer's employees;
405
[and] or
406
(b) a resident individual may establish a medical care savings account program for the
407
individual or for the individual's dependents.
408
(2) (a) A contribution into an account made by an employer on behalf of an employee,
409
or made by an individual account holder may not exceed the greater of:
410
[(a)] (i) $2,000 in any [tax] taxable year; or
411
(ii) an amount of money equal to the sum of all eligible medical expenses paid by the
412
employee or account holder [in] for that [tax] taxable year on behalf of the employee, account
413
holder, or the employee's or account holder's spouse or dependents.
414
(b) For purposes of Subsection (2)(a)(ii), eligible medical expenses [as defined in
415
Subsection
31A-32a-102
(5),] are limited to expenses in [that tax year which] the taxable year
416
that an insurance carrier has applied to the employee's or account holder's deductible.
417
(3) An employer that offers a medical care savings account program shall, before
418
making any contributions:
419
(a) inform all employees in writing of the fact that these contributions may not be
420
deductible under the federal tax laws; and
421
(b) obtain from the employee a written election to participate in the medical care
422
savings account program.
423
(4) Except as provided in Sections
31A-32a-105
and
59-10-114
, principal contributed
424
to and interest earned on a medical care savings account and money reimbursed to an employee
425
or account holder for eligible medical expenses are exempt from taxation.
426
(5) (a) An employer may select a single account administrator for all of the employer's
427
employee's medical care savings accounts.
428
(b) If a single account administrator is not selected, an employer may contribute directly
429
to the account holder's individual medical care savings account.
430
Section 10.
Section
31A-32a-104
is amended to read:
431
31A-32a-104. Administration of medical care savings account.
432
(1) An account administrator shall administer the medical care savings account from
433
which the payment of claims is made and has a fiduciary duty to the person for whose benefit
434
the account administrator administers an account.
435
(2) (a) Except as provided in Subsection
31A-32a-105
(1), the account administrator
436
shall use the funds held in a medical care savings account solely for the purpose of paying or
437
reimbursing the employee or account holder for eligible medical expenses of the employee or
438
account holder or of the employee's or account holder's dependents.
439
(b) The commissioner shall adopt rules concerning the coordination of benefits between
440
a medical care savings account and medical expenses payable from automobile insurance
441
policies, workers' compensation insurance policies, or other health care insurance policies or
442
contracts.
443
(3) The employee or account holder may submit documentation of eligible medical
444
expenses paid by the employee or account holder in the [tax] taxable year to the account
445
administrator, and the account administrator shall reimburse the employee or account holder
446
from the employee's or account holder's account for eligible medical expenses.
447
(4) If an employer makes contributions to a medical care savings account program on a
448
periodic installment basis, the employer may advance to an employee an amount necessary to
449
cover eligible medical expenses incurred that exceed the amount in the employee's medical care
450
savings account at the time the expense is incurred if the employee agrees to repay the advance.
451
Section 11.
Section
31A-32a-105
is amended to read:
452
31A-32a-105. Withdrawals -- Termination -- Transfers.
453
(1) Subject to Subsection (3), if the employee or account holder withdraws money for
454
any purpose other than a medical expense at any time in which the balance in the account is
455
below $4,000 [all of the following apply]:
456
(a) the amount of the withdrawal [is income for the purposes of Title 59, Chapter 10,
457
Individual Income Tax Act] shall be added to adjusted gross income in accordance with Section
458
59-10-114
; and
459
(b) the administrator shall withhold from the amount of the withdrawal, and on behalf
460
of the employee or account holder shall pay a penalty to the State Tax Commission equal to
461
10% of the amount of the withdrawal.
462
(2) If an employee or account holder withdraws money from the employee's or account
463
holder's medical care savings account for any purpose other than a medical expense, but the
464
withdrawal occurs when the balance in the medical care savings account is over $4,000, and the
465
withdrawal will not result in the account balance dropping below $4,000, the amount of the
466
withdrawal:
467
(a) is not subject to the penalties described in Subsection (1)(b); and
468
[(b) is subject to taxation as provided in Subsection (1)(a).]
469
(b) shall be added to adjusted gross income in accordance with Section
59-10-114
.
470
(3) The amount of a disbursement of any assets of a medical care savings account
471
pursuant to a filing for protection under [Title 11 of the United States Code,] 11 U.S.C. Sec.
472
101 to 1330, by an employee, account holder, or person for whose benefit the account was
473
established:
474
(a) is not considered a withdrawal for purposes of this section; and
475
[(b) is subject to taxation under Title 59, Chapter 10, Individual Income Tax Act.]
476
(b) shall be added to adjusted gross income in accordance with Section
59-10-114
.
477
(4) (a) Upon the death of the employee or account holder, the account administrator
478
shall distribute the principal and accumulated interest of the medical care savings account to the
479
estate of the employee or account holder.
480
(b) A distribution under this Subsection (4) is not subject to the penalties described in
481
Subsection (1)(b).
482
(5) (a) If an employee is no longer employed by an employer that participates in a
483
medical care savings account program, and if the employee's account is administered by the
484
employer's account administrator, the money in the medical care savings account may be used
485
for the benefit of the employee or the employee's dependents in accordance with this chapter,
486
and [remains exempt from taxation] may not be added to adjusted gross income under Section
487
59-10-114
if the employee, not more than 60 days after the employee's final day of employment:
488
(i) transfers the account to a new account administrator; or
489
(ii) (A) requests in writing to the former employer's account administrator that the
490
account remain with that administrator; and
491
(B) the account administrator agrees to retain the account.
492
(b) Not more than 30 days after the expiration of the 60 days described in Subsection
493
(5)(a), if an account administrator has not accepted the former employee's account, the
494
employer shall mail a check to the former employee at the employee's last-known address equal
495
to the amount in the account on that day.
496
(c) The amount mailed to the employee [is subject to taxation pursuant to Subsection
497
(1)(a)] under Subsection (5)(b) shall be added to adjusted gross income in accordance with
498
Section
59-10-114
, but is not subject to the penalties under Subsection (1)(b).
499
(d) If an employee becomes employed with a different employer that participates in a
500
medical care savings account program, the employee may transfer the employee's medical care
501
savings account to that new employer's account administrator.
502
(e) If an account holder becomes an employee of an employer that participates in a
503
medical care savings account program, the account holder may transfer the account holder's
504
account to the employer's account administrator.
505
Section 12.
Section
31A-32a-106
is amended to read:
506
31A-32a-106. Regulation of account administrators -- Administration of addition
507
to adjusted gross income and tax credit -- Rulemaking authority.
508
(1) The department shall regulate account administrators and may adopt rules necessary
509
to administer this chapter.
510
(2) The State Tax Commission may adopt rules necessary to monitor and implement the
511
[tax deductions established by this chapter and Section
59-10-114
.]:
512
(a) amounts required to be added to adjusted gross income in accordance with Sections
513
31A-32a-105
and
59-10-114
; or
514
(b) amount claimed as a tax credit in accordance with Section
59-10-1021
.
515
Section 13.
Section
31A-32a-107
is amended to read:
516
31A-32a-107. Penalties for noncompliance with tax provisions.
517
(1) An account administrator who fails to comply with [the statutes and rules governing
518
the tax deduction established by this chapter and Section
59-10-114
] a provision described in
519
Subsection (2) is subject to:
520
[(1)] (a) the civil penalties provided in Section
59-1-401
; and
521
[(2)] (b) interest at the rate and in the manner provided in Section
59-1-402
.
522
(2) The following provisions apply to Subsection (1):
523
(a) a provision of this chapter relating to:
524
(i) an addition to income made in accordance with Section
59-10-114
; or
525
(ii) a tax credit allowed by Section
59-10-1021
; or
526
(b) a provision of Title 59, Chapter 10, Individual Income Tax Act, relating to:
527
(i) an addition to income made in accordance with Section
59-10-114
; or
528
(ii) a tax credit allowed by Section
59-10-1021
.
529
Section 14.
Section
48-2c-117
is amended to read:
530
48-2c-117. Taxation of limited liability companies.
531
A company established under this chapter or a foreign company transacting business in
532
this state shall be taxed as provided in [Section
59-10-801
] Subsection
59-10-1403
(4).
533
Section 15.
Section
53B-8a-106
is amended to read:
534
53B-8a-106. Account agreements.
535
The Utah Educational Savings Plan Trust may enter into account agreements with
536
account owners on behalf of beneficiaries under the following terms and agreements:
537
(1) (a) An account agreement may require an account owner to agree to invest a
538
specific amount of money in the Utah Educational Savings Plan Trust for a specific period of
539
time for the benefit of a specific beneficiary, not to exceed an amount determined by the
540
program administrator.
541
(b) Account agreements may be amended to provide for adjusted levels of payments
542
based upon changed circumstances or changes in educational plans.
543
(c) An account owner may make additional optional payments as long as the total
544
payments for a specific beneficiary do not exceed the total estimated higher education costs as
545
determined by the program administrator.
546
(d) Subject to Subsection (1)(f), the maximum amount of a qualified investment that a
547
corporation that is an account owner may subtract from unadjusted income for a taxable year in
548
accordance with Title 59, Chapter 7, Corporate Franchise and Income Taxes, is [$1,560]
549
$1,650 for each individual beneficiary for the taxable year beginning on or after January 1,
550
[2006] 2008, but beginning on or before December 31, [2006] 2008.
551
(e) Subject to Subsection (1)(f), the maximum amount of a qualified investment that
552
may be [subtracted from federal taxable income of a resident or nonresident individual for a
553
taxable year in accordance with Section
59-10-114
, a resident or nonresident estate or trust for
554
a taxable year in accordance with Section
59-10-202
, or] used as the basis for claiming a tax
555
credit [for a taxable year by a resident or nonresident individual] in accordance with Section
556
[
59-10-1206.1
]
59-10-1017
, is:
557
(i) for a resident or nonresident estate or trust that is an account owner, [$1,560]
558
$1,650 for each individual beneficiary for the taxable year beginning on or after January 1,
559
[2006] 2008, but beginning on or before December 31, [2006] 2008;
560
(ii) for a resident or nonresident individual that is an account owner, other than a
561
husband and wife who are account owners and file a single return jointly under Title 59,
562
Chapter 10, Individual Income Tax Act, [$1,560] $1,650 for each individual beneficiary for the
563
taxable year beginning on or after January 1, [2006] 2008, but beginning on or before December
564
31, [2006] 2008; or
565
(iii) for a husband and wife who are account owners and file a single return jointly
566
under Title 59, Chapter 10, Individual Income Tax Act, [$3,120] $3,300 for each individual
567
beneficiary:
568
(A) for the taxable year beginning on or after January 1, [2006] 2008, but beginning on
569
or before December 31, [2006] 2008; and
570
(B) regardless of whether the Utah Educational Savings Plan Trust has entered into:
571
(I) a separate account agreement with each spouse; or
572
(II) a single account agreement with both spouses jointly.
573
(f) (i) For taxable years beginning on or after January 1, [2007] 2009, the program
574
administrator shall increase or decrease the maximum amount of a qualified investment
575
described in Subsections (1)(d) and (1)(e)(i) and (ii), by a percentage equal to the percentage
576
difference between the consumer price index for the preceding calendar year and the consumer
577
price index for the calendar year [2005] 2007.
578
(ii) After making an increase or decrease required by Subsection (1)(f)(i), the program
579
administrator shall:
580
(A) round the maximum amount of the qualified investments described in Subsections
581
(1)(d) and (1)(e)(i) and (ii) increased or decreased under Subsection (1)(f)(i) to the nearest ten
582
dollar increment; and
583
(B) increase or decrease the maximum amount of the qualified investment described in
584
Subsection (1)(e)(iii) so that the maximum amount of the qualified investment described in
585
Subsection (1)(e)(iii) is equal to the product of:
586
(I) the maximum amount of the qualified investment described in Subsection (1)(e)(ii)
587
as rounded under Subsection (1)(f)(ii)(A); and
588
(II) two.
589
(iii) For purposes of Subsections (1)(f)(i) and (ii), the program administrator shall
590
calculate the consumer price index as provided in Sections 1(f)(4) and 1(f)(5), Internal Revenue
591
Code.
592
(2) (a) (i) Beneficiaries designated in account agreements must be designated after birth
593
and before age 19 for an account owner to:
594
(A) subtract a qualified investment from income under[:(I)] Title 59, Chapter 7,
595
Corporate Franchise and Income Taxes; or
596
[(II) Section
59-10-114
; or]
597
[(III) Section
59-10-202
; or]
598
(B) use a qualified investment as the basis for claiming a tax credit in accordance with
599
Section [
59-10-1206.1
]
59-10-1017
.
600
(ii) If the beneficiary is designated after birth and before age 19, the payment of benefits
601
provided under the account agreement must begin not later than the beneficiary's 27th birthday.
602
(b) (i) Account owners may designate [beneficiaries] a beneficiary age 19 or older, but
603
investments for [those beneficiaries] that beneficiary are not eligible [for subtraction from
604
federal taxable income.] to be:
605
(A) subtracted from income under Title 59, Chapter 7, Corporate Franchise and Income
606
Taxes; or
607
(B) used as the basis for claiming a tax credit in accordance with Section
59-10-1017
.
608
(ii) If a beneficiary age 19 or older is designated, the payment of benefits provided
609
under the account agreement must begin not later than ten years from the account agreement
610
date.
611
(3) Each account agreement shall state clearly that there are no guarantees regarding
612
moneys in the Utah Educational Savings Plan Trust as to the return of principal and that losses
613
could occur.
614
(4) Each account agreement shall provide that:
615
(a) [no] a contributor to, or designated beneficiary under, an account agreement may
616
not direct the investment of any contributions or earnings on contributions;
617
(b) [no] any part of the money in any account may not be used as security for a loan;
618
and
619
(c) [no] an account owner may not borrow from the Utah Educational Savings Plan
620
Trust.
621
(5) The execution of an account agreement by the trust may not guarantee in any way
622
that higher education costs will be equal to projections and estimates provided by the Utah
623
Educational Savings Plan Trust or that the beneficiary named in any participation agreement
624
will:
625
(a) be admitted to an institution of higher education;
626
(b) if admitted, be determined a resident for tuition purposes by the institution of higher
627
education, unless the account agreement is vested;
628
(c) be allowed to continue attendance at the institution of higher education following
629
admission; or
630
(d) graduate from the institution of higher education.
631
(6) [Beneficiaries] A beneficiary may be changed as permitted by the rules and
632
regulations of the board upon written request of the account owner prior to the date of
633
admission of any beneficiary under an account agreement by an institution of higher education
634
so long as the substitute beneficiary is eligible for participation.
635
(7) [Account agreements] An account agreement may be freely amended throughout
636
[their terms] the term of the account agreement in order to enable [account owners] an account
637
owner to increase or decrease the level of participation, change the designation of beneficiaries,
638
and carry out similar matters as authorized by rule.
639
(8) Each account agreement shall provide that:
640
(a) the account agreement may be canceled upon the terms and conditions, and upon
641
payment of the fees and costs set forth and contained in the board's rules and regulations; and
642
(b) the program administrator may amend the agreement unilaterally and retroactively,
643
if necessary, to maintain the Utah Educational Savings Plan Trust as a qualified tuition program
644
under Section 529, Internal Revenue Code.
645
Section 16.
Section
59-7-101
is amended to read:
646
59-7-101. Definitions.
647
As used in this chapter:
648
(1) "Adjusted income" means unadjusted income as modified by Sections
59-7-105
and
649
59-7-106
.
650
(2) (a) "Affiliated group" means one or more chains of corporations that are connected
651
through stock ownership with a common parent corporation that meet the following
652
requirements:
653
(i) at least 80% of the stock of each of the corporations in the group, excluding the
654
common parent corporation, is owned by one or more of the other corporations in the group;
655
and
656
(ii) the common parent directly owns at least 80% of the stock of at least one of the
657
corporations in the group.
658
(b) "Affiliated group" does not include corporations that are qualified to do business but
659
are not otherwise doing business in this state.
660
(c) For purposes of this Subsection (2), "stock" does not include nonvoting stock which
661
is limited and preferred as to dividends.
662
(3) "Apportionable income" means adjusted income less nonbusiness income net of
663
related expenses, to the extent included in adjusted income.
664
(4) "Apportioned income" means apportionable income multiplied by the apportionment
665
fraction as determined in Section
59-7-311
.
666
(5) "Business income" is as defined in Section
59-7-302
.
667
(6) (a) "Captive real estate investment trust" means a real estate investment trust if:
668
(i) the shares or beneficial interests of the real estate investment trust are not regularly
669
traded on an established securities market; and
670
(ii) more than 50% of the voting power or value of the shares or beneficial interests of
671
the real estate investment trust are directly, indirectly, or constructively:
672
(A) owned by a controlling entity of the real estate investment trust; or
673
(B) controlled by a controlling entity of the real estate investment trust.
674
(b) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
675
commission may make rules defining "established securities market."
676
(7) (a) "Controlling entity of a captive real estate investment trust" means an entity that:
677
(i) is treated as an association taxable as a corporation under the Internal Revenue
678
Code;
679
(ii) is not exempt from federal income taxation under Section 501(a), Internal Revenue
680
Code; and
681
(iii) directly, indirectly, or constructively holds more than 50% of:
682
(A) the voting power of a captive real estate investment trust; or
683
(B) the value of the shares or beneficial interests of a captive real estate investment
684
trust.
685
(b) "Controlling entity of a captive real estate investment trust" does not include:
686
(i) a real estate investment trust, except for a captive real estate investment trust;
687
(ii) a qualified real estate investment subsidiary described in Section 856(i), Internal
688
Revenue Code, except for a qualified real estate investment trust subsidiary of a captive real
689
estate investment trust; or
690
(iii) a foreign real estate investment trust.
691
(c) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
692
commission may make rules defining "established securities market."
693
[(7)] (8) (a) "Common ownership" means the direct or indirect control or ownership of
694
more than 50% of the outstanding voting stock of:
695
(i) a parent-subsidiary controlled group as defined in Section 1563, Internal Revenue
696
Code, except that 50% shall be substituted for 80%;
697
(ii) a brother-sister controlled group as defined in Section 1563, Internal Revenue
698
Code, except that 50% shall be substituted for 80%; or
699
(iii) three or more corporations each of which is a member of a group of corporations
700
described in Subsection (2)(a)(i) or (2)(a)(ii), and one of which is:
701
(A) a common parent corporation included in a group of corporations described in
702
Subsection (2)(a)(i); and
703
(B) included in a group of corporations described in Subsection (2)(a)(ii).
704
(b) Ownership of outstanding voting stock shall be determined by Section 1563,
705
Internal Revenue Code.
706
[(6)] (9) "Corporate return" or "return" includes a combined report.
707
[(8)] (10) "Corporation" includes:
708
(a) entities defined as corporations under Sections 7701(a) and 7704, Internal Revenue
709
Code; and
710
(b) other organizations that are taxed as corporations for federal income tax purposes
711
under the Internal Revenue Code.
712
[(9)] (11) "Dividend" means any distribution, including money or other type of
713
property, made by a corporation to its shareholders out of its earnings or profits accumulated
714
after December 31, 1930.
715
[(10)] (12) (a) "Doing business" includes any transaction in the course of its business by
716
a domestic corporation, or by a foreign corporation qualified to do or doing intrastate business
717
in this state.
718
(b) Except as provided in Subsection
59-7-102
(2), "doing business" includes:
719
(i) the right to do business through incorporation or qualification;
720
(ii) the owning, renting, or leasing of real or personal property within this state; and
721
(iii) the participation in joint ventures, working and operating agreements, the
722
performance of which takes place in this state.
723
[(11)] (13) "Domestic corporation" means a corporation that is incorporated or
724
organized under the laws of this state.
725
[(12)] (14) (a) "Farmers' cooperative" means an association, corporation, or other
726
organization that is:
727
(i) (A) an association, corporation, or other organization of:
728
(I) farmers; or
729
(II) fruit growers; or
730
(B) an association, corporation, or other organization that is similar to an association,
731
corporation, or organization described in Subsection [(12)] (14)(a)(i)(A); and
732
(ii) organized and operated on a cooperative basis to:
733
(A) (I) market the products of members of the cooperative or the products of other
734
producers; and
735
(II) return to the members of the cooperative or other producers the proceeds of sales
736
less necessary marketing expenses on the basis of the quantity of the products of a member or
737
producer or the value of the products of a member or producer; or
738
(B) (I) purchase supplies and equipment for the use of members of the cooperative or
739
other persons; and
740
(II) turn over the supplies and equipment described in Subsection [(12)]
741
(14)(a)(ii)(B)(I) at actual costs plus necessary expenses to the members of the cooperative or
742
other persons.
743
(b) (i) Subject to Subsection [(12)] (14)(b)(ii), for purposes of this Subsection [(12)]
744
(14), the commission by rule, made in accordance with Title 63, Chapter 46a, Utah
745
Administrative Rulemaking Act, shall define:
746
(A) the terms:
747
(I) "member"; and
748
(II) "producer"; and
749
(B) what constitutes an association, corporation, or other organization that is similar to
750
an association, corporation, or organization described in Subsection [(12)] (14)(a)(i)(A).
751
(ii) The rules made under this Subsection [(12)] (14)(b) shall be consistent with the
752
filing requirements under federal law for a farmers' cooperative.
753
[(13)] (15) "Foreign corporation" means a corporation that is not incorporated or
754
organized under the laws of this state.
755
[(14)] (16) (a) "Foreign operating company" means a corporation that:
756
(i) is incorporated in the United States; and
757
(ii) 80% or more of whose business activity, as determined under Section
59-7-401
, is
758
conducted outside the United States.
759
(b) "Foreign operating company" does not include a corporation that qualifies for the
760
Puerto Rico and Possession Tax Credit as provided in Section 936, Internal Revenue Code.
761
(17) (a) "Foreign real estate investment trust" means:
762
(i) a business entity organized outside the laws of the United States if:
763
(A) at least 75% of the business entity's total asset value at the close of the business
764
entity's taxable year is represented by:
765
(I) real estate assets, as defined in Section 856(c)(5)(B), Internal Revenue Code;
766
(II) cash or cash equivalents; or
767
(III) one or more securities issued or guaranteed by the United States;
768
(B) the business entity is:
769
(I) not subject to income taxation:
770
(Aa) on amounts distributed to the business entity's beneficial owners; and
771
(Bb) in the jurisdiction in which the business entity is organized; or
772
(II) exempt from income taxation on an entity level in the jurisdiction in which the
773
business entity is organized;
774
(C) the business entity distributes at least 85% of the business entity's taxable income,
775
as computed in the jurisdiction in which the business entity is organized, to the holders of the
776
business entity's:
777
(I) shares or beneficial interests; and
778
(II) on an annual basis;
779
(D) (I) not more than 10% of the following is held directly, indirectly, or constructively
780
by a single person:
781
(Aa) the voting power of the business entity; or
782
(Bb) the value of the shares or beneficial interests of the business entity; or
783
(II) the shares of the business entity are regularly traded on an established securities
784
market; and
785
(E) the business entity is organized in a country that has a tax treaty with the United
786
States; or
787
(ii) a listed Australian property trust.
788
(b) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
789
commission may make rules defining:
790
(i) "cash or cash equivalents";
791
(ii) "established securities market"; or
792
(iii) "listed Australian property trust."
793
[(15)] (18) "Income" includes losses.
794
[(16)] (19) "Internal Revenue Code" means Title 26 of the United States Code as
795
effective during the year in which Utah taxable income is determined.
796
[(17)] (20) "Nonbusiness income" is as defined in Section
59-7-302
.
797
[(18)] (21) "Nonresident shareholder" means any shareholder of an S corporation who
798
on the last day of the taxable year of the S corporation, is:
799
(a) an individual not domiciled in Utah; or
800
(b) a nonresident trust or nonresident estate, as defined in Section
59-10-103
.
801
(22) "Real estate investment trust" is as defined in Section 856, Internal Revenue Code.
802
[(19)] (23) "Related expenses" means:
803
(a) expenses directly attributable to nonbusiness income; and
804
(b) the portion of interest or other expense indirectly attributable to both nonbusiness
805
and business income which bears the same ratio to the aggregate amount of such interest or
806
other expense, determined without regard to this Subsection [(19)] (23), as the average amount
807
of the asset producing the nonbusiness income bears to the average amount of all assets of the
808
taxpayer within the taxable year.
809
[(20)] (24) "Resident shareholder" means any shareholder of an S corporation who is
810
not a nonresident shareholder.
811
[(22)] (25) "Safe harbor lease" means a lease that qualified as a safe harbor lease under
812
Section 168, Internal Revenue Code.
813
[(21)] (26) "S corporation" means an S corporation as defined in Section 1361, Internal
814
Revenue Code.
815
[(23)] (27) "State of the United States" includes any of the 50 states or the District of
816
Columbia [and "United States" includes the 50 states and the District of Columbia].
817
[(24)] (28) (a) "Taxable year" means the calendar year or the fiscal year ending during
818
such calendar year upon the basis of which the adjusted income is computed.
819
(b) In the case of a return made for a fractional part of a year under this chapter or
820
under rules prescribed by the commission, "taxable year" includes the period for which such
821
return is made.
822
[(25)] (29) "Taxpayer" means any corporation subject to the tax imposed by this
823
chapter.
824
[(26)] (30) "Threshold level of business activity" means business activity in the United
825
States equal to or greater than 20% of the corporation's total business activity as determined
826
under Section
59-7-401
.
827
[(27)] (31) "Unadjusted income" means federal taxable income as determined on a
828
separate return basis before intercompany eliminations as determined by the Internal Revenue
829
Code, before the net operating loss deduction and special deductions for dividends received.
830
[(28)] (32) (a) "Unitary group" means a group of corporations that:
831
(i) are related through common ownership; and
832
(ii) by a preponderance of the evidence as determined by a court of competent
833
jurisdiction or the commission, are economically interdependent with one another as
834
demonstrated by the following factors:
835
(A) centralized management;
836
(B) functional integration; and
837
(C) economies of scale.
838
(b) "Unitary group" includes a captive real estate investment trust.
839
[(b)] (c) "Unitary group" does not include an S [corporations] corporation.
840
(33) "United States" includes the 50 states and the District of Columbia.
841
[(29)] (34) "Utah net loss" means the current year Utah taxable income before Utah net
842
loss deduction, if determined to be less than zero.
843
[(30)] (35) "Utah net loss deduction" means the amount of Utah net losses from other
844
taxable years that may be carried back or carried forward to the current taxable year in
845
accordance with Section
59-7-110
.
846
[(31)] (36) (a) "Utah taxable income" means Utah taxable income before net loss
847
deduction less Utah net loss deduction.
848
(b) "Utah taxable income" includes income from tangible or intangible property located
849
or having situs in this state, regardless of whether carried on in intrastate, interstate, or foreign
850
commerce.
851
[(32)] (37) "Utah taxable income before net loss deduction" means apportioned income
852
plus nonbusiness income allocable to Utah net of related expenses.
853
[(33)] (38) (a) "Water's edge combined report" means a report combining the income
854
and activities of:
855
(i) all members of a unitary group that are:
856
(A) corporations organized or incorporated in the United States, including those
857
corporations qualifying for the Puerto Rico and Possession Tax Credit as provided in Section
858
936, Internal Revenue Code, in accordance with Subsection [(33)] (38)(b); and
859
(B) corporations organized or incorporated outside of the United States meeting the
860
threshold level of business activity; and
861
(ii) an affiliated group electing to file a water's edge combined report under Subsection
862
59-7-402
(2).
863
(b) There is a rebuttable presumption that a corporation which qualifies for the Puerto
864
Rico and Possession Tax Credit provided in Section 936, Internal Revenue Code, is part of a
865
unitary group.
866
[(34)] (39) "Worldwide combined report" means the combination of the income and
867
activities of all members of a unitary group irrespective of the country in which the corporations
868
are incorporated or conduct business activity.
869
Section 17.
Section
59-7-105
is amended to read:
870
59-7-105. Additions to unadjusted income.
871
In computing adjusted income the following amounts shall be added to unadjusted
872
income:
873
(1) interest from bonds, notes, and other evidences of indebtedness issued by any state
874
of the United States, including any agency and instrumentality of a state of the United States;
875
(2) the amount of any deduction taken on a corporation's federal return for taxes paid
876
by a corporation:
877
(a) to Utah for taxes imposed by this chapter; and
878
(b) to another state of the United States, a foreign country, a United States possession,
879
or the Commonwealth of Puerto Rico for taxes imposed for the privilege of doing business, or
880
exercising its corporate franchise, including income, franchise, corporate stock and business and
881
occupation taxes;
882
(3) the safe harbor lease adjustment required under Subsections
59-7-111
(1)(a) and
883
(2)(a);
884
(4) capital losses that have been deducted on a Utah corporate return in previous years;
885
(5) any deduction on the federal return that has been previously deducted on the Utah
886
return;
887
(6) the amount of contributions claimed as a tax credit pursuant to Section
59-7-602
;
888
(7) the amount of the deduction taken pursuant to Section
59-7-603
for sophisticated
889
technological equipment;
890
(8) charitable contributions, to the extent deducted on the federal return when
891
determining federal taxable income;
892
(9) the amount of gain or loss determined under Section
59-7-114
relating to a target
893
corporation under Section 338, Internal Revenue Code, unless such gain or loss has already
894
been included in the unadjusted income of the target corporation;
895
(10) the amount of gain or loss determined under Section
59-7-115
relating to
896
corporations treated for federal purposes as having disposed of its assets under Section 336(e),
897
Internal Revenue Code, unless such gain or loss has already been included in the unadjusted
898
income of the target corporation;
899
(11) adjustments to gains, losses, depreciation expense, amortization expense, and
900
similar items due to a difference between basis for federal purposes and basis as computed
901
under Section
59-7-107
; [and]
902
(12) the amount withdrawn under Title 53B, Chapter 8a, Higher Education Savings
903
Incentive Program, from the account of a corporation that is an account owner as defined in
904
Section
53B-8a-102
, for the taxable year for which the amount is withdrawn, if that amount
905
withdrawn from the account of the corporation that is the account owner:
906
(a) is not expended for higher education costs as defined in Section
53B-8a-102
; and
907
(b) is subtracted by the corporation:
908
(i) that is the account owner; and
909
(ii) in accordance with Subsection
59-7-106
(18)[.]; and
910
(13) the amount of the deduction for dividends paid, as defined in Section 561, Internal
911
Revenue Code, that is allowed under Section 857(b)(2)(B), Internal Revenue Code, in
912
computing the taxable income of a captive real estate investment trust, if that captive real estate
913
investment trust is subject to federal income taxation.
914
Section 18.
Section
59-7-106
is amended to read:
915
59-7-106. Subtractions from unadjusted income.
916
In computing adjusted income the following amounts shall be subtracted from
917
unadjusted income:
918
(1) the foreign dividend gross-up included in gross income for federal income tax
919
purposes under Section 78, Internal Revenue Code;
920
(2) the net capital loss, as defined for federal purposes, if the taxpayer elects to deduct
921
the loss on the current Utah return. The deduction shall be made by claiming the deduction on
922
the current Utah return which shall be filed by the due date of the return, including extensions.
923
For the purposes of this Subsection (2) all capital losses in a given year must be:
924
(a) deducted in the year incurred; or
925
(b) carried forward as provided in Sections 1212(a)(1)(B) and (C), Internal Revenue
926
Code;
927
(3) the decrease in salary expense deduction for federal income tax purposes due to
928
claiming the federal jobs credit under Section 51, Internal Revenue Code;
929
(4) the decrease in qualified research and basic research expense deduction for federal
930
income tax purposes due to claiming the federal research and development credit under Section
931
41, Internal Revenue Code;
932
(5) the decrease in qualified clinical testing expense deduction for federal income tax
933
purposes due to claiming the federal orphan drug credit under Section 28, Internal Revenue
934
Code;
935
(6) any decrease in any expense deduction for federal income tax purposes due to
936
claiming any other federal credit;
937
(7) the safe harbor lease adjustment required under Subsections
59-7-111
(1)(b) and
938
(2)(b);
939
(8) any income on the federal corporate return that has been previously taxed by Utah;
940
(9) amounts included in federal taxable income that are due to refunds of taxes imposed
941
for the privilege of doing business, or exercising a corporate franchise, including income,
942
franchise, corporate stock and business and occupation taxes paid by the corporation to Utah,
943
another state of the United States, a foreign country, a United States possession, or the
944
Commonwealth of Puerto Rico to the extent that the taxes were added to unadjusted income
945
under Section
59-7-105
;
946
(10) charitable contributions, to the extent allowed as a subtraction under Section
947
59-7-109
;
948
(11) (a) 50% of the dividends deemed received or received from subsidiaries which are
949
members of the unitary group and are organized or incorporated outside of the United States
950
unless such subsidiaries are included in a combined report under Section
59-7-402
or
59-7-403
.
951
In arriving at the amount of the dividend exclusion, the taxpayer shall first deduct from the
952
dividends deemed received or received, the expense directly attributable to those dividends.
953
Interest expense attributable to excluded dividends shall be determined by multiplying interest
954
expense by a fraction, the numerator of which is the taxpayer's average investment in such
955
dividend paying subsidiaries, and the denominator of which is the taxpayer's average total
956
investment in assets;
957
(b) in determining income apportionable to this state, a portion of the factors of a
958
foreign subsidiary whose dividends are partially excluded under Subsection (11)(a) shall be
959
included in the combined report factors. The portion to be included shall be determined by
960
multiplying each factor of the foreign subsidiary by a fraction, but not to exceed 100%, the
961
numerator of which is the amount of the dividend paid by the foreign subsidiary which is
962
included in adjusted income, and the denominator of which is the current year earnings and
963
profits of the foreign subsidiary as determined under the Internal Revenue Code;
964
(12) (a) 50% of the adjusted income of a foreign operating company unless the taxpayer
965
has elected to file a worldwide combined report as provided in Section
59-7-403
. For purposes
966
of this Subsection (12), when calculating the adjusted income of a foreign operating company, a
967
foreign operating company may not deduct the subtractions allowable under this Subsection
968
(12) and Subsection (11);
969
(b) in determining income apportionable to this state, the factors for a foreign operating
970
company shall be included in the combined report factors in the same percentage its adjusted
971
income is included in the combined adjusted income;
972
(13) the amount of gain or loss which is included in unadjusted income but not
973
recognized for federal purposes on stock sold or exchanged by a member of a selling
974
consolidated group as defined in Section 338, Internal Revenue Code, if an election has been
975
made pursuant to Section 338(h)(10), Internal Revenue Code;
976
(14) the amount of gain or loss which is included in unadjusted income but not
977
recognized for federal purposes on stock sold, exchanged, or distributed by a corporation
978
pursuant to Section 336(e), Internal Revenue Code, if an election under Section 336(e), Internal
979
Revenue Code, has been made for federal purposes;
980
(15) (a) adjustments to gains, losses, depreciation expense, amortization expense, and
981
similar items due to a difference between basis for federal purposes and basis as computed
982
under Section
59-7-107
; and
983
(b) if there has been a reduction in federal basis for a federal tax credit where there is no
984
corresponding Utah tax credit, the amount of the reduction in basis shall be allowed as an
985
expense in the year of the federal credit;
986
(16) any interest expense not deducted on the federal corporate return under Section
987
265(b) or 291(e), Internal Revenue Code;
988
(17) 100% of the dividends received from subsidiaries which are insurance companies
989
exempt from this chapter under Subsection
59-7-102
(1)(c) and are under "common ownership"
990
as defined by Subsection
59-7-101
[(7)](8); [and]
991
(18) subject to Subsection
59-7-105
(12), the amount of a qualified investment as
992
defined in Section
53B-8a-102
that:
993
(a) a corporation that is an account owner as defined in Section
53B-8a-102
makes
994
during the taxable year;
995
(b) the corporation described in Subsection (18)(a) does not deduct on a federal
996
corporation income tax return; and
997
(c) does not exceed the maximum amount of the qualified investment that may be
998
subtracted from unadjusted income for a taxable year in accordance with Subsections
999
53B-8a-106
(1)(d) and (f)[.]; and
1000
(19) for purposes of income included in a combined report under Part 4, Combined
1001
Reporting, the entire amount of the dividends a member of a unitary group receives or is
1002
considered to receive from a captive real estate investment trust.
1003
Section 19.
Section
59-7-116.5
is amended to read:
1004
59-7-116.5. Real estate investment trusts.
1005
(1) A real estate investment trust[, as defined in Section 856, Internal Revenue Code,]
1006
that is not a captive real estate investment trust shall be taxed on the same income taxed for
1007
federal purposes under the Internal Revenue Code.
1008
(2) Any income taxable under this section shall be taxed at the same rate and in the
1009
same manner provided for in this chapter.
1010
Section 20.
Section
59-7-402
is amended to read:
1011
59-7-402. Water's edge combined report.
1012
(1) Except as provided in Section
59-7-403
, if any corporation listed in Subsection
1013
59-7-101
[(33)](38)(a) is doing business in Utah, the unitary group shall file a water's edge
1014
combined report.
1015
(2) (a) A group of corporations that are not otherwise a unitary group may elect to file
1016
a water's edge combined report if each member of the group is:
1017
(i) doing business in Utah;
1018
(ii) part of the same affiliated group; and
1019
(iii) qualified, under Section 1501, Internal Revenue Code, to file a federal consolidated
1020
return.
1021
(b) Each corporation within the affiliated group that is doing business in Utah must
1022
consent to filing a combined report. If an affiliated group elects to file a combined report, each
1023
corporation within the affiliated group that is doing business in Utah must file a combined
1024
report.
1025
(c) Corporations that elect to file a water's edge combined report under this section may
1026
not thereafter elect to file a separate return without the consent of the commission.
1027
Section 21.
Section
59-7-614
is amended to read:
1028
59-7-614. Renewable energy systems tax credit -- Definitions -- Limitations --
1029
Certification -- Rulemaking authority.
1030
(1) As used in this section:
1031
(a) "Active solar system":
1032
(i) means a system of equipment capable of collecting and converting incident solar
1033
radiation into thermal, mechanical, or electrical energy, and transferring these forms of energy
1034
by a separate apparatus to storage or to the point of use; and
1035
(ii) includes water heating, space heating or cooling, and electrical or mechanical energy
1036
generation.
1037
(b) "Biomass system" means any system of apparatus and equipment for use in
1038
converting material into biomass energy, as defined in Section
59-12-102
, and transporting that
1039
energy by separate apparatus to the point of use or storage.
1040
(c) "Business entity" means any sole proprietorship, estate, trust, partnership,
1041
association, corporation, cooperative, or other entity under which business is conducted or
1042
transacted.
1043
(d) "Commercial energy system" means any active solar, passive solar, geothermal
1044
electricity, direct-use geothermal, geothermal heat-pump system, wind, hydroenergy, or biomass
1045
system used to supply energy to a commercial unit or as a commercial enterprise.
1046
(e) "Commercial enterprise" means a business entity whose purpose is to produce
1047
electrical, mechanical, or thermal energy for sale from a commercial energy system.
1048
(f) (i) "Commercial unit" means any building or structure that a business entity uses to
1049
transact its business.
1050
(ii) Notwithstanding Subsection (1)(f)(i):
1051
(A) in the case of an active solar system used for agricultural water pumping or a wind
1052
system, each individual energy generating device shall be a commercial unit; and
1053
(B) if an energy system is the building or structure that a business entity uses to transact
1054
its business, a commercial unit is the complete energy system itself.
1055
(g) "Direct-use geothermal system" means a system of apparatus and equipment
1056
enabling the direct use of thermal energy, generally between 100 and 300 degrees Fahrenheit,
1057
that is contained in the earth to meet energy needs, including heating a building, an industrial
1058
process, and aquaculture.
1059
(h) "Geothermal electricity" means energy contained in heat that continuously flows
1060
outward from the earth that is used as a sole source of energy to produce electricity.
1061
(i) "Geothermal heat-pump system" means a system of apparatus and equipment
1062
enabling the use of thermal properties contained in the earth at temperatures well below 100
1063
degrees Fahrenheit to help meet heating and cooling needs of a structure.
1064
(j) "Hydroenergy system" means a system of apparatus and equipment capable of
1065
intercepting and converting kinetic water energy into electrical or mechanical energy and
1066
transferring this form of energy by separate apparatus to the point of use or storage.
1067
(k) "Individual taxpayer" means any person who is a taxpayer as defined in Section
1068
59-10-103
and an individual as defined in Section
59-10-103
.
1069
(l) "Passive solar system":
1070
(i) means a direct thermal system that utilizes the structure of a building and its operable
1071
components to provide for collection, storage, and distribution of heating or cooling during the
1072
appropriate times of the year by utilizing the climate resources available at the site; and
1073
(ii) includes those portions and components of a building that are expressly designed
1074
and required for the collection, storage, and distribution of solar energy.
1075
(m) "Residential energy system" means any active solar, passive solar, biomass,
1076
direct-use geothermal, geothermal heat-pump system, wind, or hydroenergy system used to
1077
supply energy to or for any residential unit.
1078
(n) "Residential unit" means any house, condominium, apartment, or similar dwelling
1079
unit that serves as a dwelling for a person, group of persons, or a family but does not include
1080
property subject to a fee under:
1081
(i) Section
59-2-404
;
1082
(ii) Section
59-2-405
;
1083
(iii) Section
59-2-405.1
;
1084
(iv) Section
59-2-405.2
; or
1085
(v) Section
59-2-405.3
.
1086
(o) "Utah Geological Survey" means the Utah Geological Survey established in Section
1087
63-73-5
.
1088
(p) "Wind system" means a system of apparatus and equipment capable of intercepting
1089
and converting wind energy into mechanical or electrical energy and transferring these forms of
1090
energy by a separate apparatus to the point of use, sale, or storage.
1091
(2) (a) (i) For taxable years beginning on or after January 1, 2007, a business entity that
1092
purchases and completes or participates in the financing of a residential energy system to supply
1093
all or part of the energy required for a residential unit owned or used by the business entity and
1094
situated in Utah is entitled to a nonrefundable tax credit as provided in this Subsection (2)(a).
1095
(ii) (A) A business entity is entitled to a tax credit equal to 25% of the reasonable costs
1096
of each residential energy system installed with respect to each residential unit it owns or uses,
1097
including installation costs, against any tax due under this chapter for the taxable year in which
1098
the energy system is completed and placed in service.
1099
(B) The total amount of each credit under this Subsection (2)(a) may not exceed $2,000
1100
per residential unit.
1101
(C) The credit under this Subsection (2)(a) is allowed for any residential energy system
1102
completed and placed in service on or after January 1, 2007.
1103
(iii) If a business entity sells a residential unit to an individual taxpayer before making a
1104
claim for the tax credit under this Subsection (2)(a), the business entity may:
1105
(A) assign its right to this tax credit to the individual taxpayer; and
1106
(B) if the business entity assigns its right to the tax credit to an individual taxpayer
1107
under Subsection (2)(a)(iii)(A), the individual taxpayer may claim the tax credit as if the
1108
individual taxpayer had completed or participated in the costs of the residential energy system
1109
under Section
59-10-1014
.
1110
(b) (i) For taxable years beginning on or after January 1, 2007, a business entity that
1111
purchases or participates in the financing of a commercial energy system situated in Utah is
1112
entitled to a refundable tax credit as provided in this Subsection (2)(b) if the commercial energy
1113
system does not use wind, geothermal electricity, or biomass equipment capable of producing a
1114
total of 660 or more kilowatts of electricity, and:
1115
(A) the commercial energy system supplies all or part of the energy required by
1116
commercial units owned or used by the business entity; or
1117
(B) the business entity sells all or part of the energy produced by the commercial energy
1118
system as a commercial enterprise.
1119
(ii) (A) A business entity is entitled to a tax credit of up to 10% of the reasonable costs
1120
of any commercial energy system installed, including installation costs, against any tax due
1121
under this chapter for the taxable year in which the commercial energy system is completed and
1122
placed in service.
1123
(B) Notwithstanding Subsection (2)(b)(ii)(A), the total amount of the credit under this
1124
Subsection (2)(b) may not exceed $50,000 per commercial unit.
1125
(C) The credit under this Subsection (2)(b) is allowed for any commercial energy
1126
system completed and placed in service on or after January 1, 2007.
1127
(iii) A business entity that leases a commercial energy system installed on a commercial
1128
unit is eligible for the tax credit under this Subsection (2)(b) if the lessee can confirm that the
1129
lessor irrevocably elects not to claim the credit.
1130
(iv) Only the principal recovery portion of the lease payments, which is the cost
1131
incurred by a business entity in acquiring a commercial energy system, excluding interest
1132
charges and maintenance expenses, is eligible for the tax credit under this Subsection (2)(b).
1133
(v) A business entity that leases a commercial energy system is eligible to use the tax
1134
credit under this Subsection (2)(b) for a period no greater than seven years from the initiation of
1135
the lease.
1136
(vi) A tax credit allowed by this Subsection (2)(b) may not be carried forward or carried
1137
back.
1138
(c) (i) For taxable years beginning on or after January 1, 2007, a business entity that
1139
owns a commercial energy system situated in Utah using wind, geothermal electricity, or
1140
biomass equipment capable of producing a total of 660 or more kilowatts of electricity is
1141
entitled to a refundable tax credit as provided in this Subsection (2)(c) if:
1142
(A) the commercial energy system supplies all or part of the energy required by
1143
commercial units owned or used by the business entity; or
1144
(B) the business entity sells all or part of the energy produced by the commercial energy
1145
system as a commercial enterprise.
1146
(ii) (A) A business entity is entitled to a tax credit under this section equal to the
1147
product of:
1148
(I) 0.35 cents; and
1149
(II) the kilowatt hours of electricity produced and either used or sold during the taxable
1150
year.
1151
(B) (I) The credit calculated under Subsection (2)(c)(ii)(A) may be claimed for
1152
production occurring during a period of 48 months beginning with the month in which the
1153
commercial energy system is placed in commercial service.
1154
(II) The credit allowed by this Subsection (2)(c) for each year may not be carried
1155
forward or carried back.
1156
(C) The credit under this Subsection (2)(c) is allowed for any commercial energy
1157
system completed and placed in service on or after January 1, 2007.
1158
(iii) A business entity that leases a commercial energy system installed on a commercial
1159
unit is eligible for the tax credit under this Subsection (2)(c) if the lessee can confirm that the
1160
lessor irrevocably elects not to claim the credit.
1161
(d) (i) A tax credit under Subsection (2)(a) or (b) may be claimed for the taxable year in
1162
which the energy system is completed and placed in service.
1163
(ii) Additional energy systems or parts of energy systems may be claimed for
1164
subsequent years.
1165
(iii) If the amount of a tax credit under Subsection (2)(a) exceeds a business entity's tax
1166
liability under this chapter for a taxable year, the amount of the credit exceeding the liability may
1167
be carried forward for a period which does not exceed the next four taxable years.
1168
(3) (a) [The] Except as provided in Subsection (3)(b), the tax credits provided for under
1169
Subsection (2) are in addition to any tax credits provided under the laws or rules and
1170
regulations of the United States.
1171
(b) A purchaser of one or more solar units that claims a tax credit under Section
1172
59-7-614.2
for the purchase of the one or more solar units may not claim a tax credit under this
1173
section for that purchase.
1174
[(b)] (c) (i) The Utah Geological Survey may set standards for residential and
1175
commercial energy systems claiming a credit under Subsections (2)(a) and (b) that cover the
1176
safety, reliability, efficiency, leasing, and technical feasibility of the systems to ensure that the
1177
systems eligible for the tax credit use the state's renewable and nonrenewable energy resources
1178
in an appropriate and economic manner.
1179
(ii) The Utah Geological Survey may set standards for residential and commercial
1180
energy systems that establish the reasonable costs of an energy system, as used in Subsections
1181
(2)(a)(ii)(A) and (2)(b)(ii)(A), as an amount per unit of energy production.
1182
(iii) A tax credit may not be taken under Subsection (2) until the Utah Geological
1183
Survey has certified that the energy system has been completely installed and is a viable system
1184
for saving or production of energy from renewable resources.
1185
[(c)] (d) The Utah Geological Survey and the commission may make rules in
1186
accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, that are necessary
1187
to implement this section.
1188
(4) (a) On or before October 1, 2012, and every five years thereafter, the Utah Tax
1189
Review Commission shall review each tax credit provided by this section and make
1190
recommendations to the Revenue and Taxation Interim Committee concerning whether the
1191
credit should be continued, modified, or repealed.
1192
(b) The Utah Tax Review Commission's report under Subsection (4)(a) shall include
1193
information concerning the cost of the credit, the purpose and effectiveness of the credit, and
1194
the state's benefit from the credit.
1195
Section 22.
Section
59-7-614.2
is enacted to read:
1196
59-7-614.2. Nonrefundable tax credit for qualifying solar projects.
1197
(1) As used in this section:
1198
(a) "Active solar system" is as defined in Section
59-7-614
.
1199
(b) "Purchaser" means a taxpayer that purchases one or more solar units from a
1200
qualifying political subdivision.
1201
(c) "Qualifying political subdivision" means:
1202
(i) a city or town in this state;
1203
(ii) an interlocal entity created under Title 11, Chapter 13, Interlocal Cooperation Act;
1204
or
1205
(iii) a special service district created under Title 17A, Chapter 2, Part 13, Utah Special
1206
Service District Act.
1207
(d) "Qualifying solar project" means the portion of an active solar system:
1208
(i) that a qualifying political subdivision:
1209
(A) constructs;
1210
(B) controls; or
1211
(C) owns;
1212
(ii) with respect to which the qualifying political subdivision described in Subsection
1213
(1)(c)(i) sells one or more solar units; and
1214
(iii) that generates electrical output that is furnished:
1215
(A) to one or more residential units; or
1216
(B) for the benefit of one or more residential units.
1217
(e) "Residential unit" is as defined in Section
59-7-614
.
1218
(f) "Solar unit" means a portion of the electrical output:
1219
(i) of a qualifying solar project;
1220
(ii) that a qualifying political subdivision sells to a purchaser; and
1221
(iii) the purchase of which requires that the purchaser agree to bear a proportionate
1222
share of the expense of the qualifying solar project:
1223
(A) in accordance with a written agreement between the purchaser and the qualifying
1224
political subdivision;
1225
(B) in exchange for a credit on the purchaser's electrical bill; and
1226
(C) as determined by a formula established by the qualifying political subdivision.
1227
(2) Subject to Subsection (3), for taxable years beginning on or after January 1, 2008, a
1228
purchaser may claim a nonrefundable tax credit equal to the product of:
1229
(a) the amount the purchaser pays to purchase one or more solar units during the
1230
taxable year; and
1231
(b) 25%.
1232
(3) For a taxable year, a tax credit under this section may not exceed $2,000 on a
1233
return.
1234
(4) A purchaser may carry forward a tax credit under this section for a period that does
1235
not exceed the next four taxable years if:
1236
(a) the purchaser is allowed to claim a tax credit under this section for a taxable year;
1237
and
1238
(b) the amount of the tax credit exceeds the purchaser's tax liability under this chapter
1239
for that taxable year.
1240
(5) Subject to Section
59-7-614
, a tax credit under this section is in addition to any
1241
other tax credit allowed by this chapter.
1242
(6) (a) On or before October 1, 2012, and every five years after October 1, 2012, the
1243
Utah Tax Review Commission shall review the tax credit allowed by this section and make
1244
recommendations to the Revenue and Taxation Interim Committee concerning whether the tax
1245
credit should be continued, modified, or repealed.
1246
(b) The Utah Tax Review Commission's report under Subsection (6)(a) shall include
1247
information concerning the cost of the tax credit, the purpose and effectiveness of the tax credit,
1248
and the state's benefit from the tax credit.
1249
Section 23.
Section
59-10-103
is amended to read:
1250
59-10-103. Definitions.
1251
(1) As used in this chapter:
1252
(a) "Adjusted gross income":
1253
(i) for a resident or nonresident individual, is as defined in Section 62, Internal Revenue
1254
Code; or
1255
(ii) for a resident or nonresident estate or trust, is as calculated in Section 67(e),
1256
Internal Revenue Code.
1257
[(b) "Adoption expenses" means:]
1258
[(i) any actual medical and hospital expenses of the mother of the adopted child which
1259
are incident to the child's birth;]
1260
[(ii) any welfare agency fees or costs;]
1261
[(iii) any child placement service fees or costs;]
1262
[(iv) any legal fees or costs; or]
1263
[(v) any other fees or costs relating to an adoption.]
1264
[(c) "Adult with a disability" means an individual who:]
1265
[(i) is 18 years of age or older;]
1266
[(ii) is eligible for services under Title 62A, Chapter 5, Services for People with
1267
Disabilities; and]
1268
[(iii) is not enrolled in:]
1269
[(A) an education program for students with disabilities that is authorized under Section
1270
53A-15-301
; or]
1271
[(B) a school established under Title 53A, Chapter 25, Schools for the Deaf and Blind.]
1272
[(d) (i) For purposes of Subsection
59-10-114
(2)(l), "capital gain transaction" means a
1273
transaction that results in a:]
1274
[(A) short-term capital gain; or]
1275
[(B) long-term capital gain.]
1276
[(ii) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act,
1277
the commission may by rule define the term "transaction."]
1278
[(e) "Commercial domicile" means the principal place from which the trade or business
1279
of a Utah small business corporation is directed or managed.]
1280
[(f)] (b) "Corporation" includes:
1281
(i) [associations] an association;
1282
(ii) a joint stock [companies] company; and
1283
(iii) an insurance [companies] company.
1284
[(g) "Dependent child with a disability" means an individual 21 years of age or younger
1285
who:]
1286
[(i) (A) is diagnosed by a school district representative under rules adopted by the State
1287
Board of Education as having a disability classified as:]
1288
[(I) autism;]
1289
[(II) deafness;]
1290
[(III) preschool developmental delay;]
1291
[(IV) dual sensory impairment;]
1292
[(V) hearing impairment;]
1293
[(VI) intellectual disability;]
1294
[(VII) multidisability;]
1295
[(VIII) orthopedic impairment;]
1296
[(IX) other health impairment;]
1297
[(X) traumatic brain injury; or]
1298
[(XI) visual impairment;]
1299
[(B) is not receiving residential services from:]
1300
[(I) the Division of Services for People with Disabilities created under Section
1301
62A-5-102
; or]
1302
[(II) a school established under Title 53A, Chapter 25, Schools for the Deaf and Blind;
1303
and]
1304
[(C) is enrolled in:]
1305
[(I) an education program for students with disabilities that is authorized under Section
1306
53A-15-301
; or]
1307
[(II) a school established under Title 53A, Chapter 25, Schools for the Deaf and Blind;
1308
or]
1309
[(ii) is identified under guidelines of the Department of Health as qualified for:]
1310
[(A) Early Intervention; or]
1311
[(B) Infant Development Services.]
1312
[(h)] (c) "Distributable net income" is as defined in Section 643, Internal Revenue
1313
Code.
1314
[(i)] (d) "Employee" is as defined in Section
59-10-401
.
1315
[(j)] (e) "Employer" is as defined in Section
59-10-401
.
1316
[(k)] (f) "Federal taxable income":
1317
(i) for a resident or nonresident individual, means taxable income as defined by Section
1318
63, Internal Revenue Code; or
1319
(ii) for a resident or nonresident estate or trust, is as calculated in Section 641(a) and
1320
(b), Internal Revenue Code.
1321
[(l)] (g) "Fiduciary" means:
1322
(i) a guardian;
1323
(ii) a trustee;
1324
(iii) an executor;
1325
(iv) an administrator;
1326
(v) a receiver;
1327
(vi) a conservator; or
1328
(vii) any person acting in any fiduciary capacity for any individual.
1329
(h) "Guaranteed annuity interest" is as defined in 26 C.F.R. Sec. 1.170A-6(c)(2).
1330
[(m)] (i) "Homesteaded land diminished from the Uintah and Ouray Reservation" means
1331
the homesteaded land that was held to have been diminished from the Uintah and Ouray
1332
Reservation in Hagen v. Utah, 510 U.S. 399 (1994).
1333
[(n)] (j) "Individual" means a natural person and includes aliens and minors.
1334
[(o)] (k) "Irrevocable trust" means a trust in which the settlor may not revoke or
1335
terminate all or part of the trust without the consent of a person who has a substantial beneficial
1336
interest in the trust and the interest would be adversely affected by the exercise of the settlor's
1337
power to revoke or terminate all or part of the trust.
1338
[(p) For purposes of Subsection
59-10-114
(2)(l), "long-term capital gain" is as defined
1339
in Section 1222, Internal Revenue Code.]
1340
(l) "Military service" is as defined in Pub. L. No. 108-189, Sec. 101.
1341
[(q)] (m) "Nonresident individual" means an individual who is not a resident of this
1342
state.
1343
[(r)] (n) "Nonresident trust" or "nonresident estate" means a trust or estate which is not
1344
a resident estate or trust.
1345
[(s)] (o) (i) "Partnership" includes a syndicate, group, pool, joint venture, or other
1346
unincorporated organization:
1347
(A) through or by means of which any business, financial operation, or venture is
1348
carried on; and
1349
(B) which is not, within the meaning of this chapter:
1350
(I) a trust;
1351
(II) an estate; or
1352
(III) a corporation.
1353
(ii) "Partnership" does not include any organization not included under the definition of
1354
"partnership" in Section 761, Internal Revenue Code.
1355
(iii) "Partner" includes a member in a syndicate, group, pool, joint venture, or
1356
organization described in Subsection (1)[(s)](o)(i).
1357
[(t) "Qualifying military servicemember" means a member of:]
1358
[(i) The Utah Army National Guard;]
1359
[(ii) The Utah Air National Guard; or]
1360
[(iii) the following if the member is assigned to a unit that is located in the state:]
1361
[(A) The Army Reserve;]
1362
[(B) The Naval Reserve;]
1363
[(C) The Air Force Reserve;]
1364
[(D) The Marine Corps Reserve; or]
1365
[(E) The Coast Guard Reserve.]
1366
[(u) "Qualifying stock" means stock that is:]
1367
[(i) (A) common; or]
1368
[(B) preferred;]
1369
[(ii) as defined by the commission by rule, originally issued to:]
1370
[(A) a resident or nonresident individual; or]
1371
[(B) a partnership if the resident or nonresident individual making a subtraction from
1372
federal taxable income in accordance with Subsection
59-10-114
(2)(l):]
1373
[(I) was a partner when the stock was issued; and]
1374
[(II) remains a partner until the last day of the taxable year for which the resident or
1375
nonresident individual makes the subtraction from federal taxable income in accordance with
1376
Subsection
59-10-114
(2)(l); and]
1377
[(iii) issued:]
1378
[(A) by a Utah small business corporation;]
1379
[(B) on or after January 1, 2003; and]
1380
[(C) for:]
1381
[(I) money; or]
1382
[(II) other property, except for stock or securities.]
1383
(p) "Qualified nongrantor charitable lead trust" means a trust:
1384
(i) that is irrevocable;
1385
(ii) that has a trust term measured by:
1386
(A) a fixed term of years; or
1387
(B) the life of a person living on the day on which the trust is created;
1388
(iii) under which:
1389
(A) a portion of the value of the trust assets is distributed during the trust term:
1390
(I) to an organization described in Section 170(c), Internal Revenue Code; and
1391
(II) as a:
1392
(Aa) guaranteed annuity interest; or
1393
(Bb) unitrust interest; and
1394
(B) assets remaining in the trust at the termination of the trust term are distributed to a
1395
beneficiary:
1396
(I) designated in the trust; and
1397
(II) that is not an organization described in Section 170(c), Internal Revenue Code;
1398
(iv) for which the trust is allowed a deduction under Section 642(c), Internal Revenue
1399
Code; and
1400
(v) under which the grantor of the trust is not treated as the owner of any portion of the
1401
trust for federal income tax purposes.
1402
[(v)] (q) (i) "Resident individual" means:
1403
(A) an individual who is domiciled in this state for any period of time during the taxable
1404
year, but only for the duration of the period during which the individual is domiciled in this
1405
state; or
1406
(B) an individual who is not domiciled in this state but:
1407
(I) maintains a permanent place of abode in this state; and
1408
(II) spends in the aggregate 183 or more days of the taxable year in this state.
1409
(ii) For purposes of Subsection (1)[(v)] (q)(i)(B), a fraction of a calendar day shall be
1410
counted as a whole day.
1411
[(w)] (r) "Resident estate" or "resident trust" is as defined in Section
75-7-103
.
1412
[(x) For purposes of Subsection
59-10-114
(2)(l), "short-term capital gain" is as defined
1413
in Section 1222, Internal Revenue Code.]
1414
(s) "Servicemember" is as defined in Pub. L. No. 108-189, Sec. 101.
1415
(t) "State income tax percentage for a nonresident estate or trust" means a percentage
1416
equal to a nonresident estate's or trust's state taxable income for the taxable year divided by the
1417
nonresident estate's or trust's total adjusted gross income for that taxable year after making the
1418
adjustments required by:
1419
(i) Section
59-10-202
;
1420
(ii) Section
59-10-207
;
1421
(iii) Section
59-10-209.1
; or
1422
(iv) Section
59-10-210
.
1423
(u) "State income tax percentage for a nonresident individual" means a percentage equal
1424
to a nonresident individual's state taxable income for the taxable year divided by the difference
1425
between:
1426
(i) the nonresident individual's total adjusted gross income for that taxable year, after
1427
making the:
1428
(A) additions and subtractions required by Section
59-10-114
; and
1429
(B) adjustments required by Section
59-10-115
; and
1430
(ii) if the nonresident individual described in Subsection (1)(u)(i) is a servicemember,
1431
the compensation the servicemember receives for military service if the servicemember is
1432
serving in compliance with military orders.
1433
(v) "State income tax percentage for a part-year resident individual" means, for a
1434
taxable year, a fraction:
1435
(i) the numerator of which is the sum of:
1436
(A) subject to Subsections
59-10-1404
(3) and (4), for the time period during the
1437
taxable year that the part-year resident individual is a resident, the part-year resident individual's
1438
total adjusted gross income for that time period, after making the:
1439
(I) additions and subtractions required by Section
59-10-114
; and
1440
(II) adjustments required by Section
59-10-115
; and
1441
(B) for the time period during the taxable year that the part-year resident individual is a
1442
nonresident, an amount calculated by:
1443
(I) determining the part-year resident individual's adjusted gross income for that time
1444
period, after making the:
1445
(Aa) additions and subtractions required by Section
59-10-114
; and
1446
(Bb) adjustments required by Section
59-10-115
; and
1447
(II) calculating the portion of the amount determined under Subsection (1)(v)(i)(B)(I)
1448
that is derived from Utah sources in accordance with Section
59-10-117
; and
1449
(ii) the denominator of which is the difference between:
1450
(A) the part-year resident individual's total adjusted gross income for that taxable year,
1451
after making the:
1452
(I) additions and subtractions required by Section
59-10-114
; and
1453
(II) adjustments required by Section
59-10-115
; and
1454
(B) if the part-year resident individual is a servicemember, any compensation the
1455
servicemember receives for military service during the portion of the taxable year that the
1456
servicemember is a nonresident if the servicemember is serving in compliance with military
1457
orders.
1458
[(y)] (w) "Taxable income" or "state taxable income":
1459
(i) subject to Subsection [
59-10-302
(2)]
59-10-1404
(3), for a resident individual [other
1460
than a resident individual described in Subsection (1)(y)(iii)], means the resident individual's
1461
[federal taxable] adjusted gross income after making the:
1462
(A) additions and subtractions required by Section
59-10-114
; and
1463
(B) adjustments required by Section
59-10-115
;
1464
(ii) for a nonresident individual [other than a nonresident individual described in
1465
Subsection (1)(y)(iii), is as defined in Section
59-10-116
;], is an amount calculated by:
1466
(A) determining the nonresident individual's adjusted gross income for the taxable year,
1467
after making the:
1468
(I) additions and subtractions required by Section
59-10-114
; and
1469
(II) adjustments required by Section
59-10-115
; and
1470
(B) calculating the portion of the amount determined under Subsection (1)(w)(ii)(A)
1471
that is derived from Utah sources in accordance with Section
59-10-117
;
1472
[(iii) for a resident or nonresident individual that collects and pays a tax described in
1473
Part 12, Single Rate Individual Income Tax Act, is as defined in Section
59-10-1202
;]
1474
[(iv)] (iii) for a resident estate or trust, is as calculated under Section
59-10-201.1
; and
1475
[(v)] (iv) for a nonresident estate or trust, is as calculated under Section
59-10-204
.
1476
[(z)] (x) "Taxpayer" means any individual, estate, [or] trust, or beneficiary of an estate
1477
or trust, [whose income is] that has income subject in whole or part to the tax imposed by this
1478
chapter.
1479
(y) "Trust term" means a time period:
1480
(i) beginning on the day on which a qualified nongrantor charitable lead trust is created;
1481
and
1482
(ii) ending on the day on which the qualified nongrantor charitable lead trust described
1483
in Subsection (1)(y)(i) terminates.
1484
[(aa)] (z) "Uintah and Ouray Reservation" means the lands recognized as being included
1485
within the Uintah and Ouray Reservation in:
1486
(i) Hagen v. Utah, 510 U.S. 399 (1994); and
1487
(ii) Ute Indian Tribe v. Utah, 114 F.3d 1513 (10th Cir. 1997).
1488
[(bb) (i) "Utah small business corporation" means a corporation that:]
1489
[(A) is a small business corporation as defined in Section 1244(c)(3), Internal Revenue
1490
Code;]
1491
[(B) except as provided in Subsection (1)(bb)(ii), meets the requirements of Section
1492
1244(c)(1)(C), Internal Revenue Code; and]
1493
[(C) has its commercial domicile in this state.]
1494
[(ii) Notwithstanding Subsection (1)(bb)(i)(B), the time period described in Section
1495
1244(c)(1)(C) and Section 1244(c)(2), Internal Revenue Code, for determining the source of a
1496
corporation's aggregate gross receipts shall end on the last day of the taxable year for which the
1497
resident or nonresident individual makes a subtraction from federal taxable income in
1498
accordance with Subsection
59-10-114
(2)(l).]
1499
(aa) "Unadjusted income" means an amount equal to the difference between:
1500
(i) the total income required to be reported by a resident or nonresident estate or trust
1501
on the resident or nonresident estate's or trust's federal income tax return for estates and trusts
1502
for the taxable year; and
1503
(ii) the sum of the following:
1504
(A) fees paid or incurred to the fiduciary of a resident or nonresident estate or trust:
1505
(I) for administering the resident or nonresident estate or trust; and
1506
(II) that the resident or nonresident estate or trust deducts as allowed on the resident or
1507
nonresident estate's or trust's federal income tax return for estates and trusts for the taxable
1508
year;
1509
(B) the income distribution deduction that a resident or nonresident estate or trust
1510
deducts under Section 651 or 661, Internal Revenue Code, as allowed on the resident or
1511
nonresident estate's or trust's federal income tax return for estates and trusts for the taxable
1512
year;
1513
(C) the amount that a resident or nonresident estate or trust deducts as a deduction for
1514
estate tax or generation skipping transfer tax under