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Third Substitute H.B. 359
Senator Wayne L. Niederhauser proposes the following substitute bill:
1
TAX CHANGES
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2008 GENERAL SESSION
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STATE OF UTAH
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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 tax refund
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for qualified emergency food agencies, a sales and use tax exemption, and the
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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;
18
. addresses the income taxation of a real estate investment trust or income from a real
19
estate investment trust;
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. repeals provisions imposing an individual income tax on the basis of graduated
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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:
24
. modifying and repealing definitions;
25
. modifying additions to and subtractions from adjusted gross 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:
33
. 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 and subtractions from unadjusted income; and
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. addressing provisions relating to the determination and reporting of income tax
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liability and information;
38
. addresses the taxation of pass-through entities, including:
39
. providing definitions; and
40
. 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:
42
. a taxpayer;
43
. an investment in the Utah Educational Savings Plan Trust; or
44
. 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
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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
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Fund 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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This bill coordinates with the following to provide for apportionment of tax credits:
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(1) H.B. 158, Tax Credit for Military Retired Pay;
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(2) H.B. 199, Tax Credits for Energy Efficient Residences;
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(3) H.B. 279, Tax Incentives for Military Members;
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(4) H.B. 351, Individual Income Tax - Health Insurance; and
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(5) H.B. 360, Individual Income Tax - Long-Term Care Insurance Premiums.
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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
99
23-14-13, as last amended by Laws of Utah 1995, Chapter 211
100
23-14-14.1, as enacted by Laws of Utah 2003, Chapter 162
101
26-18a-3, as last amended by Laws of Utah 1997, Chapter 1
102
26-18a-4, as last amended by Laws of Utah 1997, Chapter 1
103
26-48-102, as enacted by Laws of Utah 2006, Chapter 280
104
31A-32a-101, as enacted by Laws of Utah 1999, Chapter 131
105
31A-32a-103, as enacted by Laws of Utah 1999, Chapter 131
106
31A-32a-104, as enacted by Laws of Utah 1999, Chapter 131
107
31A-32a-105, as enacted by Laws of Utah 1999, Chapter 131
108
31A-32a-106, as last amended by Laws of Utah 2001, Chapter 53
109
31A-32a-107, as enacted by Laws of Utah 1999, Chapter 131
110
48-2c-117, as enacted by Laws of Utah 2001, Chapter 260
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53B-8a-106, as last amended by Laws of Utah 2007, Chapter 100
112
59-7-101, as last amended by Laws of Utah 2004, Chapter 54
113
59-7-105, as last amended by Laws of Utah 2007, Chapter 100
114
59-7-106, as last amended by Laws of Utah 2007, Chapter 100
115
59-7-116.5, as enacted by Laws of Utah 1995, Chapter 311
116
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
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59-10-103, as last amended by Laws of Utah 2006, Fourth Special Session, Chapter 2
119
59-10-104, as last amended by Laws of Utah 2007, Chapter 288
120
59-10-104.1, as last amended by Laws of Utah 2006, Fourth Special Session, Chapter 2
121
59-10-110, as renumbered and amended by Laws of Utah 1987, Chapter 2
122
59-10-114, as last amended by Laws of Utah 2007, Chapter 100
123
59-10-115, as last amended by Laws of Utah 2006, Fourth Special Session, Chapter 2
124
59-10-116, as last amended by Laws of Utah 2006, Fourth Special Session, Chapter 2
125
59-10-117, as last amended by Laws of Utah 2006, Fourth Special Session, Chapter 2
126
59-10-118, as last amended by Laws of Utah 1995, Chapter 311
127
59-10-119, as renumbered and amended by Laws of Utah 1987, Chapter 2
128
59-10-120, as renumbered and amended by Laws of Utah 1987, Chapter 2
129
59-10-121, as renumbered and amended by Laws of Utah 1987, Chapter 2
130
59-10-122, as renumbered and amended by Laws of Utah 1987, Chapter 2
131
59-10-123, as renumbered and amended by Laws of Utah 1987, Chapter 2
132
59-10-124, as renumbered and amended by Laws of Utah 1987, Chapter 2
133
59-10-125, as renumbered and amended by Laws of Utah 1987, Chapter 2
134
59-10-126, as last amended by Laws of Utah 1995, Chapter 311
135
59-10-201, as last amended by Laws of Utah 2007, Chapter 100
136
59-10-201.1, as last amended by Laws of Utah 2006, Chapter 223
137
59-10-202, as last amended by Laws of Utah 2007, Chapter 100
138
59-10-204, as last amended by Laws of Utah 2006, Chapter 223
139
59-10-205, as last amended by Laws of Utah 2006, Chapter 223
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59-10-207, as last amended by Laws of Utah 2006, Chapter 223
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59-10-209.1, as enacted by Laws of Utah 2006, Chapter 223
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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
162
59-10-1401, Utah Code Annotated 1953
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59-10-1402, Utah Code Annotated 1953
164
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)
167
59-10-1002.2, (Renumbered from 59-10-1206.9, as enacted by Laws of Utah 2007,
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Chapter 288)
169
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)
175
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,
180
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)
183
59-10-1308, (Renumbered from 59-10-550, as last amended by Laws of Utah 1997,
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Chapters 1 and 12)
185
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,
188
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)
195
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
201
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
207
59-10-1206, as enacted by Laws of Utah 2006, Fourth Special Session, Chapter 2
208
59-10-1207, as enacted by Laws of Utah 2006, Fourth Special Session, Chapter 2
209
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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:
212
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
215
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
219
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
226
advice and input of those designated in Subsection
9-4-801
(3);
227
(b) consider need, diversity of geographic location, coordination with or enhancement
228
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
236
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
238
(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
241
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.
243
(b) If there are decreases in contributions to the account, the committee may expend
244
funds held in reserve to provide program stability, but the committee shall reimburse the
245
amounts of those expenditures to the reserve fund.
246
(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
248
by contributions to the Pamela Atkinson Homeless Trust Account.
249
(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
251
Money Management Act, except that all interest or other earnings derived from the fund
252
moneys shall be deposited in the fund.
253
Section 2.
Section
9-4-803
is amended to read:
254
9-4-803. Creation of Pamela Atkinson Homeless Trust Account.
255
(1) There is created a restricted account within the General Fund to be known as the
256
Pamela Atkinson Homeless Trust Account.
257
(2) Private contributions received under this section and Section [
59-10-530.5
]
258
59-10-1306
shall be deposited into the account to be used only for programs described in
259
Section
9-4-802
.
260
(3) Money shall be appropriated from the account to the State Homeless Coordinating
261
Committee in accordance with the Utah Budgetary Procedures Act.
262
(4) The State Homeless Coordinating Committee may accept transfers, grants, gifts,
263
bequests, or any money made available from any source to implement this part.
264
Section 3.
Section
23-14-13
is amended to read:
265
23-14-13. Wildlife Resources Account.
266
(1) The Wildlife Resources Account [within the General Fund] is established within
267
the General Fund.
268
(2) The following monies shall be deposited into the Wildlife Resources Account:
269
(a) revenue from the sale of licenses, permits, tags, and certificates of registration
270
issued under this title or a rule or proclamation of the Wildlife Board, except as otherwise
271
provided by this title;
272
(b) revenue from the sale, lease, rental, or other granting of rights of real or personal
273
property acquired with revenue specified in Subsection (2)(a);
274
(c) revenue from fines and forfeitures for violations of this title or any rule,
275
proclamation, or order of the Wildlife Board, minus court costs not to exceed the schedule
276
adopted by the Judicial Council;
277
(d) funds appropriated from the General Fund by the Legislature pursuant to Section
278
23-19-39
;
279
(e) other monies received by the division under any provision of this title, except as
280
otherwise provided by this title; [and]
281
(f) contributions made in accordance with Section
59-10-1305
; and
282
[(f)] (g) interest, dividends, or other income earned on account monies.
283
(3) Monies in the Wildlife Resources Account shall be used for the administration of
284
this title.
285
Section 4.
Section
23-14-14.1
is amended to read:
286
23-14-14.1. Wolf Depredation and Management Restricted Account -- Interest --
287
Use of contributions and interest.
288
(1) There is created within the General Fund the Wolf Depredation and Management
289
Restricted Account.
290
(2) The account shall be funded by contributions deposited into the Wolf Depredation
291
and Management Restricted Account in accordance with Section [
59-10-550.1
]
59-10-1309
.
292
(3) (a) The Wolf Depredation and Management Restricted Account shall earn interest.
293
(b) Interest earned on the Wolf Depredation and Management Restricted Account shall
294
be deposited into the Wolf Depredation and Management Restricted Account.
295
(4) (a) Subject to Subsection (4)(b), contributions and interest deposited into the Wolf
296
Depredation and Management Restricted Account shall be used by the Division of Wildlife
297
Resources for:
298
(i) payments for livestock depredation by wolves; or
299
(ii) wolf management.
300
(b) Contributions and interest deposited into the Wolf Depredation and Management
301
Restricted Account may be used for the purposes described in Subsection (4)(a) only to the
302
extent permitted by federal law.
303
Section 5.
Section
26-18a-3
is amended to read:
304
26-18a-3. Purpose of committee.
305
(1) The committee shall work to:
306
(a) provide financial assistance for initial medical expenses of children who need organ
307
transplants;
308
(b) obtain the assistance of volunteer and public service organizations; and
309
(c) fund activities as the committee designates for the purpose of educating the public
310
about the need for organ donors.
311
(2) (a) The committee is responsible for awarding financial assistance funded by the
312
trust account.
313
(b) The financial assistance awarded by the committee under Subsection (1)(a) shall be
314
in the form of interest free loans. The committee may establish terms for repayment of the
315
loans, including a waiver of the requirement to repay any awards if, in the committee's
316
judgment, repayment of the loan would impose an undue financial burden on the recipient.
317
(c) In making financial awards under Subsection (1)(a), the committee shall consider:
318
(i) need;
319
(ii) coordination with or enhancement of existing services or financial assistance,
320
including availability of insurance or other state aid;
321
(iii) the success rate of the particular organ transplant procedure needed by the child;
322
and
323
(iv) the extent of the threat to the child's life without the organ transplant.
324
(3) The committee may only provide the assistance described in this section to children
325
who have resided in Utah, or whose legal guardians have resided in Utah for at least six months
326
prior to the date of assistance under this section.
327
(4) (a) The committee may expend up to 5% of its annual appropriation for
328
administrative costs associated with the allocation of funds from the trust account.
329
(b) The administrative costs shall be used for the costs associated with staffing the
330
committee and for State Tax Commission costs in implementing Section [
59-10-550
]
331
59-10-1308
.
332
(5) The committee shall make an annual report to the Health and Human Services
333
Appropriations Subcommittee regarding the programs and services funded by contributions to
334
the trust account.
335
Section 6.
Section
26-18a-4
is amended to read:
336
26-18a-4. Creation of Kurt Oscarson Children's Organ Transplant Trust
337
Account.
338
(1) There is created a restricted account within the General Fund pursuant to Section
339
51-5-4
known as the Kurt Oscarson Children's Organ Transplant Trust Account. Private
340
contributions received under this section and Section [
59-10-550
]
59-10-1308
shall be
341
deposited into the trust account to be used only for the programs and purposes described in
342
Section
26-18a-3
.
343
(2) Money shall be appropriated from the trust account to the committee in accordance
344
with Title 63, Chapter 38, Budgetary Procedures Act.
345
(3) In addition to funds received under Section [
59-10-550
]
59-10-1308
, the committee
346
may accept transfers, grants, gifts, bequests, or any money made available from any source to
347
implement this chapter.
348
Section 7.
Section
26-48-102
is amended to read:
349
26-48-102. Cat and Dog Community Spay and Neuter Program Restricted
350
Account -- Interest -- Use of contributions and interest.
351
(1) There is created within the General Fund the Cat and Dog Community Spay and
352
Neuter Program Restricted Account.
353
(2) The account shall be funded by contributions deposited into the Cat and Dog
354
Community Spay and Neuter Program Restricted Account in accordance with Section
355
[
59-10-550.2
]
59-10-1310
.
356
(3) (a) The Cat and Dog Community Spay and Neuter Program Restricted Account
357
shall earn interest.
358
(b) Interest earned on the Cat and Dog Community Spay and Neuter Program
359
Restricted Account shall be deposited into the Cat and Dog Community Spay and Neuter
360
Program Restricted Account.
361
(4) The department shall distribute contributions and interest deposited into the Cat and
362
Dog Community Spay and Neuter Program Restricted Account to one or more organizations
363
that:
364
(a) are exempt from federal income taxation under Section 501(c)(3), Internal Revenue
365
Code;
366
(b) operate a mobile spay and neuter clinic for cats and dogs;
367
(c) provide annual spay and neuter services at the mobile spay and neuter clinic
368
described in Subsection (4)(b):
369
(i) to one or more communities in at least 20 counties in the state; and
370
(ii) by veterinarians who are licensed by Title 58, Chapter 28, Veterinary Practice Act;
371
and
372
(d) (i) spay and neuter cats and dogs owned by persons having low incomes; and
373
(ii) have established written guidelines for determining what constitutes a person
374
having a low income in accordance with any rules made by the department as authorized by
375
Subsection (5)(c).
376
(5) (a) An organization described in Subsection (4) may apply to the department to
377
receive a distribution in accordance with Subsection (4).
378
(b) An organization that receives a distribution from the department in accordance with
379
Subsection (4):
380
(i) shall expend the distribution only to spay or neuter dogs and cats:
381
(A) owned by persons having low incomes;
382
(B) by veterinarians who are licensed by Title 58, Chapter 28, Veterinary Practice Act;
383
(C) through a statewide voucher program; and
384
(D) at a location that:
385
(I) is not a mobile spay and neuter clinic; and
386
(II) does not receive any funding from a governmental entity; and
387
(ii) may not expend the distribution for any administrative cost relating to an
388
expenditure authorized by Subsection (5)(b)(i).
389
(c) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
390
department may make rules:
391
(i) providing procedures and requirements for an organization to apply to the
392
department to receive a distribution in accordance with Subsection (4); and
393
(ii) to define what constitutes a person having a low income.
394
Section 8.
Section
31A-32a-101
is amended to read:
395
31A-32a-101. Title and scope.
396
(1) This chapter is known as the "Medical Care Savings Account Act."
397
(2) (a) This chapter applies only to a medical care savings [accounts] account
398
established for the purpose of seeking a tax [deduction] credit under Section [
59-10-114
]
399
59-10-1021
.
400
(b) This chapter does not apply to a medical care savings [accounts that will not be
401
subject to tax deductions under Section
59-10-114
] account with respect to which a tax credit is
402
not claimed under Section
59-10-1021
.
403
Section 9.
Section
31A-32a-103
is amended to read:
404
31A-32a-103. Establishing medical care savings accounts.
405
[(1) For tax years beginning 1995, both of the following apply:]
406
(1) For a taxable year beginning on or after January 1, 1995:
407
(a) an employer, except as otherwise provided by contract or a collective bargaining
408
agreement, may offer a medical care savings account program to the employer's employees;
409
[and] or
410
(b) a resident individual may establish a medical care savings account program for the
411
individual or for the individual's dependents.
412
(2) (a) A contribution into an account made by an employer on behalf of an employee,
413
or made by an individual account holder may not exceed the greater of:
414
[(a)] (i) $2,000 in any [tax] taxable year; or
415
(ii) an amount of money equal to the sum of all eligible medical expenses paid by the
416
employee or account holder [in] for that [tax] taxable year on behalf of the employee, account
417
holder, or the employee's or account holder's spouse or dependents.
418
(b) For purposes of Subsection (2)(a)(ii), eligible medical expenses [as defined in
419
Subsection
31A-32a-102
(5),] are limited to expenses in [that tax year which] the taxable year
420
that an insurance carrier has applied to the employee's or account holder's deductible.
421
(3) An employer that offers a medical care savings account program shall, before
422
making any contributions:
423
(a) inform all employees in writing of the fact that these contributions may not be
424
deductible under the federal tax laws; and
425
(b) obtain from the employee a written election to participate in the medical care
426
savings account program.
427
(4) Except as provided in Sections
31A-32a-105
and
59-10-114
, principal contributed
428
to and interest earned on a medical care savings account and money reimbursed to an employee
429
or account holder for eligible medical expenses are exempt from taxation.
430
(5) (a) An employer may select a single account administrator for all of the employer's
431
employee's medical care savings accounts.
432
(b) If a single account administrator is not selected, an employer may contribute
433
directly to the account holder's individual medical care savings account.
434
Section 10.
Section
31A-32a-104
is amended to read:
435
31A-32a-104. Administration of medical care savings account.
436
(1) An account administrator shall administer the medical care savings account from
437
which the payment of claims is made and has a fiduciary duty to the person for whose benefit
438
the account administrator administers an account.
439
(2) (a) Except as provided in Subsection
31A-32a-105
(1), the account administrator
440
shall use the funds held in a medical care savings account solely for the purpose of paying or
441
reimbursing the employee or account holder for eligible medical expenses of the employee or
442
account holder or of the employee's or account holder's dependents.
443
(b) The commissioner shall adopt rules concerning the coordination of benefits
444
between a medical care savings account and medical expenses payable from automobile
445
insurance policies, workers' compensation insurance policies, or other health care insurance
446
policies or contracts.
447
(3) The employee or account holder may submit documentation of eligible medical
448
expenses paid by the employee or account holder in the [tax] taxable year to the account
449
administrator, and the account administrator shall reimburse the employee or account holder
450
from the employee's or account holder's account for eligible medical expenses.
451
(4) If an employer makes contributions to a medical care savings account program on a
452
periodic installment basis, the employer may advance to an employee an amount necessary to
453
cover eligible medical expenses incurred that exceed the amount in the employee's medical
454
care savings account at the time the expense is incurred if the employee agrees to repay the
455
advance.
456
Section 11.
Section
31A-32a-105
is amended to read:
457
31A-32a-105. Withdrawals -- Termination -- Transfers.
458
(1) Subject to Subsection (3), if the employee or account holder withdraws money for
459
any purpose other than a medical expense at any time in which the balance in the account is
460
below $4,000 [all of the following apply]:
461
(a) the amount of the withdrawal [is income for the purposes of Title 59, Chapter 10,
462
Individual Income Tax Act] shall be added to adjusted gross income in accordance with
463
Section
59-10-114
; and
464
(b) the administrator shall withhold from the amount of the withdrawal, and on behalf
465
of the employee or account holder shall pay a penalty to the State Tax Commission equal to
466
10% of the amount of the withdrawal.
467
(2) If an employee or account holder withdraws money from the employee's or account
468
holder's medical care savings account for any purpose other than a medical expense, but the
469
withdrawal occurs when the balance in the medical care savings account is over $4,000, and
470
the withdrawal will not result in the account balance dropping below $4,000, the amount of the
471
withdrawal:
472
(a) is not subject to the penalties described in Subsection (1)(b); and
473
[(b) is subject to taxation as provided in Subsection (1)(a).]
474
(b) shall be added to adjusted gross income in accordance with Section
59-10-114
.
475
(3) The amount of a disbursement of any assets of a medical care savings account
476
pursuant to a filing for protection under [Title 11 of the United States Code,] 11 U.S.C. Sec.
477
101 to 1330, by an employee, account holder, or person for whose benefit the account was
478
established:
479
(a) is not considered a withdrawal for purposes of this section; and
480
[(b) is subject to taxation under Title 59, Chapter 10, Individual Income Tax Act.]
481
(b) shall be added to adjusted gross income in accordance with Section
59-10-114
.
482
(4) (a) Upon the death of the employee or account holder, the account administrator
483
shall distribute the principal and accumulated interest of the medical care savings account to
484
the estate of the employee or account holder.
485
(b) A distribution under this Subsection (4) is not subject to the penalties described in
486
Subsection (1)(b).
487
(5) (a) If an employee is no longer employed by an employer that participates in a
488
medical care savings account program, and if the employee's account is administered by the
489
employer's account administrator, the money in the medical care savings account may be used
490
for the benefit of the employee or the employee's dependents in accordance with this chapter,
491
and [remains exempt from taxation] may not be added to adjusted gross income under Section
492
59-10-114
if the employee, not more than 60 days after the employee's final day of
493
employment:
494
(i) transfers the account to a new account administrator; or
495
(ii) (A) requests in writing to the former employer's account administrator that the
496
account remain with that administrator; and
497
(B) the account administrator agrees to retain the account.
498
(b) Not more than 30 days after the expiration of the 60 days described in Subsection
499
(5)(a), if an account administrator has not accepted the former employee's account, the
500
employer shall mail a check to the former employee at the employee's last-known address equal
501
to the amount in the account on that day.
502
(c) The amount mailed to the employee [is subject to taxation pursuant to Subsection
503
(1)(a)] under Subsection (5)(b) shall be added to adjusted gross income in accordance with
504
Section
59-10-114
, but is not subject to the penalties under Subsection (1)(b).
505
(d) If an employee becomes employed with a different employer that participates in a
506
medical care savings account program, the employee may transfer the employee's medical care
507
savings account to that new employer's account administrator.
508
(e) If an account holder becomes an employee of an employer that participates in a
509
medical care savings account program, the account holder may transfer the account holder's
510
account to the employer's account administrator.
511
Section 12.
Section
31A-32a-106
is amended to read:
512
31A-32a-106. Regulation of account administrators -- Administration of addition
513
to adjusted gross income and tax credit -- Rulemaking authority.
514
(1) The department shall regulate account administrators and may adopt rules
515
necessary to administer this chapter.
516
(2) The State Tax Commission may adopt rules necessary to monitor and implement
517
the [tax deductions established by this chapter and Section
59-10-114
.]:
518
(a) amounts required to be added to adjusted gross income in accordance with Sections
519
31A-32a-105
and
59-10-114
; or
520
(b) amount claimed as a tax credit in accordance with Section
59-10-1021
.
521
Section 13.
Section
31A-32a-107
is amended to read:
522
31A-32a-107. Penalties for noncompliance with tax provisions.
523
(1) An account administrator who fails to comply with [the statutes and rules
524
governing the tax deduction established by this chapter and Section
59-10-114
] a provision
525
described in Subsection (2) is subject to:
526
[(1)] (a) the civil penalties provided in Section
59-1-401
; and
527
[(2)] (b) interest at the rate and in the manner provided in Section
59-1-402
.
528
(2) The following provisions apply to Subsection (1):
529
(a) a provision of this chapter relating to:
530
(i) an addition to income made in accordance with Section
59-10-114
; or
531
(ii) a tax credit allowed by Section
59-10-1021
; or
532
(b) a provision of Title 59, Chapter 10, Individual Income Tax Act, relating to:
533
(i) an addition to income made in accordance with Section
59-10-114
; or
534
(ii) a tax credit allowed by Section
59-10-1021
.
535
Section 14.
Section
48-2c-117
is amended to read:
536
48-2c-117. Taxation of limited liability companies.
537
A company established under this chapter or a foreign company transacting business in
538
this state shall be taxed as provided in [Section
59-10-801
] Subsection
59-10-1403
(4).
539
Section 15.
Section
53B-8a-106
is amended to read:
540
53B-8a-106. Account agreements.
541
The Utah Educational Savings Plan Trust may enter into account agreements with
542
account owners on behalf of beneficiaries under the following terms and agreements:
543
(1) (a) An account agreement may require an account owner to agree to invest a
544
specific amount of money in the Utah Educational Savings Plan Trust for a specific period of
545
time for the benefit of a specific beneficiary, not to exceed an amount determined by the
546
program administrator.
547
(b) Account agreements may be amended to provide for adjusted levels of payments
548
based upon changed circumstances or changes in educational plans.
549
(c) An account owner may make additional optional payments as long as the total
550
payments for a specific beneficiary do not exceed the total estimated higher education costs as
551
determined by the program administrator.
552
(d) Subject to Subsection (1)(f), the maximum amount of a qualified investment that a
553
corporation that is an account owner may subtract from unadjusted income for a taxable year in
554
accordance with Title 59, Chapter 7, Corporate Franchise and Income Taxes, is [$1,560]
555
$1,650 for each individual beneficiary for the taxable year beginning on or after January 1,
556
[2006] 2008, but beginning on or before December 31, [2006] 2008.
557
(e) Subject to Subsection (1)(f), the maximum amount of a qualified investment that
558
may be [subtracted from federal taxable income of a resident or nonresident individual for a
559
taxable year in accordance with Section
59-10-114
, a resident or nonresident estate or trust for
560
a taxable year in accordance with Section
59-10-202
, or] used as the basis for claiming a tax
561
credit [for a taxable year by a resident or nonresident individual] in accordance with Section
562
[
59-10-1206.1
]
59-10-1017
, is:
563
(i) for a resident or nonresident estate or trust that is an account owner, [$1,560] $1,650
564
for each individual beneficiary for the taxable year beginning on or after January 1, [2006]
565
2008, but beginning on or before December 31, [2006] 2008;
566
(ii) for a resident or nonresident individual that is an account owner, other than a
567
husband and wife who are account owners and file a single return jointly under Title 59,
568
Chapter 10, Individual Income Tax Act, [$1,560] $1,650 for each individual beneficiary for the
569
taxable year beginning on or after January 1, [2006] 2008, but beginning on or before
570
December 31, [2006] 2008; or
571
(iii) for a husband and wife who are account owners and file a single return jointly
572
under Title 59, Chapter 10, Individual Income Tax Act, [$3,120] $3,300 for each individual
573
beneficiary:
574
(A) for the taxable year beginning on or after January 1, [2006] 2008, but beginning on
575
or before December 31, [2006] 2008; and
576
(B) regardless of whether the Utah Educational Savings Plan Trust has entered into:
577
(I) a separate account agreement with each spouse; or
578
(II) a single account agreement with both spouses jointly.
579
(f) (i) For taxable years beginning on or after January 1, [2007] 2009, the program
580
administrator shall increase or decrease the maximum amount of a qualified investment
581
described in Subsections (1)(d) and (1)(e)(i) and (ii), by a percentage equal to the percentage
582
difference between the consumer price index for the preceding calendar year and the consumer
583
price index for the calendar year [2005] 2007.
584
(ii) After making an increase or decrease required by Subsection (1)(f)(i), the program
585
administrator shall:
586
(A) round the maximum amount of the qualified investments described in Subsections
587
(1)(d) and (1)(e)(i) and (ii) increased or decreased under Subsection (1)(f)(i) to the nearest ten
588
dollar increment; and
589
(B) increase or decrease the maximum amount of the qualified investment described in
590
Subsection (1)(e)(iii) so that the maximum amount of the qualified investment described in
591
Subsection (1)(e)(iii) is equal to the product of:
592
(I) the maximum amount of the qualified investment described in Subsection (1)(e)(ii)
593
as rounded under Subsection (1)(f)(ii)(A); and
594
(II) two.
595
(iii) For purposes of Subsections (1)(f)(i) and (ii), the program administrator shall
596
calculate the consumer price index as provided in Sections 1(f)(4) and 1(f)(5), Internal Revenue
597
Code.
598
(2) (a) (i) Beneficiaries designated in account agreements must be designated after
599
birth and before age 19 for an account owner to:
600
(A) subtract a qualified investment from income under[:(I)] Title 59, Chapter 7,
601
Corporate Franchise and Income Taxes; or
602
[(II) Section
59-10-114
; or]
603
[(III) Section
59-10-202
; or]
604
(B) use a qualified investment as the basis for claiming a tax credit in accordance with
605
Section [
59-10-1206.1
]
59-10-1017
.
606
(ii) If the beneficiary is designated after birth and before age 19, the payment of
607
benefits provided under the account agreement must begin not later than the beneficiary's 27th
608
birthday.
609
(b) (i) Account owners may designate [beneficiaries] a beneficiary age 19 or older, but
610
investments for [those beneficiaries] that beneficiary are not eligible [for subtraction from
611
federal taxable income.] to be:
612
(A) subtracted from income under Title 59, Chapter 7, Corporate Franchise and Income
613
Taxes; or
614
(B) used as the basis for claiming a tax credit in accordance with Section
59-10-1017
.
615
(ii) If a beneficiary age 19 or older is designated, the payment of benefits provided
616
under the account agreement must begin not later than ten years from the account agreement
617
date.
618
(3) Each account agreement shall state clearly that there are no guarantees regarding
619
moneys in the Utah Educational Savings Plan Trust as to the return of principal and that losses
620
could occur.
621
(4) Each account agreement shall provide that:
622
(a) [no] a contributor to, or designated beneficiary under, an account agreement may
623
not direct the investment of any contributions or earnings on contributions;
624
(b) [no] any part of the money in any account may not be used as security for a loan;
625
and
626
(c) [no] an account owner may not borrow from the Utah Educational Savings Plan
627
Trust.
628
(5) The execution of an account agreement by the trust may not guarantee in any way
629
that higher education costs will be equal to projections and estimates provided by the Utah
630
Educational Savings Plan Trust or that the beneficiary named in any participation agreement
631
will:
632
(a) be admitted to an institution of higher education;
633
(b) if admitted, be determined a resident for tuition purposes by the institution of
634
higher education, unless the account agreement is vested;
635
(c) be allowed to continue attendance at the institution of higher education following
636
admission; or
637
(d) graduate from the institution of higher education.
638
(6) [Beneficiaries] A beneficiary may be changed as permitted by the rules and
639
regulations of the board upon written request of the account owner prior to the date of
640
admission of any beneficiary under an account agreement by an institution of higher education
641
so long as the substitute beneficiary is eligible for participation.
642
(7) [Account agreements] An account agreement may be freely amended throughout
643
[their terms] the term of the account agreement in order to enable [account owners] an account
644
owner to increase or decrease the level of participation, change the designation of beneficiaries,
645
and carry out similar matters as authorized by rule.
646
(8) Each account agreement shall provide that:
647
(a) the account agreement may be canceled upon the terms and conditions, and upon
648
payment of the fees and costs set forth and contained in the board's rules and regulations; and
649
(b) the program administrator may amend the agreement unilaterally and retroactively,
650
if necessary, to maintain the Utah Educational Savings Plan Trust as a qualified tuition
651
program under Section 529, Internal Revenue Code.
652
Section 16.
Section
59-7-101
is amended to read:
653
59-7-101. Definitions.
654
As used in this chapter:
655
(1) "Adjusted income" means unadjusted income as modified by Sections
59-7-105
656
and
59-7-106
.
657
(2) (a) "Affiliated group" means one or more chains of corporations that are connected
658
through stock ownership with a common parent corporation that meet the following
659
requirements:
660
(i) at least 80% of the stock of each of the corporations in the group, excluding the
661
common parent corporation, is owned by one or more of the other corporations in the group;
662
and
663
(ii) the common parent directly owns at least 80% of the stock of at least one of the
664
corporations in the group.
665
(b) "Affiliated group" does not include corporations that are qualified to do business
666
but are not otherwise doing business in this state.
667
(c) For purposes of this Subsection (2), "stock" does not include nonvoting stock which
668
is limited and preferred as to dividends.
669
(3) "Apportionable income" means adjusted income less nonbusiness income net of
670
related expenses, to the extent included in adjusted income.
671
(4) "Apportioned income" means apportionable income multiplied by the
672
apportionment fraction as determined in Section
59-7-311
.
673
(5) "Business income" is as defined in Section
59-7-302
.
674
(6) (a) "Captive real estate investment trust" means a real estate investment trust if:
675
(i) the shares or beneficial interests of the real estate investment trust are not regularly
676
traded on an established securities market; and
677
(ii) more than 50% of the voting power or value of the shares or beneficial interests of
678
the real estate investment trust are directly, indirectly, or constructively:
679
(A) owned by a controlling entity of the real estate investment trust; or
680
(B) controlled by a controlling entity of the real estate investment trust.
681
(b) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
682
commission may make rules defining "established securities market."
683
(7) (a) "Controlling entity of a captive real estate investment trust" means an entity
684
that:
685
(i) is treated as an association taxable as a corporation under the Internal Revenue
686
Code;
687
(ii) is not exempt from federal income taxation under Section 501(a), Internal Revenue
688
Code; and
689
(iii) directly, indirectly, or constructively holds more than 50% of:
690
(A) the voting power of a captive real estate investment trust; or
691
(B) the value of the shares or beneficial interests of a captive real estate investment
692
trust.
693
(b) "Controlling entity of a captive real estate investment trust" does not include:
694
(i) a real estate investment trust, except for a captive real estate investment trust;
695
(ii) a qualified real estate investment subsidiary described in Section 856(i), Internal
696
Revenue Code, except for a qualified real estate investment trust subsidiary of a captive real
697
estate investment trust; or
698
(iii) a foreign real estate investment trust.
699
(c) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
700
commission may make rules defining "established securities market."
701
[(7)] (8) (a) "Common ownership" means the direct or indirect control or ownership of
702
more than 50% of the outstanding voting stock of:
703
(i) a parent-subsidiary controlled group as defined in Section 1563, Internal Revenue
704
Code, except that 50% shall be substituted for 80%;
705
(ii) a brother-sister controlled group as defined in Section 1563, Internal Revenue
706
Code, except that 50% shall be substituted for 80%; or
707
(iii) three or more corporations each of which is a member of a group of corporations
708
described in Subsection (2)(a)(i) or (2)(a)(ii), and one of which is:
709
(A) a common parent corporation included in a group of corporations described in
710
Subsection (2)(a)(i); and
711
(B) included in a group of corporations described in Subsection (2)(a)(ii).
712
(b) Ownership of outstanding voting stock shall be determined by Section 1563,
713
Internal Revenue Code.
714
[(6)] (9) "Corporate return" or "return" includes a combined report.
715
[(8)] (10) "Corporation" includes:
716
(a) entities defined as corporations under Sections 7701(a) and 7704, Internal Revenue
717
Code; and
718
(b) other organizations that are taxed as corporations for federal income tax purposes
719
under the Internal Revenue Code.
720
[(9)] (11) "Dividend" means any distribution, including money or other type of
721
property, made by a corporation to its shareholders out of its earnings or profits accumulated
722
after December 31, 1930.
723
[(10)] (12) (a) "Doing business" includes any transaction in the course of its business
724
by a domestic corporation, or by a foreign corporation qualified to do or doing intrastate
725
business in this state.
726
(b) Except as provided in Subsection
59-7-102
(2), "doing business" includes:
727
(i) the right to do business through incorporation or qualification;
728
(ii) the owning, renting, or leasing of real or personal property within this state; and
729
(iii) the participation in joint ventures, working and operating agreements, the
730
performance of which takes place in this state.
731
[(11)] (13) "Domestic corporation" means a corporation that is incorporated or
732
organized under the laws of this state.
733
[(12)] (14) (a) "Farmers' cooperative" means an association, corporation, or other
734
organization that is:
735
(i) (A) an association, corporation, or other organization of:
736
(I) farmers; or
737
(II) fruit growers; or
738
(B) an association, corporation, or other organization that is similar to an association,
739
corporation, or organization described in Subsection [(12)] (14)(a)(i)(A); and
740
(ii) organized and operated on a cooperative basis to:
741
(A) (I) market the products of members of the cooperative or the products of other
742
producers; and
743
(II) return to the members of the cooperative or other producers the proceeds of sales
744
less necessary marketing expenses on the basis of the quantity of the products of a member or
745
producer or the value of the products of a member or producer; or
746
(B) (I) purchase supplies and equipment for the use of members of the cooperative or
747
other persons; and
748
(II) turn over the supplies and equipment described in Subsection [(12)]
749
(14)(a)(ii)(B)(I) at actual costs plus necessary expenses to the members of the cooperative or
750
other persons.
751
(b) (i) Subject to Subsection [(12)] (14)(b)(ii), for purposes of this Subsection [(12)]
752
(14), the commission by rule, made in accordance with Title 63, Chapter 46a, Utah
753
Administrative Rulemaking Act, shall define:
754
(A) the terms:
755
(I) "member"; and
756
(II) "producer"; and
757
(B) what constitutes an association, corporation, or other organization that is similar to
758
an association, corporation, or organization described in Subsection [(12)] (14)(a)(i)(A).
759
(ii) The rules made under this Subsection [(12)] (14)(b) shall be consistent with the
760
filing requirements under federal law for a farmers' cooperative.
761
[(13)] (15) "Foreign corporation" means a corporation that is not incorporated or
762
organized under the laws of this state.
763
[(14)] (16) (a) "Foreign operating company" means a corporation that:
764
(i) is incorporated in the United States; and
765
(ii) 80% or more of whose business activity, as determined under Section
59-7-401
, is
766
conducted outside the United States.
767
(b) "Foreign operating company" does not include a corporation that qualifies for the
768
Puerto Rico and Possession Tax Credit as provided in Section 936, Internal Revenue Code.
769
(17) (a) "Foreign real estate investment trust" means:
770
(i) a business entity organized outside the laws of the United States if:
771
(A) at least 75% of the business entity's total asset value at the close of the business
772
entity's taxable year is represented by:
773
(I) real estate assets, as defined in Section 856(c)(5)(B), Internal Revenue Code;
774
(II) cash or cash equivalents; or
775
(III) one or more securities issued or guaranteed by the United States;
776
(B) the business entity is:
777
(I) not subject to income taxation:
778
(Aa) on amounts distributed to the business entity's beneficial owners; and
779
(Bb) in the jurisdiction in which the business entity is organized; or
780
(II) exempt from income taxation on an entity level in the jurisdiction in which the
781
business entity is organized;
782
(C) the business entity distributes at least 85% of the business entity's taxable income,
783
as computed in the jurisdiction in which the business entity is organized, to the holders of the
784
business entity's:
785
(I) shares or beneficial interests; and
786
(II) on an annual basis;
787
(D) (I) not more than 10% of the following is held directly, indirectly, or constructively
788
by a single person:
789
(Aa) the voting power of the business entity; or
790
(Bb) the value of the shares or beneficial interests of the business entity; or
791
(II) the shares of the business entity are regularly traded on an established securities
792
market; and
793
(E) the business entity is organized in a country that has a tax treaty with the United
794
States; or
795
(ii) a listed Australian property trust.
796
(b) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
797
commission may make rules defining:
798
(i) "cash or cash equivalents";
799
(ii) "established securities market"; or
800
(iii) "listed Australian property trust."
801
[(15)] (18) "Income" includes losses.
802
[(16)] (19) "Internal Revenue Code" means Title 26 of the United States Code as
803
effective during the year in which Utah taxable income is determined.
804
[(17)] (20) "Nonbusiness income" is as defined in Section
59-7-302
.
805
[(18)] (21) "Nonresident shareholder" means any shareholder of an S corporation who
806
on the last day of the taxable year of the S corporation, is:
807
(a) an individual not domiciled in Utah; or
808
(b) a nonresident trust or nonresident estate, as defined in Section
59-10-103
.
809
(22) "Real estate investment trust" is as defined in Section 856, Internal Revenue Code.
810
[(19)] (23) "Related expenses" means:
811
(a) expenses directly attributable to nonbusiness income; and
812
(b) the portion of interest or other expense indirectly attributable to both nonbusiness
813
and business income which bears the same ratio to the aggregate amount of such interest or
814
other expense, determined without regard to this Subsection [(19)] (23), as the average amount
815
of the asset producing the nonbusiness income bears to the average amount of all assets of the
816
taxpayer within the taxable year.
817
[(20)] (24) "Resident shareholder" means any shareholder of an S corporation who is
818
not a nonresident shareholder.
819
[(22)] (25) "Safe harbor lease" means a lease that qualified as a safe harbor lease under
820
Section 168, Internal Revenue Code.
821
[(21)] (26) "S corporation" means an S corporation as defined in Section 1361, Internal
822
Revenue Code.
823
[(23)] (27) "State of the United States" includes any of the 50 states or the District of
824
Columbia [and "United States" includes the 50 states and the District of Columbia].
825
[(24)] (28) (a) "Taxable year" means the calendar year or the fiscal year ending during
826
such calendar year upon the basis of which the adjusted income is computed.
827
(b) In the case of a return made for a fractional part of a year under this chapter or
828
under rules prescribed by the commission, "taxable year" includes the period for which such
829
return is made.
830
[(25)] (29) "Taxpayer" means any corporation subject to the tax imposed by this
831
chapter.
832
[(26)] (30) "Threshold level of business activity" means business activity in the United
833
States equal to or greater than 20% of the corporation's total business activity as determined
834
under Section
59-7-401
.
835
[(27)] (31) "Unadjusted income" means federal taxable income as determined on a
836
separate return basis before intercompany eliminations as determined by the Internal Revenue
837
Code, before the net operating loss deduction and special deductions for dividends received.
838
[(28)] (32) (a) "Unitary group" means a group of corporations that:
839
(i) are related through common ownership; and
840
(ii) by a preponderance of the evidence as determined by a court of competent
841
jurisdiction or the commission, are economically interdependent with one another as
842
demonstrated by the following factors:
843
(A) centralized management;
844
(B) functional integration; and
845
(C) economies of scale.
846
(b) "Unitary group" includes a captive real estate investment trust.
847
[(b)] (c) "Unitary group" does not include an S [corporations] corporation.
848
(33) "United States" includes the 50 states and the District of Columbia.
849
[(29)] (34) "Utah net loss" means the current year Utah taxable income before Utah net
850
loss deduction, if determined to be less than zero.
851
[(30)] (35) "Utah net loss deduction" means the amount of Utah net losses from other
852
taxable years that may be carried back or carried forward to the current taxable year in
853
accordance with Section
59-7-110
.
854
[(31)] (36) (a) "Utah taxable income" means Utah taxable income before net loss
855
deduction less Utah net loss deduction.
856
(b) "Utah taxable income" includes income from tangible or intangible property located
857
or having situs in this state, regardless of whether carried on in intrastate, interstate, or foreign
858
commerce.
859
[(32)] (37) "Utah taxable income before net loss deduction" means apportioned income
860
plus nonbusiness income allocable to Utah net of related expenses.
861
[(33)] (38) (a) "Water's edge combined report" means a report combining the income
862
and activities of:
863
(i) all members of a unitary group that are:
864
(A) corporations organized or incorporated in the United States, including those
865
corporations qualifying for the Puerto Rico and Possession Tax Credit as provided in Section
866
936, Internal Revenue Code, in accordance with Subsection [(33)] (38)(b); and
867
(B) corporations organized or incorporated outside of the United States meeting the
868
threshold level of business activity; and
869
(ii) an affiliated group electing to file a water's edge combined report under Subsection
870
59-7-402
(2).
871
(b) There is a rebuttable presumption that a corporation which qualifies for the Puerto
872
Rico and Possession Tax Credit provided in Section 936, Internal Revenue Code, is part of a
873
unitary group.
874
[(34)] (39) "Worldwide combined report" means the combination of the income and
875
activities of all members of a unitary group irrespective of the country in which the
876
corporations are incorporated or conduct business activity.
877
Section 17.
Section
59-7-105
is amended to read:
878
59-7-105. Additions to unadjusted income.
879
In computing adjusted income the following amounts shall be added to unadjusted
880
income:
881
(1) interest from bonds, notes, and other evidences of indebtedness issued by any state
882
of the United States, including any agency and instrumentality of a state of the United States;
883
(2) the amount of any deduction taken on a corporation's federal return for taxes paid
884
by a corporation:
885
(a) to Utah for taxes imposed by this chapter; and
886
(b) to another state of the United States, a foreign country, a United States possession,
887
or the Commonwealth of Puerto Rico for taxes imposed for the privilege of doing business, or
888
exercising its corporate franchise, including income, franchise, corporate stock and business
889
and occupation taxes;
890
(3) the safe harbor lease adjustment required under Subsections
59-7-111
(1)(a) and
891
(2)(a);
892
(4) capital losses that have been deducted on a Utah corporate return in previous years;
893
(5) any deduction on the federal return that has been previously deducted on the Utah
894
return;
895
(6) the amount of contributions claimed as a tax credit pursuant to Section
59-7-602
;
896
(7) the amount of the deduction taken pursuant to Section
59-7-603
for sophisticated
897
technological equipment;
898
(8) charitable contributions, to the extent deducted on the federal return when
899
determining federal taxable income;
900
(9) the amount of gain or loss determined under Section
59-7-114
relating to a target
901
corporation under Section 338, Internal Revenue Code, unless such gain or loss has already
902
been included in the unadjusted income of the target corporation;
903
(10) the amount of gain or loss determined under Section
59-7-115
relating to
904
corporations treated for federal purposes as having disposed of its assets under Section 336(e),
905
Internal Revenue Code, unless such gain or loss has already been included in the unadjusted
906
income of the target corporation;
907
(11) adjustments to gains, losses, depreciation expense, amortization expense, and
908
similar items due to a difference between basis for federal purposes and basis as computed
909
under Section
59-7-107
; [and]
910
(12) the amount withdrawn under Title 53B, Chapter 8a, Higher Education Savings
911
Incentive Program, from the account of a corporation that is an account owner as defined in
912
Section
53B-8a-102
, for the taxable year for which the amount is withdrawn, if that amount
913
withdrawn from the account of the corporation that is the account owner:
914
(a) is not expended for higher education costs as defined in Section
53B-8a-102
; and
915
(b) is subtracted by the corporation:
916
(i) that is the account owner; and
917
(ii) in accordance with Subsection
59-7-106
(18)[.]; and
918
(13) the amount of the deduction for dividends paid, as defined in Section 561, Internal
919
Revenue Code, that is allowed under Section 857(b)(2)(B), Internal Revenue Code, in
920
computing the taxable income of a captive real estate investment trust, if that captive real estate
921
investment trust is subject to federal income taxation.
922
Section 18.
Section
59-7-106
is amended to read:
923
59-7-106. Subtractions from unadjusted income.
924
In computing adjusted income the following amounts shall be subtracted from
925
unadjusted income:
926
(1) the foreign dividend gross-up included in gross income for federal income tax
927
purposes under Section 78, Internal Revenue Code;
928
(2) the net capital loss, as defined for federal purposes, if the taxpayer elects to deduct
929
the loss on the current Utah return. The deduction shall be made by claiming the deduction on
930
the current Utah return which shall be filed by the due date of the return, including extensions.
931
For the purposes of this Subsection (2) all capital losses in a given year must be:
932
(a) deducted in the year incurred; or
933
(b) carried forward as provided in Sections 1212(a)(1)(B) and (C), Internal Revenue
934
Code;
935
(3) the decrease in salary expense deduction for federal income tax purposes due to
936
claiming the federal jobs credit under Section 51, Internal Revenue Code;
937
(4) the decrease in qualified research and basic research expense deduction for federal
938
income tax purposes due to claiming the federal research and development credit under Section
939
41, Internal Revenue Code;
940
(5) the decrease in qualified clinical testing expense deduction for federal income tax
941
purposes due to claiming the federal orphan drug credit under Section 28, Internal Revenue
942
Code;
943
(6) any decrease in any expense deduction for federal income tax purposes due to
944
claiming any other federal credit;
945
(7) the safe harbor lease adjustment required under Subsections
59-7-111
(1)(b) and
946
(2)(b);
947
(8) any income on the federal corporate return that has been previously taxed by Utah;
948
(9) amounts included in federal taxable income that are due to refunds of taxes
949
imposed for the privilege of doing business, or exercising a corporate franchise, including
950
income, franchise, corporate stock and business and occupation taxes paid by the corporation to
951
Utah, another state of the United States, a foreign country, a United States possession, or the
952
Commonwealth of Puerto Rico to the extent that the taxes were added to unadjusted income
953
under Section
59-7-105
;
954
(10) charitable contributions, to the extent allowed as a subtraction under Section
955
59-7-109
;
956
(11) (a) 50% of the dividends deemed received or received from subsidiaries which are
957
members of the unitary group and are organized or incorporated outside of the United States
958
unless such subsidiaries are included in a combined report under Section
59-7-402
or
59-7-403
.
959
In arriving at the amount of the dividend exclusion, the taxpayer shall first deduct from the
960
dividends deemed received or received, the expense directly attributable to those dividends.
961
Interest expense attributable to excluded dividends shall be determined by multiplying interest
962
expense by a fraction, the numerator of which is the taxpayer's average investment in such
963
dividend paying subsidiaries, and the denominator of which is the taxpayer's average total
964
investment in assets;
965
(b) in determining income apportionable to this state, a portion of the factors of a
966
foreign subsidiary whose dividends are partially excluded under Subsection (11)(a) shall be
967
included in the combined report factors. The portion to be included shall be determined by
968
multiplying each factor of the foreign subsidiary by a fraction, but not to exceed 100%, the
969
numerator of which is the amount of the dividend paid by the foreign subsidiary which is
970
included in adjusted income, and the denominator of which is the current year earnings and
971
profits of the foreign subsidiary as determined under the Internal Revenue Code;
972
(12) (a) 50% of the adjusted income of a foreign operating company unless the
973
taxpayer has elected to file a worldwide combined report as provided in Section
59-7-403
. For
974
purposes of this Subsection (12), when calculating the adjusted income of a foreign operating
975
company, a foreign operating company may not deduct the subtractions allowable under this
976
Subsection (12) and Subsection (11);
977
(b) in determining income apportionable to this state, the factors for a foreign operating
978
company shall be included in the combined report factors in the same percentage its adjusted
979
income is included in the combined adjusted income;
980
(13) the amount of gain or loss which is included in unadjusted income but not
981
recognized for federal purposes on stock sold or exchanged by a member of a selling
982
consolidated group as defined in Section 338, Internal Revenue Code, if an election has been
983
made pursuant to Section 338(h)(10), Internal Revenue Code;
984
(14) the amount of gain or loss which is included in unadjusted income but not
985
recognized for federal purposes on stock sold, exchanged, or distributed by a corporation
986
pursuant to Section 336(e), Internal Revenue Code, if an election under Section 336(e), Internal
987
Revenue Code, has been made for federal purposes;
988
(15) (a) adjustments to gains, losses, depreciation expense, amortization expense, and
989
similar items due to a difference between basis for federal purposes and basis as computed
990
under Section
59-7-107
; and
991
(b) if there has been a reduction in federal basis for a federal tax credit where there is
992
no corresponding Utah tax credit, the amount of the reduction in basis shall be allowed as an
993
expense in the year of the federal credit;
994
(16) any interest expense not deducted on the federal corporate return under Section
995
265(b) or 291(e), Internal Revenue Code;
996
(17) 100% of the dividends received from subsidiaries which are insurance companies
997
exempt from this chapter under Subsection
59-7-102
(1)(c) and are under "common ownership"
998
as defined by Subsection
59-7-101
[(7)](8); [and]
999
(18) subject to Subsection
59-7-105
(12), the amount of a qualified investment as
1000
defined in Section
53B-8a-102
that:
1001
(a) a corporation that is an account owner as defined in Section
53B-8a-102
makes
1002
during the taxable year;
1003
(b) the corporation described in Subsection (18)(a) does not deduct on a federal
1004
corporation income tax return; and
1005
(c) does not exceed the maximum amount of the qualified investment that may be
1006
subtracted from unadjusted income for a taxable year in accordance with Subsections
1007
53B-8a-106
(1)(d) and (f)[.]; and
1008
(19) for purposes of income included in a combined report under Part 4, Combined
1009
Reporting, the entire amount of the dividends a member of a unitary group receives or is
1010
considered to receive from a captive real estate investment trust.
1011
Section 19.
Section
59-7-116.5
is amended to read:
1012
59-7-116.5. Real estate investment trusts.
1013
(1) A real estate investment trust[, as defined in Section 856, Internal Revenue Code,]
1014
that is not a captive real estate investment trust shall be taxed on the same income taxed for
1015
federal purposes under the Internal Revenue Code.
1016
(2) Any income taxable under this section shall be taxed at the same rate and in the
1017
same manner provided for in this chapter.
1018
Section 20.
Section
59-7-402
is amended to read:
1019
59-7-402. Water's edge combined report.
1020
(1) Except as provided in Section
59-7-403
, if any corporation listed in Subsection
1021
59-7-101
[(33)](38)(a) is doing business in Utah, the unitary group shall file a water's edge
1022
combined report.
1023
(2) (a) A group of corporations that are not otherwise a unitary group may elect to file a
1024
water's edge combined report if each member of the group is:
1025
(i) doing business in Utah;
1026
(ii) part of the same affiliated group; and
1027
(iii) qualified, under Section 1501, Internal Revenue Code, to file a federal
1028
consolidated return.
1029
(b) Each corporation within the affiliated group that is doing business in Utah must
1030
consent to filing a combined report. If an affiliated group elects to file a combined report, each
1031
corporation within the affiliated group that is doing business in Utah must file a combined
1032
report.
1033
(c) Corporations that elect to file a water's edge combined report under this section may
1034
not thereafter elect to file a separate return without the consent of the commission.
1035
Section 21.
Section
59-7-614
is amended to read:
1036
59-7-614. Renewable energy systems tax credit -- Definitions -- Limitations --
1037
State tax credit in addition to allowable federal credits -- Certification -- Rulemaking
1038
authority.
1039
(1) As used in this section:
1040
(a) "Active solar system":
1041
(i) means a system of equipment capable of collecting and converting incident solar
1042
radiation into thermal, mechanical, or electrical energy, and transferring these forms of energy
1043
by a separate apparatus to storage or to the point of use; and
1044
(ii) includes water heating, space heating or cooling, and electrical or mechanical
1045
energy generation.
1046
(b) "Biomass system" means any system of apparatus and equipment for use in
1047
converting material into biomass energy, as defined in Section
59-12-102
, and transporting that
1048
energy by separate apparatus to the point of use or storage.
1049
(c) "Business entity" means any sole proprietorship, estate, trust, partnership,
1050
association, corporation, cooperative, or other entity under which business is conducted or
1051
transacted.
1052
(d) "Commercial energy system" means any active solar, passive solar, geothermal
1053
electricity, direct-use geothermal, geothermal heat-pump system, wind, hydroenergy, or
1054
biomass system used to supply energy to a commercial unit or as a commercial enterprise.
1055
(e) "Commercial enterprise" means a business entity whose purpose is to produce
1056
electrical, mechanical, or thermal energy for sale from a commercial energy system.
1057
(f) (i) "Commercial unit" means any building or structure that a business entity uses to
1058
transact its business.
1059
(ii) Notwithstanding Subsection (1)(f)(i):
1060
(A) in the case of an active solar system used for agricultural water pumping or a wind
1061
system, each individual energy generating device shall be a commercial unit; and
1062
(B) if an energy system is the building or structure that a business entity uses to
1063
transact its business, a commercial unit is the complete energy system itself.
1064
(g) "Direct-use geothermal system" means a system of apparatus and equipment
1065
enabling the direct use of thermal energy, generally between 100 and 300 degrees Fahrenheit,
1066
that is contained in the earth to meet energy needs, including heating a building, an industrial
1067
process, and aquaculture.
1068
(h) "Geothermal electricity" means energy contained in heat that continuously flows
1069
outward from the earth that is used as a sole source of energy to produce electricity.
1070
(i) "Geothermal heat-pump system" means a system of apparatus and equipment
1071
enabling the use of thermal properties contained in the earth at temperatures well below 100
1072
degrees Fahrenheit to help meet heating and cooling needs of a structure.
1073
(j) "Hydroenergy system" means a system of apparatus and equipment capable of
1074
intercepting and converting kinetic water energy into electrical or mechanical energy and
1075
transferring this form of energy by separate apparatus to the point of use or storage.
1076
(k) "Individual taxpayer" means any person who is a taxpayer as defined in Section
1077
59-10-103
and an individual as defined in Section
59-10-103
.
1078
(l) "Passive solar system":
1079
(i) means a direct thermal system that utilizes the structure of a building and its
1080
operable components to provide for collection, storage, and distribution of heating or cooling
1081
during the appropriate times of the year by utilizing the climate resources available at the site;
1082
and
1083
(ii) includes those portions and components of a building that are expressly designed
1084
and required for the collection, storage, and distribution of solar energy.
1085
(m) "Residential energy system" means any active solar, passive solar, biomass,
1086
direct-use geothermal, geothermal heat-pump system, wind, or hydroenergy system used to
1087
supply energy to or for any residential unit.
1088
(n) "Residential unit" means any house, condominium, apartment, or similar dwelling
1089
unit that serves as a dwelling for a person, group of persons, or a family but does not include
1090
property subject to a fee under:
1091
(i) Section
59-2-404
;
1092
(ii) Section
59-2-405
;
1093
(iii) Section
59-2-405.1
;
1094
(iv) Section
59-2-405.2
; or
1095
(v) Section
59-2-405.3
.
1096
(o) "Utah Geological Survey" means the Utah Geological Survey established in Section
1097
63-73-5
.
1098
(p) "Wind system" means a system of apparatus and equipment capable of intercepting
1099
and converting wind energy into mechanical or electrical energy and transferring these forms of
1100
energy by a separate apparatus to the point of use, sale, or storage.
1101
(2) (a) (i) For taxable years beginning on or after January 1, 2007, a business entity that
1102
purchases and completes or participates in the financing of a residential energy system to
1103
supply all or part of the energy required for a residential unit owned or used by the business
1104
entity and situated in Utah is entitled to a nonrefundable tax credit as provided in this
1105
Subsection (2)(a).
1106
(ii) (A) A business entity is entitled to a tax credit equal to 25% of the reasonable costs
1107
of each residential energy system installed with respect to each residential unit it owns or uses,
1108
including installation costs, against any tax due under this chapter for the taxable year in which
1109
the energy system is completed and placed in service.
1110
(B) The total amount of each credit under this Subsection (2)(a) may not exceed $2,000
1111
per residential unit.
1112
(C) The credit under this Subsection (2)(a) is allowed for any residential energy system
1113
completed and placed in service on or after January 1, 2007.
1114
(iii) If a business entity sells a residential unit to an individual taxpayer before making
1115
a claim for the tax credit under this Subsection (2)(a), the business entity may:
1116
(A) assign its right to this tax credit to the individual taxpayer; and
1117
(B) if the business entity assigns its right to the tax credit to an individual taxpayer
1118
under Subsection (2)(a)(iii)(A), the individual taxpayer may claim the tax credit as if the
1119
individual taxpayer had completed or participated in the costs of the residential energy system
1120
under Section
59-10-1014
.
1121
(b) (i) For taxable years beginning on or after January 1, 2007, a business entity that
1122
purchases or participates in the financing of a commercial energy system situated in Utah is
1123
entitled to a refundable tax credit as provided in this Subsection (2)(b) if the commercial
1124
energy system does not use wind, geothermal electricity, or biomass equipment capable of
1125
producing a total of 660 or more kilowatts of electricity, and:
1126
(A) the commercial energy system supplies all or part of the energy required by
1127
commercial units owned or used by the business entity; or
1128
(B) the business entity sells all or part of the energy produced by the commercial
1129
energy system as a commercial enterprise.
1130
(ii) (A) A business entity is entitled to a tax credit of up to 10% of the reasonable costs
1131
of any commercial energy system installed, including installation costs, against any tax due
1132
under this chapter for the taxable year in which the commercial energy system is completed and
1133
placed in service.
1134
(B) Notwithstanding Subsection (2)(b)(ii)(A), the total amount of the credit under this
1135
Subsection (2)(b) may not exceed $50,000 per commercial unit.
1136
(C) The credit under this Subsection (2)(b) is allowed for any commercial energy
1137
system completed and placed in service on or after January 1, 2007.
1138
(iii) A business entity that leases a commercial energy system installed on a
1139
commercial unit is eligible for the tax credit under this Subsection (2)(b) if the lessee can
1140
confirm that the lessor irrevocably elects not to claim the credit.
1141
(iv) Only the principal recovery portion of the lease payments, which is the cost
1142
incurred by a business entity in acquiring a commercial energy system, excluding interest
1143
charges and maintenance expenses, is eligible for the tax credit under this Subsection (2)(b).
1144
(v) A business entity that leases a commercial energy system is eligible to use the tax
1145
credit under this Subsection (2)(b) for a period no greater than seven years from the initiation
1146
of the lease.
1147
(vi) A tax credit allowed by this Subsection (2)(b) may not be carried forward or
1148
carried back.
1149
(c) (i) For taxable years beginning on or after January 1, 2007, a business entity that
1150
owns a commercial energy system situated in Utah using wind, geothermal electricity, or
1151
biomass equipment capable of producing a total of 660 or more kilowatts of electricity is
1152
entitled to a refundable tax credit as provided in this Subsection (2)(c) if:
1153
(A) the commercial energy system supplies all or part of the energy required by
1154
commercial units owned or used by the business entity; or
1155
(B) the business entity sells all or part of the energy produced by the commercial
1156
energy system as a commercial enterprise.
1157
(ii) (A) A business entity is entitled to a tax credit under this section equal to the
1158
product of:
1159
(I) 0.35 cents; and
1160
(II) the kilowatt hours of electricity produced and either used or sold during the taxable
1161
year.
1162
(B) (I) The credit calculated under Subsection (2)(c)(ii)(A) may be claimed for
1163
production occurring during a period of 48 months beginning with the month in which the
1164
commercial energy system is placed in commercial service.
1165
(II) The credit allowed by this Subsection (2)(c) for each year may not be carried
1166
forward or carried back.
1167
(C) The credit under this Subsection (2)(c) is allowed for any commercial energy
1168
system completed and placed in service on or after January 1, 2007.
1169
(iii) A business entity that leases a commercial energy system installed on a
1170
commercial unit is eligible for the tax credit under this Subsection (2)(c) if the lessee can
1171
confirm that the lessor irrevocably elects not to claim the credit.
1172
(d) (i) A tax credit under Subsection (2)(a) or (b) may be claimed for the taxable year
1173
in which the energy system is completed and placed in service.
1174
(ii) Additional energy systems or parts of energy systems may be claimed for
1175
subsequent years.
1176
(iii) If the amount of a tax credit under Subsection (2)(a) exceeds a business entity's tax
1177
liability under this chapter for a taxable year, the amount of the credit exceeding the liability
1178
may be carried forward for a period which does not exceed the next four taxable years.
1179
(3) (a) [The] Except as provided in Subsection (3)(b), the tax credits provided for
1180
under Subsection (2) are in addition to any tax credits provided under the laws or rules and
1181
regulations of the United States.
1182
(b) A purchaser of one or more solar units that claims a tax credit under Section
1183
59-7-614.2
for the purchase of the one or more solar units may not claim a tax credit under this
1184
section for that purchase.
1185
[(b)] (c) (i) The Utah Geological Survey may set standards for residential and
1186
commercial energy systems claiming a credit under Subsections (2)(a) and (b) that cover the
1187
safety, reliability, efficiency, leasing, and technical feasibility of the systems to ensure that the
1188
systems eligible for the tax credit use the state's renewable and nonrenewable energy resources
1189
in an appropriate and economic manner.
1190
(ii) The Utah Geological Survey may set standards for residential and commercial
1191
energy systems that establish the reasonable costs of an energy system, as used in Subsections
1192
(2)(a)(ii)(A) and (2)(b)(ii)(A), as an amount per unit of energy production.
1193
(iii) A tax credit may not be taken under Subsection (2) until the Utah Geological
1194
Survey has certified that the energy system has been completely installed and is a viable system
1195
for saving or production of energy from renewable resources.
1196
[(c)] (d) The Utah Geological Survey and the commission may make rules in
1197
accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, that are
1198
necessary to implement this section.
1199
(4) (a) On or before October 1, 2012, and every five years thereafter, the Utah Tax
1200
Review Commission shall review each tax credit provided by this section and make
1201
recommendations to the Revenue and Taxation Interim Committee concerning whether the
1202
credit should be continued, modified, or repealed.
1203
(b) The Utah Tax Review Commission's report under Subsection (4)(a) shall include
1204
information concerning the cost of the credit, the purpose and effectiveness of the credit, and
1205
the state's benefit from the credit.
1206
Section 22.
Section
59-7-614.2
is enacted to read:
1207
59-7-614.2. Nonrefundable tax credit for qualifying solar projects.
1208
(1) As used in this section:
1209
(a) "Active solar system" is as defined in Section
59-7-614
.
1210
(b) "Purchaser" means a taxpayer that purchases one or more solar units from a
1211
qualifying political subdivision.
1212
(c) "Qualifying political subdivision" means:
1213
(i) a city or town in this state;
1214
(ii) an interlocal entity created under Title 11, Chapter 13, Interlocal Cooperation Act;
1215
or
1216
(iii) a special service district created under Title 17A, Chapter 2, Part 13, Utah Special
1217
Service District Act.
1218
(d) "Qualifying solar project" means the portion of an active solar system:
1219
(i) that a qualifying political subdivision:
1220
(A) constructs;
1221
(B) controls; or
1222
(C) owns;
1223
(ii) with respect to which the qualifying political subdivision described in Subsection
1224
(1)(c)(i) sells one or more solar units; and
1225
(iii) that generates electrical output that is furnished:
1226
(A) to one or more residential units; or
1227
(B) for the benefit of one or more residential units.
1228
(e) "Residential unit" is as defined in Section
59-7-614
.
1229
(f) "Solar unit" means a portion of the electrical output:
1230
(i) of a qualifying solar project;
1231
(ii) that a qualifying political subdivision sells to a purchaser; and
1232
(iii) the purchase of which requires that the purchaser agree to bear a proportionate
1233
share of the expense of the qualifying solar project:
1234
(A) in accordance with a written agreement between the purchaser and the qualifying
1235
political subdivision;
1236
(B) in exchange for a credit on the purchaser's electrical bill; and
1237
(C) as determined by a formula established by the qualifying political subdivision.
1238
(2) Subject to Subsection (3), for taxable years beginning on or after January 1, 2008, a
1239
purchaser may claim a nonrefundable tax credit equal to the product of:
1240
(a) the amount the purchaser pays to purchase one or more solar units during the
1241
taxable year; and
1242
(b) 25%.
1243
(3) For a taxable year, a tax credit under this section may not exceed $2,000 on a
1244
return.
1245
(4) A purchaser may carry forward a tax credit under this section for a period that does
1246
not exceed the next four taxable years if:
1247
(a) the purchaser is allowed to claim a tax credit under this section for a taxable year;
1248
and
1249
(b) the amount of the tax credit exceeds the purchaser's tax liability under this chapter
1250
for that taxable year.
1251
(5) Subject to Section
59-7-614
, a tax credit under this section is in addition to any
1252
other tax credit allowed by this chapter.
1253
(6) (a) On or before October 1, 2012, and every five years after October 1, 2012, the
1254
Utah Tax Review Commission shall review the tax credit allowed by this section and make
1255
recommendations to the Revenue and Taxation Interim Committee concerning whether the tax
1256
credit should be continued, modified, or repealed.
1257
(b) The Utah Tax Review Commission's report under Subsection (6)(a) shall include
1258
information concerning the cost of the tax credit, the purpose and effectiveness of the tax
1259
credit, and the state's benefit from the tax credit.
1260
Section 23.
Section
59-10-103
is amended to read:
1261
59-10-103. Definitions.
1262
(1) As used in this chapter:
1263
(a) "Adjusted gross income":
1264
(i) for a resident or nonresident individual, is as defined in Section 62, Internal
1265
Revenue Code; or
1266
(ii) for a resident or nonresident estate or trust, is as calculated in Section 67(e),
1267
Internal Revenue Code.
1268
[(b) "Adoption expenses" means:]
1269
[(i) any actual medical and hospital expenses of the mother of the adopted child which
1270
are incident to the child's birth;]
1271
[(ii) any welfare agency fees or costs;]
1272
[(iii) any child placement service fees or costs;]
1273
[(iv) any legal fees or costs; or]
1274
[(v) any other fees or costs relating to an adoption.]
1275
[(c) "Adult with a disability" means an individual who:]
1276
[(i) is 18 years of age or older;]
1277
[(ii) is eligible for services under Title 62A, Chapter 5, Services for People with
1278
Disabilities; and]
1279
[(iii) is not enrolled in:]
1280
[(A) an education program for students with disabilities that is authorized under
1281
Section
53A-15-301
; or]
1282
[(B) a school established under Title 53A, Chapter 25, Schools for the Deaf and Blind.]
1283
[(d) (i) For purposes of Subsection
59-10-114
(2)(l), "capital gain transaction" means a
1284
transaction that results in a:]
1285
[(A) short-term capital gain; or]
1286
[(B) long-term capital gain.]
1287
[(ii) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act,
1288
the commission may by rule define the term "transaction."]
1289
[(e) "Commercial domicile" means the principal place from which the trade or business
1290
of a Utah small business corporation is directed or managed.]
1291
[(f)] (b) "Corporation" includes:
1292
(i) [associations] an association;
1293
(ii) a joint stock [companies] company; and
1294
(iii) an insurance [companies] company.
1295
[(g) "Dependent child with a disability" means an individual 21 years of age or younger
1296
who:]
1297
[(i) (A) is diagnosed by a school district representative under rules adopted by the State
1298
Board of Education as having a disability classified as:]
1299
[(I) autism;]
1300
[(II) deafness;]
1301
[(III) preschool developmental delay;]
1302
[(IV) dual sensory impairment;]
1303
[(V) hearing impairment;]
1304
[(VI) intellectual disability;]
1305
[(VII) multidisability;]
1306
[(VIII) orthopedic impairment;]
1307
[(IX) other health impairment;]
1308
[(X) traumatic brain injury; or]
1309
[(XI) visual impairment;]
1310
[(B) is not receiving residential services from:]
1311
[(I) the Division of Services for People with Disabilities created under Section
1312
62A-5-102
; or]
1313
[(II) a school established under Title 53A, Chapter 25, Schools for the Deaf and Blind;
1314
and]
1315
[(C) is enrolled in:]
1316
[(I) an education program for students with disabilities that is authorized under Section
1317
53A-15-301
; or]
1318
[(II) a school established under Title 53A, Chapter 25, Schools for the Deaf and Blind;
1319
or]
1320
[(ii) is identified under guidelines of the Department of Health as qualified for:]
1321
[(A) Early Intervention; or]
1322
[(B) Infant Development Services.]
1323
[(h)] (c) "Distributable net income" is as defined in Section 643, Internal Revenue
1324
Code.
1325
[(i)] (d) "Employee" is as defined in Section
59-10-401
.
1326
[(j)] (e) "Employer" is as defined in Section
59-10-401
.
1327
[(k)] (f) "Federal taxable income":
1328
(i) for a resident or nonresident individual, means taxable income as defined by Section
1329
63, Internal Revenue Code; or
1330
(ii) for a resident or nonresident estate or trust, is as calculated in Section 641(a) and
1331
(b), Internal Revenue Code.
1332
[(l)] (g) "Fiduciary" means:
1333
(i) a guardian;
1334
(ii) a trustee;
1335
(iii) an executor;
1336
(iv) an administrator;
1337
(v) a receiver;
1338
(vi) a conservator; or
1339
(vii) any person acting in any fiduciary capacity for any individual.
1340
(h) "Guaranteed annuity interest" is as defined in 26 C.F.R. Sec. 1.170A-6(c)(2).
1341
[(m)] (i) "Homesteaded land diminished from the Uintah and Ouray Reservation"
1342
means the homesteaded land that was held to have been diminished from the Uintah and Ouray
1343
Reservation in Hagen v. Utah, 510 U.S. 399 (1994).
1344
[(n)] (j) "Individual" means a natural person and includes aliens and minors.
1345
[(o)] (k) "Irrevocable trust" means a trust in which the settlor may not revoke or
1346
terminate all or part of the trust without the consent of a person who has a substantial beneficial
1347
interest in the trust and the interest would be adversely affected by the exercise of the settlor's
1348
power to revoke or terminate all or part of the trust.
1349
[(p) For purposes of Subsection
59-10-114
(2)(l), "long-term capital gain" is as defined
1350
in Section 1222, Internal Revenue Code.]
1351
(l) "Military service" is as defined in Pub. L. No. 108-189, Sec. 101.
1352
[(q)] (m) "Nonresident individual" means an individual who is not a resident of this
1353
state.
1354
[(r)] (n) "Nonresident trust" or "nonresident estate" means a trust or estate which is not
1355
a resident estate or trust.
1356
[(s)] (o) (i) "Partnership" includes a syndicate, group, pool, joint venture, or other
1357
unincorporated organization:
1358
(A) through or by means of which any business, financial operation, or venture is
1359
carried on; and
1360
(B) which is not, within the meaning of this chapter:
1361
(I) a trust;
1362
(II) an estate; or
1363
(III) a corporation.
1364
(ii) "Partnership" does not include any organization not included under the definition of
1365
"partnership" in Section 761, Internal Revenue Code.
1366
(iii) "Partner" includes a member in a syndicate, group, pool, joint venture, or
1367
organization described in Subsection (1)[(s)](o)(i).
1368
[(t) "Qualifying military servicemember" means a member of:]
1369
[(i) The Utah Army National Guard;]
1370
[(ii) The Utah Air National Guard; or]
1371
[(iii) the following if the member is assigned to a unit that is located in the state:]
1372
[(A) The Army Reserve;]
1373
[(B) The Naval Reserve;]
1374
[(C) The Air Force Reserve;]
1375
[(D) The Marine Corps Reserve; or]
1376
[(E) The Coast Guard Reserve.]
1377
[(u) "Qualifying stock" means stock that is:]
1378
[(i) (A) common; or]
1379
[(B) preferred;]
1380
[(ii) as defined by the commission by rule, originally issued to:]
1381
[(A) a resident or nonresident individual; or]
1382
[(B) a partnership if the resident or nonresident individual making a subtraction from
1383
federal taxable income in accordance with Subsection
59-10-114
(2)(l):]
1384
[(I) was a partner when the stock was issued; and]
1385
[(II) remains a partner until the last day of the taxable year for which the resident or
1386
nonresident individual makes the subtraction from federal taxable income in accordance with
1387
Subsection
59-10-114
(2)(l); and]
1388
[(iii) issued:]
1389
[(A) by a Utah small business corporation;]
1390
[(B) on or after January 1, 2003; and]
1391
[(C) for:]
1392
[(I) money; or]
1393
[(II) other property, except for stock or securities.]
1394
(p) "Qualified nongrantor charitable lead trust" means a trust:
1395
(i) that is irrevocable;
1396
(ii) that has a trust term measured by:
1397
(A) a fixed term of years; or
1398
(B) the life of a person living on the day on which the trust is created;
1399
(iii) under which:
1400
(A) a portion of the value of the trust assets is distributed during the trust term:
1401
(I) to an organization described in Section 170(c), Internal Revenue Code; and
1402
(II) as a:
1403
(Aa) guaranteed annuity interest; or
1404
(Bb) unitrust interest; and
1405
(B) assets remaining in the trust at the termination of the trust term are distributed to a
1406
beneficiary:
1407
(I) designated in the trust; and
1408
(II) that is not an organization described in Section 170(c), Internal Revenue Code;
1409
(iv) for which the trust is allowed a deduction under Section 642(c), Internal Revenue
1410
Code; and
1411
(v) under which the grantor of the trust is not treated as the owner of any portion of the
1412
trust for federal income tax purposes.
1413
[(v)] (q) (i) "Resident individual" means:
1414
(A) an individual who is domiciled in this state for any period of time during the
1415
taxable year, but only for the duration of the period during which the individual is domiciled in
1416
this state; or
1417
(B) an individual who is not domiciled in this state but:
1418
(I) maintains a permanent place of abode in this state; and
1419
(II) spends in the aggregate 183 or more days of the taxable year in this state.
1420
(ii) For purposes of Subsection (1)[(v)] (q)(i)(B), a fraction of a calendar day shall be
1421
counted as a whole day.
1422
[(w)] (r) "Resident estate" or "resident trust" is as defined in Section
75-7-103
.
1423
[(x) For purposes of Subsection
59-10-114
(2)(l), "short-term capital gain" is as defined
1424
in Section 1222, Internal Revenue Code.]
1425
(s) "Servicemember" is as defined in Pub. L. No. 108-189, Sec. 101.
1426
(t) "State income tax percentage for a nonresident estate or trust" means a percentage
1427
equal to a nonresident estate's or trust's state taxable income for the taxable year divided by the
1428
nonresident estate's or trust's total adjusted gross income for that taxable year after making the
1429
adjustments required by:
1430
(i) Section
59-10-202
;
1431
(ii) Section
59-10-207
;
1432
(iii) Section
59-10-209.1
; or
1433
(iv) Section
59-10-210
;
1434
(u) "State income tax percentage for a nonresident individual" means a percentage
1435
equal to a nonresident individual's state taxable income for the taxable year divided by the
1436
difference between:
1437
(i) the nonresident individual's total adjusted gross income for that taxable year, after
1438
making the:
1439
(A) additions and subtractions required by Section
59-10-114
; and
1440
(B) adjustments required by Section
59-10-115
; and
1441
(ii) if the nonresident individual described in Subsection (1)(u)(i) is a servicemember,
1442
the compensation the servicemember receives for military service if the servicemember is
1443
serving in compliance with military orders.
1444
(v) "State income tax percentage for a part-year resident individual" means, for a
1445
taxable year, a fraction:
1446
(i) the numerator of which is the sum of:
1447
(A) subject to Subsections
59-10-1404
(3) and (4), for the time period during the
1448
taxable year that the part-year resident individual is a resident, the part-year resident
1449
individual's total adjusted gross income for that time period, after making the:
1450
(I) additions and subtractions required by Section
59-10-114
; and
1451
(II) adjustments required by Section
59-10-115
; and
1452
(B) for the time period during the taxable year that the part-year resident individual is a
1453
nonresident, an amount calculated by:
1454
(I) determining the part-year resident individual's adjusted gross income for that time
1455
period, after making the:
1456
(Aa) additions and subtractions required by Section
59-10-114
; and
1457
(Bb) adjustments required by Section
59-10-115
; and
1458
(II) calculating the portion of the amount determined under Subsection (1)(v)(i)(B)(I)
1459
that is derived from Utah sources in accordance with Section
59-10-117
; and
1460
(ii) the denominator of which is the difference between:
1461
(A) the part-year resident individual's total adjusted gross income for that taxable year,
1462
after making the:
1463
(I) additions and subtractions required by Section
59-10-114
; and
1464
(II) adjustments required by Section
59-10-115
; and
1465
(B) if the part-year resident individual is a servicemember, any compensation the
1466
servicemember receives for military service during the portion of the taxable year that the
1467
servicemember is a nonresident if the servicemember is serving in compliance with military
1468
orders.
1469
[(y)] (w) "Taxable income" or "state taxable income":
1470
(i) subject to Subsection [
59-10-302
(2)]
59-10-1404
(3), for a resident individual [other
1471
than a resident individual described in Subsection (1)(y)(iii)], means the resident individual's
1472
[federal taxable] adjusted gross income after making the:
1473
(A) additions and subtractions required by Section
59-10-114
; and
1474
(B) adjustments required by Section
59-10-115
;
1475
(ii) for a nonresident individual [other than a nonresident individual described in
1476
Subsection (1)(y)(iii), is as defined in Section
59-10-116
;], is an amount calculated by:
1477
(A) determining the nonresident individual's adjusted gross income for the taxable
1478
year, after making the:
1479
(I) additions and subtractions required by Section
59-10-114
; and
1480
(II) adjustments required by Section
59-10-115
; and
1481
(B) calculating the portion of the amount determined under Subsection (1)(w)(ii)(A)
1482
that is derived from Utah sources in accordance with Section
59-10-117
;
1483
[(iii) for a resident or nonresident individual that collects and pays a tax described in
1484
Part 12, Single Rate Individual Income Tax Act, is as defined in Section
59-10-1202
;]
1485
[(iv)] (iii) for a resident estate or trust, is as calculated under Section
59-10-201.1
; and
1486
[(v)] (iv) for a nonresident estate or trust, is as calculated under Section
59-10-204
.
1487
[(z)] (x) "Taxpayer" means any individual, estate, [or] trust, or beneficiary of an estate
1488
or trust, [whose income is] that has income subject in whole or part to the tax imposed by this
1489
chapter.
1490
(y) "Trust term" means a time period:
1491
(i) beginning on the day on which a qualified nongrantor charitable lead trust is
1492
created; and
1493
(ii) ending on the day on which the qualified nongrantor charitable lead trust described
1494
in Subsection (1)(y)(i) terminates.
1495
[(aa)] (z) "Uintah and Ouray Reservation" means the lands recognized as being
1496
included within the Uintah and Ouray Reservation in:
1497
(i) Hagen v. Utah, 510 U.S. 399 (1994); and
1498
(ii) Ute Indian Tribe v. Utah, 114 F.3d 1513 (10th Cir. 1997).
1499
[(bb) (i) "Utah small business corporation" means a corporation that:]
1500
[(A) is a small business corporation as defined in Section 1244(c)(3), Internal Revenue
1501
Code;]
1502
[(B) except as provided in Subsection (1)(bb)(ii), meets the requirements of Section
1503
1244(c)(1)(C), Internal Revenue Code; and]
1504
[(C) has its commercial domicile in this state.]
1505
[(ii) Notwithstanding Subsection (1)(bb)(i)(B), the time period described in Section
1506
1244(c)(1)(C) and Section 1244(c)(2), Internal Revenue Code, for determining the source of a
1507
corporation's aggregate gross receipts shall end on the last day of the taxable year for which the
1508
resident or nonresident individual makes a subtraction from federal taxable income in
1509
accordance with Subsection
59-10-114
(2)(l).]
1510
(aa) "Unadjusted income" means an amount equal to the difference between:
1511
(i) the total income required to be reported by a resident or nonresident estate or trust
1512
on the resident or nonresident estate's or trust's federal income tax return for estates and trusts
1513
for the taxable year; and
1514
(ii) the sum of the following:
1515
(A) fees paid or incurred to the fiduciary of a resident or nonresident estate or trust: