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Second Substitute S.B. 204
Senator Wayne L. Niederhauser proposes the following substitute bill:
1
INCOME TAXATION AMENDMENTS
2
2008 GENERAL SESSION
3
STATE OF UTAH
4
Chief Sponsor: Wayne L. Niederhauser
5
House Sponsor:
John Dougall
6
7
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, and related provisions to address the income taxation of individuals,
11
estates, and trusts, including real estate investment trusts.
12
Highlighted Provisions:
13
This bill:
14
. defines terms;
15
. addresses the income taxation of a real estate investment trust or income from a real
16
estate investment trust;
17
. repeals provisions imposing an individual income tax on the basis of graduated
18
brackets and rates;
19
. provides that an individual income tax is imposed on the basis of a single tax rate,
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including:
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. modifying and repealing definitions;
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. modifying additions to and subtractions from adjusted gross income;
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. addressing the taxation of a nonresident individual or part-year resident
24
individual; and
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. addressing provisions relating to the determination and reporting of income tax
26
liability and information;
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. addresses the apportionment of business income for purposes of the individual
28
income tax;
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. modifies the income taxation of estates and trusts, including:
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. providing definitions;
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. providing that the tax is calculated on the basis of unadjusted income;
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. modifying additions to and subtractions from unadjusted income; and
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. addressing provisions relating to the determination and reporting of income tax
34
liability and information;
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. addresses the taxation of pass-through entities, including:
36
. providing definitions; and
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. renumbering and amending provisions relating to pass-through entities;
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. renumbers and amends provisions relating to tax credits, including tax credits for:
39
. a taxpayer;
40
. an investment in the Utah Educational Savings Plan Trust; or
41
. 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; or
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. capital gain transactions;
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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 the State Tax Commission; 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 has retrospective operation for taxable years beginning on or after January 1,
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2008.
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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
68
23-14-13, as last amended by Laws of Utah 1995, Chapter 211
69
23-14-14.1, as enacted by Laws of Utah 2003, Chapter 162
70
26-18a-3, as last amended by Laws of Utah 1997, Chapter 1
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26-18a-4, as last amended by Laws of Utah 1997, Chapter 1
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26-48-102, as enacted by Laws of Utah 2006, Chapter 280
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31A-32a-101, as enacted by Laws of Utah 1999, Chapter 131
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31A-32a-103, as enacted by Laws of Utah 1999, Chapter 131
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31A-32a-104, as enacted by Laws of Utah 1999, Chapter 131
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31A-32a-105, as enacted by Laws of Utah 1999, Chapter 131
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31A-32a-106, as last amended by Laws of Utah 2001, Chapter 53
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31A-32a-107, as enacted by Laws of Utah 1999, Chapter 131
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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
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59-7-101, as last amended by Laws of Utah 2004, Chapter 54
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59-7-105, as last amended by Laws of Utah 2007, Chapter 100
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59-7-106, as last amended by Laws of Utah 2007, Chapter 100
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59-7-116.5, as enacted by Laws of Utah 1995, Chapter 311
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59-7-402, as last amended by Laws of Utah 2004, Chapter 54
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59-10-103, as last amended by Laws of Utah 2006, Fourth Special Session, Chapter 2
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59-10-104, as last amended by Laws of Utah 2007, Chapter 288
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59-10-104.1, as last amended by Laws of Utah 2006, Fourth Special Session, Chapter 2
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59-10-110, as renumbered and amended by Laws of Utah 1987, Chapter 2
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59-10-114, as last amended by Laws of Utah 2007, Chapter 100
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59-10-115, as last amended by Laws of Utah 2006, Fourth Special Session, Chapter 2
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59-10-116, as last amended by Laws of Utah 2006, Fourth Special Session, Chapter 2
93
59-10-117, as last amended by Laws of Utah 2006, Fourth Special Session, Chapter 2
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59-10-118, as last amended by Laws of Utah 1995, Chapter 311
95
59-10-119, as renumbered and amended by Laws of Utah 1987, Chapter 2
96
59-10-120, as renumbered and amended by Laws of Utah 1987, Chapter 2
97
59-10-121, as renumbered and amended by Laws of Utah 1987, Chapter 2
98
59-10-122, as renumbered and amended by Laws of Utah 1987, Chapter 2
99
59-10-123, as renumbered and amended by Laws of Utah 1987, Chapter 2
100
59-10-124, as renumbered and amended by Laws of Utah 1987, Chapter 2
101
59-10-125, as renumbered and amended by Laws of Utah 1987, Chapter 2
102
59-10-126, as last amended by Laws of Utah 1995, Chapter 311
103
59-10-201, as last amended by Laws of Utah 2007, Chapter 100
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59-10-201.1, as last amended by Laws of Utah 2006, Chapter 223
105
59-10-202, as last amended by Laws of Utah 2007, Chapter 100
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59-10-204, as last amended by Laws of Utah 2006, Chapter 223
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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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59-10-1106, as enacted by Laws of Utah 2007, Chapter 288
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ENACTS:
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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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59-10-1301, Utah Code Annotated 1953
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59-10-1302, Utah Code Annotated 1953
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59-10-1303, Utah Code Annotated 1953
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59-10-1401, Utah Code Annotated 1953
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59-10-1402, Utah Code Annotated 1953
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RENUMBERS AND AMENDS:
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59-10-1002.1, (Renumbered from 59-10-1016, as renumbered and amended by Laws of
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Utah 2006, Chapter 223)
125
59-10-1002.2, (Renumbered from 59-10-1206.9, as enacted by Laws of Utah 2007,
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Chapter 288)
127
59-10-1017, (Renumbered from 59-10-1206.1, as enacted by Laws of Utah 2007,
128
Chapter 100)
129
59-10-1018, (Renumbered from 59-10-1206.2, as enacted by Laws of Utah 2007,
130
Chapter 288)
131
59-10-1019, (Renumbered from 59-10-1206.3, as enacted by Laws of Utah 2007,
132
Chapter 288)
133
59-10-1304, (Renumbered from 59-10-551, as last amended by Laws of Utah 2006,
134
Chapter 280)
135
59-10-1305, (Renumbered from 59-10-530, as last amended by Laws of Utah 1997,
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Chapter 12)
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59-10-1306, (Renumbered from 59-10-530.5, as last amended by Laws of Utah 2003,
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Chapter 132)
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59-10-1307, (Renumbered from 59-10-549, as last amended by Laws of Utah 2005,
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Chapter 208)
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59-10-1308, (Renumbered from 59-10-550, as last amended by Laws of Utah 1997,
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Chapters 1 and 12)
143
59-10-1309, (Renumbered from 59-10-550.1, as enacted by Laws of Utah 2003,
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Chapter 162)
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59-10-1310, (Renumbered from 59-10-550.2, as enacted by Laws of Utah 2006,
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Chapter 280)
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59-10-1311, (Renumbered from 59-10-547, as last amended by Laws of Utah 1998,
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Chapter 269)
149
59-10-1312, (Renumbered from 59-10-548, as last amended by Laws of Utah 2002,
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Chapters 107 and 256)
151
59-10-1403, (Renumbered from 59-10-301, as renumbered and amended by Laws of
152
Utah 1987, Chapter 2)
153
59-10-1404, (Renumbered from 59-10-302, as renumbered and amended by Laws of
154
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:
158
59-10-206, as last amended by Laws of Utah 1995, Chapter 345
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59-10-801, as last amended by Laws of Utah 1997, Chapter 159
160
59-10-1201, as enacted by Laws of Utah 2006, Fourth Special Session, Chapter 2
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59-10-1202, as last amended by Laws of Utah 2007, Chapters 100 and 288
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59-10-1203, as last amended by Laws of Utah 2007, Chapters 100 and 288
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59-10-1204, as enacted by Laws of Utah 2006, Fourth Special Session, Chapter 2
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59-10-1205, as enacted by Laws of Utah 2006, Fourth Special Session, Chapter 2
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59-10-1206, as enacted by Laws of Utah 2006, Fourth Special Session, Chapter 2
166
59-10-1207, as enacted by Laws of Utah 2006, Fourth Special Session, Chapter 2
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Be it enacted by the Legislature of the state of Utah:
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Section 1.
Section
9-4-802
is amended to read:
170
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
173
provided to the homeless by state agencies, local governments, and private organizations are
174
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
177
activities and, where needed, special services to meet the unique needs of the homeless who
178
have families with children, or who are mentally ill, disabled, or suffer from other serious
179
challenges to employment and self-sufficiency.
180
(c) The committee may also fund treatment programs to ameliorate the effects of
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substance abuse or a disability.
182
(2) The committee members designated in Subsection
9-4-801
(2) shall:
183
(a) award contracts funded by the Pamela Atkinson Homeless Trust Account with the
184
advice and input of those designated in Subsection
9-4-801
(3);
185
(b) consider need, diversity of geographic location, coordination with or enhancement
186
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
194
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
196
(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
199
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.
201
(b) If there are decreases in contributions to the account, the committee may expend
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funds held in reserve to provide program stability, but the committee shall reimburse the
203
amounts of those expenditures to the reserve fund.
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(5) The committee shall make an annual report to the Economic Development and
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Human Resources Appropriations Subcommittee regarding the programs and services funded
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by contributions to the Pamela Atkinson Homeless Trust Account.
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(6) The moneys in the Pamela Atkinson Homeless Trust Account shall be invested by
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the state treasurer according to the procedures and requirements of Title 51, Chapter 7, State
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Money Management Act, except that all interest or other earnings derived from the fund
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moneys shall be deposited in the fund.
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Section 2.
Section
9-4-803
is amended to read:
212
9-4-803. Creation of Pamela Atkinson Homeless Trust Account.
213
(1) There is created a restricted account within the General Fund to be known as the
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Pamela Atkinson Homeless Trust Account.
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(2) Private contributions received under this section and Section [
59-10-530.5
]
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59-10-1306
shall be deposited into the account to be used only for programs described in
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Section
9-4-802
.
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(3) Money shall be appropriated from the account to the State Homeless Coordinating
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Committee in accordance with the Utah Budgetary Procedures Act.
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(4) The State Homeless Coordinating Committee may accept transfers, grants, gifts,
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bequests, or any money made available from any source to implement this part.
222
Section 3.
Section
23-14-13
is amended to read:
223
23-14-13. Wildlife Resources Account.
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(1) The Wildlife Resources Account [within the General Fund] is established within
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the General Fund.
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(2) The following monies shall be deposited into the Wildlife Resources Account:
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(a) revenue from the sale of licenses, permits, tags, and certificates of registration
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issued under this title or a rule or proclamation of the Wildlife Board, except as otherwise
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provided by this title;
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(b) revenue from the sale, lease, rental, or other granting of rights of real or personal
231
property acquired with revenue specified in Subsection (a);
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(c) revenue from fines and forfeitures for violations of this title or any rule,
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proclamation, or order of the Wildlife Board, minus court costs not to exceed the schedule
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adopted by the Judicial Council;
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(d) funds appropriated from the General Fund by the Legislature pursuant to Section
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23-19-39
;
237
(e) other monies received by the division under any provision of this title, except as
238
otherwise provided by this title; [and]
239
(f) contributions made in accordance with Section
59-10-1305
; and
240
[(f)] (g) interest, dividends, or other income earned on account monies.
241
(3) Monies in the Wildlife Resources Account shall be used for the administration of
242
this title.
243
Section 4.
Section
23-14-14.1
is amended to read:
244
23-14-14.1. Wolf Depredation and Management Restricted Account -- Interest --
245
Use of contributions and interest.
246
(1) There is created within the General Fund the Wolf Depredation and Management
247
Restricted Account.
248
(2) The account shall be funded by contributions deposited into the Wolf Depredation
249
and Management Restricted Account in accordance with Section [
59-10-550.1
]
59-10-1309
.
250
(3) (a) The Wolf Depredation and Management Restricted Account shall earn interest.
251
(b) Interest earned on the Wolf Depredation and Management Restricted Account shall
252
be deposited into the Wolf Depredation and Management Restricted Account.
253
(4) (a) Subject to Subsection (4)(b), contributions and interest deposited into the Wolf
254
Depredation and Management Restricted Account shall be used by the Division of Wildlife
255
Resources for:
256
(i) payments for livestock depredation by wolves; or
257
(ii) wolf management.
258
(b) Contributions and interest deposited into the Wolf Depredation and Management
259
Restricted Account may be used for the purposes described in Subsection (4)(a) only to the
260
extent permitted by federal law.
261
Section 5.
Section
26-18a-3
is amended to read:
262
26-18a-3. Purpose of committee.
263
(1) The committee shall work to:
264
(a) provide financial assistance for initial medical expenses of children who need organ
265
transplants;
266
(b) obtain the assistance of volunteer and public service organizations; and
267
(c) fund activities as the committee designates for the purpose of educating the public
268
about the need for organ donors.
269
(2) (a) The committee is responsible for awarding financial assistance funded by the
270
trust account.
271
(b) The financial assistance awarded by the committee under Subsection (1)(a) shall be
272
in the form of interest free loans. The committee may establish terms for repayment of the
273
loans, including a waiver of the requirement to repay any awards if, in the committee's
274
judgment, repayment of the loan would impose an undue financial burden on the recipient.
275
(c) In making financial awards under Subsection (1)(a), the committee shall consider:
276
(i) need;
277
(ii) coordination with or enhancement of existing services or financial assistance,
278
including availability of insurance or other state aid;
279
(iii) the success rate of the particular organ transplant procedure needed by the child;
280
and
281
(iv) the extent of the threat to the child's life without the organ transplant.
282
(3) The committee may only provide the assistance described in this section to children
283
who have resided in Utah, or whose legal guardians have resided in Utah for at least six months
284
prior to the date of assistance under this section.
285
(4) (a) The committee may expend up to 5% of its annual appropriation for
286
administrative costs associated with the allocation of funds from the trust account.
287
(b) The administrative costs shall be used for the costs associated with staffing the
288
committee and for State Tax Commission costs in implementing Section [
59-10-550
]
289
59-10-1308
.
290
(5) The committee shall make an annual report to the Health and Human Services
291
Appropriations Subcommittee regarding the programs and services funded by contributions to
292
the trust account.
293
Section 6.
Section
26-18a-4
is amended to read:
294
26-18a-4. Creation of Kurt Oscarson Children's Organ Transplant Trust
295
Account.
296
(1) There is created a restricted account within the General Fund pursuant to Section
297
51-5-4
known as the Kurt Oscarson Children's Organ Transplant Trust Account. Private
298
contributions received under this section and Section [
59-10-550
]
59-10-1308
shall be
299
deposited into the trust account to be used only for the programs and purposes described in
300
Section
26-18a-3
.
301
(2) Money shall be appropriated from the trust account to the committee in accordance
302
with Title 63, Chapter 38, Budgetary Procedures Act.
303
(3) In addition to funds received under Section [
59-10-550
]
59-10-1308
, the committee
304
may accept transfers, grants, gifts, bequests, or any money made available from any source to
305
implement this chapter.
306
Section 7.
Section
26-48-102
is amended to read:
307
26-48-102. Cat and Dog Community Spay and Neuter Program Restricted
308
Account -- Interest -- Use of contributions and interest.
309
(1) There is created within the General Fund the Cat and Dog Community Spay and
310
Neuter Program Restricted Account.
311
(2) The account shall be funded by contributions deposited into the Cat and Dog
312
Community Spay and Neuter Program Restricted Account in accordance with Section
313
[
59-10-550.2
]
59-10-1310
.
314
(3) (a) The Cat and Dog Community Spay and Neuter Program Restricted Account
315
shall earn interest.
316
(b) Interest earned on the Cat and Dog Community Spay and Neuter Program
317
Restricted Account shall be deposited into the Cat and Dog Community Spay and Neuter
318
Program Restricted Account.
319
(4) The department shall distribute contributions and interest deposited into the Cat and
320
Dog Community Spay and Neuter Program Restricted Account to one or more organizations
321
that:
322
(a) are exempt from federal income taxation under Section 501(c)(3), Internal Revenue
323
Code;
324
(b) operate a mobile spay and neuter clinic for cats and dogs;
325
(c) provide annual spay and neuter services at the mobile spay and neuter clinic
326
described in Subsection (4)(b):
327
(i) to one or more communities in at least 20 counties in the state; and
328
(ii) by veterinarians who are licensed by Title 58, Chapter 28, Veterinary Practice Act;
329
and
330
(d) (i) spay and neuter cats and dogs owned by persons having low incomes; and
331
(ii) have established written guidelines for determining what constitutes a person
332
having a low income in accordance with any rules made by the department as authorized by
333
Subsection (5)(c).
334
(5) (a) An organization described in Subsection (4) may apply to the department to
335
receive a distribution in accordance with Subsection (4).
336
(b) An organization that receives a distribution from the department in accordance with
337
Subsection (4):
338
(i) shall expend the distribution only to spay or neuter dogs and cats:
339
(A) owned by persons having low incomes;
340
(B) by veterinarians who are licensed by Title 58, Chapter 28, Veterinary Practice Act;
341
(C) through a statewide voucher program; and
342
(D) at a location that:
343
(I) is not a mobile spay and neuter clinic; and
344
(II) does not receive any funding from a governmental entity; and
345
(ii) may not expend the distribution for any administrative cost relating to an
346
expenditure authorized by Subsection (5)(b)(i).
347
(c) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
348
department may make rules:
349
(i) providing procedures and requirements for an organization to apply to the
350
department to receive a distribution in accordance with Subsection (4); and
351
(ii) to define what constitutes a person having a low income.
352
Section 8.
Section
31A-32a-101
is amended to read:
353
31A-32a-101. Title and scope.
354
(1) This chapter is known as the "Medical Care Savings Account Act."
355
(2) (a) This chapter applies only to a medical care savings [accounts] account
356
established for the purpose of seeking a tax [deduction] credit under Section [
59-10-114
]
357
59-10-1021
.
358
(b) This chapter does not apply to a medical care savings [accounts that will not be
359
subject to tax deductions under Section
59-10-114
] account with respect to which a tax credit is
360
not claimed under Section
59-10-1021
.
361
Section 9.
Section
31A-32a-103
is amended to read:
362
31A-32a-103. Establishing medical care savings accounts.
363
[(1) For tax years beginning 1995, both of the following apply:]
364
(1) For a taxable year beginning on or after January 1, 1995:
365
(a) an employer, except as otherwise provided by contract or a collective bargaining
366
agreement, may offer a medical care savings account program to the employer's employees;
367
[and] or
368
(b) a resident individual may establish a medical care savings account program for the
369
individual or for the individual's dependents.
370
(2) (a) A contribution into an account made by an employer on behalf of an employee,
371
or made by an individual account holder may not exceed the greater of:
372
[(a)] (i) $2,000 in any [tax] taxable year; or
373
(ii) an amount of money equal to the sum of all eligible medical expenses paid by the
374
employee or account holder [in] for that [tax] taxable year on behalf of the employee, account
375
holder, or the employee's or account holder's spouse or dependents.
376
(b) For purposes of Subsection (2)(a)(ii), eligible medical expenses [as defined in
377
Subsection
31A-32a-102
(5),] are limited to expenses in [that tax year which] the taxable year
378
that an insurance carrier has applied to the employee's or account holder's deductible.
379
(3) An employer that offers a medical care savings account program shall, before
380
making any contributions:
381
(a) inform all employees in writing of the fact that these contributions may not be
382
deductible under the federal tax laws; and
383
(b) obtain from the employee a written election to participate in the medical care
384
savings account program.
385
(4) Except as provided in Sections
31A-32a-105
and
59-10-114
, principal contributed
386
to and interest earned on a medical care savings account and money reimbursed to an employee
387
or account holder for eligible medical expenses are exempt from taxation.
388
(5) (a) An employer may select a single account administrator for all of the employer's
389
employee's medical care savings accounts.
390
(b) If a single account administrator is not selected, an employer may contribute
391
directly to the account holder's individual medical care savings account.
392
Section 10.
Section
31A-32a-104
is amended to read:
393
31A-32a-104. Administration of medical care savings account.
394
(1) An account administrator shall administer the medical care savings account from
395
which the payment of claims is made and has a fiduciary duty to the person for whose benefit
396
the account administrator administers an account.
397
(2) (a) Except as provided in Subsection
31A-32a-105
(1), the account administrator
398
shall use the funds held in a medical care savings account solely for the purpose of paying or
399
reimbursing the employee or account holder for eligible medical expenses of the employee or
400
account holder or of the employee's or account holder's dependents.
401
(b) The commissioner shall adopt rules concerning the coordination of benefits
402
between a medical care savings account and medical expenses payable from automobile
403
insurance policies, workers' compensation insurance policies, or other health care insurance
404
policies or contracts.
405
(3) The employee or account holder may submit documentation of eligible medical
406
expenses paid by the employee or account holder in the [tax] taxable year to the account
407
administrator, and the account administrator shall reimburse the employee or account holder
408
from the employee's or account holder's account for eligible medical expenses.
409
(4) If an employer makes contributions to a medical care savings account program on a
410
periodic installment basis, the employer may advance to an employee an amount necessary to
411
cover eligible medical expenses incurred that exceed the amount in the employee's medical
412
care savings account at the time the expense is incurred if the employee agrees to repay the
413
advance.
414
Section 11.
Section
31A-32a-105
is amended to read:
415
31A-32a-105. Withdrawals -- Termination -- Transfers.
416
(1) Subject to Subsection (3), if the employee or account holder withdraws money for
417
any purpose other than a medical expense at any time in which the balance in the account is
418
below $4,000 [all of the following apply]:
419
(a) the amount of the withdrawal [is income for the purposes of Title 59, Chapter 10,
420
Individual Income Tax Act] shall be added to adjusted gross income in accordance with
421
Section
59-10-114
; and
422
(b) the administrator shall withhold from the amount of the withdrawal, and on behalf
423
of the employee or account holder shall pay a penalty to the State Tax Commission equal to
424
10% of the amount of the withdrawal.
425
(2) If an employee or account holder withdraws money from the employee's or account
426
holder's medical care savings account for any purpose other than a medical expense, but the
427
withdrawal occurs when the balance in the medical care savings account is over $4,000, and
428
the withdrawal will not result in the account balance dropping below $4,000, the amount of the
429
withdrawal:
430
(a) is not subject to the penalties described in Subsection (1)(b); and
431
[(b) is subject to taxation as provided in Subsection (1)(a).]
432
(b) shall be added to adjusted gross income in accordance with Section
59-10-114
.
433
(3) The amount of a disbursement of any assets of a medical care savings account
434
pursuant to a filing for protection under [Title 11 of the United States Code,] 11 U.S.C. Sec.
435
101 to 1330, by an employee, account holder, or person for whose benefit the account was
436
established:
437
(a) is not considered a withdrawal for purposes of this section; and
438
[(b) is subject to taxation under Title 59, Chapter 10, Individual Income Tax Act.]
439
(b) shall be added to adjusted gross income in accordance with Section
59-10-114
.
440
(4) (a) Upon the death of the employee or account holder, the account administrator
441
shall distribute the principal and accumulated interest of the medical care savings account to
442
the estate of the employee or account holder.
443
(b) A distribution under this Subsection (4) is not subject to the penalties described in
444
Subsection (1)(b).
445
(5) (a) If an employee is no longer employed by an employer that participates in a
446
medical care savings account program, and if the employee's account is administered by the
447
employer's account administrator, the money in the medical care savings account may be used
448
for the benefit of the employee or the employee's dependents in accordance with this chapter,
449
and [remains exempt from taxation] may not be added to adjusted gross income under Section
450
59-10-114
if the employee, not more than 60 days after the employee's final day of
451
employment:
452
(i) transfers the account to a new account administrator; or
453
(ii) (A) requests in writing to the former employer's account administrator that the
454
account remain with that administrator; and
455
(B) the account administrator agrees to retain the account.
456
(b) Not more than 30 days after the expiration of the 60 days described in Subsection
457
(5)(a), if an account administrator has not accepted the former employee's account, the
458
employer shall mail a check to the former employee at the employee's last-known address equal
459
to the amount in the account on that day.
460
(c) The amount mailed to the employee [is subject to taxation pursuant to Subsection
461
(1)(a)] under Subsection (5)(b) shall be added to adjusted gross income in accordance with
462
Section
59-10-114
, but is not subject to the penalties under Subsection (1)(b).
463
(d) If an employee becomes employed with a different employer that participates in a
464
medical care savings account program, the employee may transfer the employee's medical care
465
savings account to that new employer's account administrator.
466
(e) If an account holder becomes an employee of an employer that participates in a
467
medical care savings account program, the account holder may transfer the account holder's
468
account to the employer's account administrator.
469
Section 12.
Section
31A-32a-106
is amended to read:
470
31A-32a-106. Regulation of account administrators -- Administration of addition
471
to adjusted gross income and tax credit -- Rulemaking authority.
472
(1) The department shall regulate account administrators and may adopt rules
473
necessary to administer this chapter.
474
(2) The State Tax Commission may adopt rules necessary to monitor and implement
475
the [tax deductions established by this chapter and Section
59-10-114
.]:
476
(a) amounts required to be added to adjusted gross income in accordance with Sections
477
31A-32a-105
and
59-10-114
; or
478
(b) amount claimed as a tax credit in accordance with Section
59-10-1021
.
479
Section 13.
Section
31A-32a-107
is amended to read:
480
31A-32a-107. Penalties for noncompliance with tax provisions.
481
(1) An account administrator who fails to comply with [the statutes and rules
482
governing the tax deduction established by this chapter and Section
59-10-114
] a provision
483
described in Subsection (2) is subject to:
484
[(1)] (a) the civil penalties provided in Section
59-1-401
; and
485
[(2)] (b) interest at the rate and in the manner provided in Section
59-1-402
.
486
(2) The following provisions apply to Subsection (1):
487
(a) a provision of this chapter relating to:
488
(i) an addition to income made in accordance with Section
59-10-114
; or
489
(ii) a tax credit allowed by Section
59-10-1021
; or
490
(b) a provision of Title 59, Chapter 10, Individual Income Tax Act, relating to:
491
(i) an addition to income made in accordance with Section
59-10-114
; or
492
(ii) a tax credit allowed by Section
59-10-1021
.
493
Section 14.
Section
48-2c-117
is amended to read:
494
48-2c-117. Taxation of limited liability companies.
495
A company established under this chapter or a foreign company transacting business in
496
this state shall be taxed as provided in [Section
59-10-801
] Subsection
59-10-1403
(4).
497
Section 15.
Section
53B-8a-106
is amended to read:
498
53B-8a-106. Account agreements.
499
The Utah Educational Savings Plan Trust may enter into account agreements with
500
account owners on behalf of beneficiaries under the following terms and agreements:
501
(1) (a) An account agreement may require an account owner to agree to invest a
502
specific amount of money in the Utah Educational Savings Plan Trust for a specific period of
503
time for the benefit of a specific beneficiary, not to exceed an amount determined by the
504
program administrator.
505
(b) Account agreements may be amended to provide for adjusted levels of payments
506
based upon changed circumstances or changes in educational plans.
507
(c) An account owner may make additional optional payments as long as the total
508
payments for a specific beneficiary do not exceed the total estimated higher education costs as
509
determined by the program administrator.
510
(d) Subject to Subsection (1)(f), the maximum amount of a qualified investment that a
511
corporation that is an account owner may subtract from unadjusted income for a taxable year in
512
accordance with Title 59, Chapter 7, Corporate Franchise and Income Taxes, is [$1,560]
513
$1,650 for each individual beneficiary for the taxable year beginning on or after January 1,
514
[2006] 2008, but beginning on or before December 31, [2006] 2008.
515
(e) Subject to Subsection (1)(f), the maximum amount of a qualified investment that
516
may be [subtracted from federal taxable income of a resident or nonresident individual for a
517
taxable year in accordance with Section
59-10-114
, a resident or nonresident estate or trust for
518
a taxable year in accordance with Section
59-10-202
, or] used as the basis for claiming a tax
519
credit [for a taxable year by a resident or nonresident individual] in accordance with Section
520
[
59-10-1206.1
]
59-10-1017
, is:
521
(i) for a resident or nonresident estate or trust that is an account owner, [$1,560] $1,650
522
for each individual beneficiary for the taxable year beginning on or after January 1, [2006]
523
2008, but beginning on or before December 31, [2006] 2008;
524
(ii) for a resident or nonresident individual that is an account owner, other than a
525
husband and wife who are account owners and file a single return jointly, [$1,560] $1,650 for
526
each individual beneficiary for the taxable year beginning on or after January 1, [2006] 2008,
527
but beginning on or before December 31, [2006] 2008; or
528
(iii) for a husband and wife who are account owners and file a single return jointly,
529
[$3,120] $3,300 for each individual beneficiary:
530
(A) for the taxable year beginning on or after January 1, [2006] 2008, but beginning on
531
or before December 31, [2006] 2008; and
532
(B) regardless of whether the Utah Educational Savings Plan Trust has entered into:
533
(I) a separate account agreement with each spouse; or
534
(II) a single account agreement with both spouses jointly.
535
(f) (i) For taxable years beginning on or after January 1, [2007] 2009, the program
536
administrator shall increase or decrease the maximum amount of a qualified investment
537
described in Subsections (1)(d) and (1)(e)(i) and (ii), by a percentage equal to the percentage
538
difference between the consumer price index for the preceding calendar year and the consumer
539
price index for the calendar year [2005] 2007.
540
(ii) After making an increase or decrease required by Subsection (1)(f)(i), the program
541
administrator shall:
542
(A) round the maximum amount of the qualified investments described in Subsections
543
(1)(d) and (1)(e)(i) and (ii) increased or decreased under Subsection (1)(f)(i) to the nearest ten
544
dollar increment; and
545
(B) increase or decrease the maximum amount of the qualified investment described in
546
Subsection (1)(e)(iii) so that the maximum amount of the qualified investment described in
547
Subsection (1)(e)(iii) is equal to the product of:
548
(I) the maximum amount of the qualified investment described in Subsection (1)(e)(ii)
549
as rounded under Subsection (1)(f)(ii)(A); and
550
(II) two.
551
(iii) For purposes of Subsections (1)(f)(i) and (ii), the program administrator shall
552
calculate the consumer price index as provided in Sections 1(f)(4) and 1(f)(5), Internal Revenue
553
Code.
554
(2) (a) (i) Beneficiaries designated in account agreements must be designated after
555
birth and before age 19 for an account owner to:
556
(A) subtract a qualified investment from income under[:(I)] Title 59, Chapter 7,
557
Corporate Franchise and Income Taxes; or
558
[(II) Section
59-10-114
; or]
559
[(III) Section
59-10-202
; or]
560
(B) use a qualified investment as the basis for claiming a tax credit in accordance with
561
Section [
59-10-1206.1
]
59-10-1017
.
562
(ii) If the beneficiary is designated after birth and before age 19, the payment of
563
benefits provided under the account agreement must begin not later than the beneficiary's 27th
564
birthday.
565
(b) (i) Account owners may designate [beneficiaries] a beneficiary age 19 or older, but
566
investments for [those beneficiaries] that beneficiary are not eligible [for subtraction from
567
federal taxable income.] to be:
568
(A) subtracted from income under Title 59, Chapter 7, Corporate Franchise and Income
569
Taxes; or
570
(B) used as the basis for claiming a tax credit in accordance with Section
59-10-1017
.
571
(ii) If a beneficiary age 19 or older is designated, the payment of benefits provided
572
under the account agreement must begin not later than ten years from the account agreement
573
date.
574
(3) Each account agreement shall state clearly that there are no guarantees regarding
575
moneys in the Utah Educational Savings Plan Trust as to the return of principal and that losses
576
could occur.
577
(4) Each account agreement shall provide that:
578
(a) [no] a contributor to, or designated beneficiary under, an account agreement may
579
not direct the investment of any contributions or earnings on contributions;
580
(b) [no] any part of the money in any account may not be used as security for a loan;
581
and
582
(c) [no] an account owner may not borrow from the Utah Educational Savings Plan
583
Trust.
584
(5) The execution of an account agreement by the trust may not guarantee in any way
585
that higher education costs will be equal to projections and estimates provided by the Utah
586
Educational Savings Plan Trust or that the beneficiary named in any participation agreement
587
will:
588
(a) be admitted to an institution of higher education;
589
(b) if admitted, be determined a resident for tuition purposes by the institution of
590
higher education, unless the account agreement is vested;
591
(c) be allowed to continue attendance at the institution of higher education following
592
admission; or
593
(d) graduate from the institution of higher education.
594
(6) [Beneficiaries] A beneficiary may be changed as permitted by the rules and
595
regulations of the board upon written request of the account owner prior to the date of
596
admission of any beneficiary under an account agreement by an institution of higher education
597
so long as the substitute beneficiary is eligible for participation.
598
(7) [Account agreements] An account agreement may be freely amended throughout
599
[their terms] the term of the account agreement in order to enable [account owners] an account
600
owner to increase or decrease the level of participation, change the designation of beneficiaries,
601
and carry out similar matters as authorized by rule.
602
(8) Each account agreement shall provide that:
603
(a) the account agreement may be canceled upon the terms and conditions, and upon
604
payment of the fees and costs set forth and contained in the board's rules and regulations; and
605
(b) the program administrator may amend the agreement unilaterally and retroactively,
606
if necessary, to maintain the Utah Educational Savings Plan Trust as a qualified tuition
607
program under Section 529, Internal Revenue Code.
608
Section 16.
Section
59-7-101
is amended to read:
609
59-7-101. Definitions.
610
As used in this chapter:
611
(1) "Adjusted income" means unadjusted income as modified by Sections
59-7-105
612
and
59-7-106
.
613
(2) (a) "Affiliated group" means one or more chains of corporations that are connected
614
through stock ownership with a common parent corporation that meet the following
615
requirements:
616
(i) at least 80% of the stock of each of the corporations in the group, excluding the
617
common parent corporation, is owned by one or more of the other corporations in the group;
618
and
619
(ii) the common parent directly owns at least 80% of the stock of at least one of the
620
corporations in the group.
621
(b) "Affiliated group" does not include corporations that are qualified to do business
622
but are not otherwise doing business in this state.
623
(c) For purposes of this Subsection (2), "stock" does not include nonvoting stock which
624
is limited and preferred as to dividends.
625
(3) "Apportionable income" means adjusted income less nonbusiness income net of
626
related expenses, to the extent included in adjusted income.
627
(4) "Apportioned income" means apportionable income multiplied by the
628
apportionment fraction as determined in Section
59-7-311
.
629
(5) "Business income" is as defined in Section
59-7-302
.
630
(6) (a) "Captive real estate investment trust" means a real estate investment trust if:
631
(i) the shares or beneficial interests of the real estate investment trust are not regularly
632
traded on an established securities market; and
633
(ii) more than 50% of the voting power or value of the shares or beneficial interests of
634
the real estate investment trust are directly, indirectly, or constructively:
635
(A) owned by a controlling entity of the real estate investment trust; or
636
(B) controlled by a controlling entity of the real estate investment trust.
637
(b) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
638
commission may make rules defining "established securities market."
639
(7) (a) "Controlling entity of a captive real estate investment trust" means an entity
640
that:
641
(i) is treated as an association taxable as a corporation under the Internal Revenue
642
Code;
643
(ii) is not exempt from federal income taxation under Section 501(a), Internal Revenue
644
Code; and
645
(iii) directly, indirectly, or constructively holds more than 50% of:
646
(A) the voting power of a captive real estate investment trust; or
647
(B) the value of the shares or beneficial interests of a captive real estate investment
648
trust.
649
(b) "Controlling entity of a captive real estate investment trust" does not include:
650
(i) a real estate investment trust, except for a captive real estate investment trust;
651
(ii) a qualified real estate investment subsidiary described in Section 856(i), Internal
652
Revenue Code, except for a qualified real estate investment trust subsidiary of a captive real
653
estate investment trust; or
654
(iii) a foreign real estate investment trust.
655
(c) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
656
commission may make rules defining "established securities market."
657
[(7)] (8) (a) "Common ownership" means the direct or indirect control or ownership of
658
more than 50% of the outstanding voting stock of:
659
(i) a parent-subsidiary controlled group as defined in Section 1563, Internal Revenue
660
Code, except that 50% shall be substituted for 80%;
661
(ii) a brother-sister controlled group as defined in Section 1563, Internal Revenue
662
Code, except that 50% shall be substituted for 80%; or
663
(iii) three or more corporations each of which is a member of a group of corporations
664
described in Subsection (2)(a)(i) or (2)(a)(ii), and one of which is:
665
(A) a common parent corporation included in a group of corporations described in
666
Subsection (2)(a)(i); and
667
(B) included in a group of corporations described in Subsection (2)(a)(ii).
668
(b) Ownership of outstanding voting stock shall be determined by Section 1563,
669
Internal Revenue Code.
670
[(6)] (9) "Corporate return" or "return" includes a combined report.
671
[(8)] (10) "Corporation" includes:
672
(a) entities defined as corporations under Sections 7701(a) and 7704, Internal Revenue
673
Code; and
674
(b) other organizations that are taxed as corporations for federal income tax purposes
675
under the Internal Revenue Code.
676
[(9)] (11) "Dividend" means any distribution, including money or other type of
677
property, made by a corporation to its shareholders out of its earnings or profits accumulated
678
after December 31, 1930.
679
[(10)] (12) (a) "Doing business" includes any transaction in the course of its business
680
by a domestic corporation, or by a foreign corporation qualified to do or doing intrastate
681
business in this state.
682
(b) Except as provided in Subsection
59-7-102
(2), "doing business" includes:
683
(i) the right to do business through incorporation or qualification;
684
(ii) the owning, renting, or leasing of real or personal property within this state; and
685
(iii) the participation in joint ventures, working and operating agreements, the
686
performance of which takes place in this state.
687
[(11)] (13) "Domestic corporation" means a corporation that is incorporated or
688
organized under the laws of this state.
689
[(12)] (14) (a) "Farmers' cooperative" means an association, corporation, or other
690
organization that is:
691
(i) (A) an association, corporation, or other organization of:
692
(I) farmers; or
693
(II) fruit growers; or
694
(B) an association, corporation, or other organization that is similar to an association,
695
corporation, or organization described in Subsection [(12)] (14)(a)(i)(A); and
696
(ii) organized and operated on a cooperative basis to:
697
(A) (I) market the products of members of the cooperative or the products of other
698
producers; and
699
(II) return to the members of the cooperative or other producers the proceeds of sales
700
less necessary marketing expenses on the basis of the quantity of the products of a member or
701
producer or the value of the products of a member or producer; or
702
(B) (I) purchase supplies and equipment for the use of members of the cooperative or
703
other persons; and
704
(II) turn over the supplies and equipment described in Subsection [(12)]
705
(14)(a)(ii)(B)(I) at actual costs plus necessary expenses to the members of the cooperative or
706
other persons.
707
(b) (i) Subject to Subsection [(12)] (14)(b)(ii), for purposes of this Subsection [(12)]
708
(14), the commission by rule, made in accordance with Title 63, Chapter 46a, Utah
709
Administrative Rulemaking Act, shall define:
710
(A) the terms:
711
(I) "member"; and
712
(II) "producer"; and
713
(B) what constitutes an association, corporation, or other organization that is similar to
714
an association, corporation, or organization described in Subsection [(12)] (14)(a)(i)(A).
715
(ii) The rules made under this Subsection [(12)] (14)(b) shall be consistent with the
716
filing requirements under federal law for a farmers' cooperative.
717
[(13)] (15) "Foreign corporation" means a corporation that is not incorporated or
718
organized under the laws of this state.
719
[(14)] (16) (a) "Foreign operating company" means a corporation that:
720
(i) is incorporated in the United States; and
721
(ii) 80% or more of whose business activity, as determined under Section
59-7-401
, is
722
conducted outside the United States.
723
(b) "Foreign operating company" does not include a corporation that qualifies for the
724
Puerto Rico and Possession Tax Credit as provided in Section 936, Internal Revenue Code.
725
(17) (a) "Foreign real estate investment trust" means:
726
(i) a business entity organized outside the laws of the United States if:
727
(A) at least 75% of the business entity's total asset value at the close of the business
728
entity's taxable year is represented by:
729
(I) real estate assets, as defined in Section 856(c)(5)(B), Internal Revenue Code;
730
(II) cash or cash equivalents; or
731
(III) one or more securities issued or guaranteed by the United States;
732
(B) the business entity is:
733
(I) not subject to income taxation:
734
(Aa) on amounts distributed to the business entity's beneficial owners; and
735
(Bb) in the jurisdiction in which the business entity is organized; or
736
(II) exempt from income taxation on an entity level in the jurisdiction in which the
737
business entity is organized;
738
(C) the business entity distributes at least 85% of the business entity's taxable income,
739
as computed in the jurisdiction in which the business entity is organized, to the holders of the
740
business entity's:
741
(I) shares or beneficial interests; and
742
(II) on an annual basis;
743
(D) (I) not more than 10% of the following is held directly, indirectly, or constructively
744
by a single person:
745
(Aa) the voting power of the business entity; or
746
(Bb) the value of the shares or beneficial interests of the business entity; or
747
(II) the shares of the business entity are regularly traded on an established securities
748
market; and
749
(E) the business entity is organized in a country that has a tax treaty with the United
750
States; or
751
(ii) a listed Australian property trust.
752
(b) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
753
commission may make rules defining:
754
(i) "cash or cash equivalents";
755
(ii) "established securities market"; or
756
(iii) "listed Australian property trust."
757
[(15)] (18) "Income" includes losses.
758
[(16)] (19) "Internal Revenue Code" means Title 26 of the United States Code as
759
effective during the year in which Utah taxable income is determined.
760
[(17)] (20) "Nonbusiness income" is as defined in Section
59-7-302
.
761
[(18)] (21) "Nonresident shareholder" means any shareholder of an S corporation who
762
on the last day of the taxable year of the S corporation, is:
763
(a) an individual not domiciled in Utah; or
764
(b) a nonresident trust or nonresident estate, as defined in Section
59-10-103
.
765
(22) "Real estate investment trust" is as defined in Section 856, Internal Revenue Code.
766
[(19)] (23) "Related expenses" means:
767
(a) expenses directly attributable to nonbusiness income; and
768
(b) the portion of interest or other expense indirectly attributable to both nonbusiness
769
and business income which bears the same ratio to the aggregate amount of such interest or
770
other expense, determined without regard to this Subsection [(19)] (23), as the average amount
771
of the asset producing the nonbusiness income bears to the average amount of all assets of the
772
taxpayer within the taxable year.
773
[(20)] (24) "Resident shareholder" means any shareholder of an S corporation who is
774
not a nonresident shareholder.
775
[(22)] (25) "Safe harbor lease" means a lease that qualified as a safe harbor lease under
776
Section 168, Internal Revenue Code.
777
[(21)] (26) "S corporation" means an S corporation as defined in Section 1361, Internal
778
Revenue Code.
779
[(23)] (27) "State of the United States" includes any of the 50 states or the District of
780
Columbia [and "United States" includes the 50 states and the District of Columbia].
781
[(24)] (28) (a) "Taxable year" means the calendar year or the fiscal year ending during
782
such calendar year upon the basis of which the adjusted income is computed.
783
(b) In the case of a return made for a fractional part of a year under this chapter or
784
under rules prescribed by the commission, "taxable year" includes the period for which such
785
return is made.
786
[(25)] (29) "Taxpayer" means any corporation subject to the tax imposed by this
787
chapter.
788
[(26)] (30) "Threshold level of business activity" means business activity in the United
789
States equal to or greater than 20% of the corporation's total business activity as determined
790
under Section
59-7-401
.
791
[(27)] (31) "Unadjusted income" means federal taxable income as determined on a
792
separate return basis before intercompany eliminations as determined by the Internal Revenue
793
Code, before the net operating loss deduction and special deductions for dividends received.
794
[(28)] (32) (a) "Unitary group" means a group of corporations that:
795
(i) are related through common ownership; and
796
(ii) by a preponderance of the evidence as determined by a court of competent
797
jurisdiction or the commission, are economically interdependent with one another as
798
demonstrated by the following factors:
799
(A) centralized management;
800
(B) functional integration; and
801
(C) economies of scale.
802
(b) "Unitary group" includes a captive real estate investment trust.
803
[(b)] (c) "Unitary group" does not include an S [corporations] corporation.
804
(33) "United States" includes the 50 states and the District of Columbia.
805
[(29)] (34) "Utah net loss" means the current year Utah taxable income before Utah net
806
loss deduction, if determined to be less than zero.
807
[(30)] (35) "Utah net loss deduction" means the amount of Utah net losses from other
808
taxable years that may be carried back or carried forward to the current taxable year in
809
accordance with Section
59-7-110
.
810
[(31)] (36) (a) "Utah taxable income" means Utah taxable income before net loss
811
deduction less Utah net loss deduction.
812
(b) "Utah taxable income" includes income from tangible or intangible property located
813
or having situs in this state, regardless of whether carried on in intrastate, interstate, or foreign
814
commerce.
815
[(32)] (37) "Utah taxable income before net loss deduction" means apportioned income
816
plus nonbusiness income allocable to Utah net of related expenses.
817
[(33)] (38) (a) "Water's edge combined report" means a report combining the income
818
and activities of:
819
(i) all members of a unitary group that are:
820
(A) corporations organized or incorporated in the United States, including those
821
corporations qualifying for the Puerto Rico and Possession Tax Credit as provided in Section
822
936, Internal Revenue Code, in accordance with Subsection [(33)] (38)(b); and
823
(B) corporations organized or incorporated outside of the United States meeting the
824
threshold level of business activity; and
825
(ii) an affiliated group electing to file a water's edge combined report under Subsection
826
59-7-402
(2).
827
(b) There is a rebuttable presumption that a corporation which qualifies for the Puerto
828
Rico and Possession Tax Credit provided in Section 936, Internal Revenue Code, is part of a
829
unitary group.
830
[(34)] (39) "Worldwide combined report" means the combination of the income and
831
activities of all members of a unitary group irrespective of the country in which the
832
corporations are incorporated or conduct business activity.
833
Section 17.
Section
59-7-105
is amended to read:
834
59-7-105. Additions to unadjusted income.
835
In computing adjusted income the following amounts shall be added to unadjusted
836
income:
837
(1) interest from bonds, notes, and other evidences of indebtedness issued by any state
838
of the United States, including any agency and instrumentality of a state of the United States;
839
(2) the amount of any deduction taken on a corporation's federal return for taxes paid
840
by a corporation:
841
(a) to Utah for taxes imposed by this chapter; and
842
(b) to another state of the United States, a foreign country, a United States possession,
843
or the Commonwealth of Puerto Rico for taxes imposed for the privilege of doing business, or
844
exercising its corporate franchise, including income, franchise, corporate stock and business
845
and occupation taxes;
846
(3) the safe harbor lease adjustment required under Subsections
59-7-111
(1)(a) and
847
(2)(a);
848
(4) capital losses that have been deducted on a Utah corporate return in previous years;
849
(5) any deduction on the federal return that has been previously deducted on the Utah
850
return;
851
(6) the amount of contributions claimed as a tax credit pursuant to Section
59-7-602
;
852
(7) the amount of the deduction taken pursuant to Section
59-7-603
for sophisticated
853
technological equipment;
854
(8) charitable contributions, to the extent deducted on the federal return when
855
determining federal taxable income;
856
(9) the amount of gain or loss determined under Section
59-7-114
relating to a target
857
corporation under Section 338, Internal Revenue Code, unless such gain or loss has already
858
been included in the unadjusted income of the target corporation;
859
(10) the amount of gain or loss determined under Section
59-7-115
relating to
860
corporations treated for federal purposes as having disposed of its assets under Section 336(e),
861
Internal Revenue Code, unless such gain or loss has already been included in the unadjusted
862
income of the target corporation;
863
(11) adjustments to gains, losses, depreciation expense, amortization expense, and
864
similar items due to a difference between basis for federal purposes and basis as computed
865
under Section
59-7-107
; [and]
866
(12) the amount withdrawn under Title 53B, Chapter 8a, Higher Education Savings
867
Incentive Program, from the account of a corporation that is an account owner as defined in
868
Section
53B-8a-102
, for the taxable year for which the amount is withdrawn, if that amount
869
withdrawn from the account of the corporation that is the account owner:
870
(a) is not expended for higher education costs as defined in Section
53B-8a-102
; and
871
(b) is subtracted by the corporation:
872
(i) that is the account owner; and
873
(ii) in accordance with Subsection
59-7-106
(18)[.]; and
874
(13) the amount of the deduction for dividends paid, as defined in Section 561, Internal
875
Revenue Code, that is allowed under Section 857(b)(2)(B), Internal Revenue Code, in
876
computing the taxable income of a captive real estate investment trust, if that captive real estate
877
investment trust is subject to federal income taxation.
878
Section 18.
Section
59-7-106
is amended to read:
879
59-7-106. Subtractions from unadjusted income.
880
In computing adjusted income the following amounts shall be subtracted from
881
unadjusted income:
882
(1) the foreign dividend gross-up included in gross income for federal income tax
883
purposes under Section 78, Internal Revenue Code;
884
(2) the net capital loss, as defined for federal purposes, if the taxpayer elects to deduct
885
the loss on the current Utah return. The deduction shall be made by claiming the deduction on
886
the current Utah return which shall be filed by the due date of the return, including extensions.
887
For the purposes of this Subsection (2) all capital losses in a given year must be:
888
(a) deducted in the year incurred; or
889
(b) carried forward as provided in Sections 1212(a)(1)(B) and (C), Internal Revenue
890
Code;
891
(3) the decrease in salary expense deduction for federal income tax purposes due to
892
claiming the federal jobs credit under Section 51, Internal Revenue Code;
893
(4) the decrease in qualified research and basic research expense deduction for federal
894
income tax purposes due to claiming the federal research and development credit under Section
895
41, Internal Revenue Code;
896
(5) the decrease in qualified clinical testing expense deduction for federal income tax
897
purposes due to claiming the federal orphan drug credit under Section 28, Internal Revenue
898
Code;
899
(6) any decrease in any expense deduction for federal income tax purposes due to
900
claiming any other federal credit;
901
(7) the safe harbor lease adjustment required under Subsections
59-7-111
(1)(b) and
902
(2)(b);
903
(8) any income on the federal corporate return that has been previously taxed by Utah;
904
(9) amounts included in federal taxable income that are due to refunds of taxes
905
imposed for the privilege of doing business, or exercising a corporate franchise, including
906
income, franchise, corporate stock and business and occupation taxes paid by the corporation to
907
Utah, another state of the United States, a foreign country, a United States possession, or the
908
Commonwealth of Puerto Rico to the extent that the taxes were added to unadjusted income
909
under Section
59-7-105
;
910
(10) charitable contributions, to the extent allowed as a subtraction under Section
911
59-7-109
;
912
(11) (a) 50% of the dividends deemed received or received from subsidiaries which are
913
members of the unitary group and are organized or incorporated outside of the United States
914
unless such subsidiaries are included in a combined report under Section
59-7-402
or
59-7-403
.
915
In arriving at the amount of the dividend exclusion, the taxpayer shall first deduct from the
916
dividends deemed received or received, the expense directly attributable to those dividends.
917
Interest expense attributable to excluded dividends shall be determined by multiplying interest
918
expense by a fraction, the numerator of which is the taxpayer's average investment in such
919
dividend paying subsidiaries, and the denominator of which is the taxpayer's average total
920
investment in assets;
921
(b) in determining income apportionable to this state, a portion of the factors of a
922
foreign subsidiary whose dividends are partially excluded under Subsection (11)(a) shall be
923
included in the combined report factors. The portion to be included shall be determined by
924
multiplying each factor of the foreign subsidiary by a fraction, but not to exceed 100%, the
925
numerator of which is the amount of the dividend paid by the foreign subsidiary which is
926
included in adjusted income, and the denominator of which is the current year earnings and
927
profits of the foreign subsidiary as determined under the Internal Revenue Code;
928
(12) (a) 50% of the adjusted income of a foreign operating company unless the
929
taxpayer has elected to file a worldwide combined report as provided in Section
59-7-403
. For
930
purposes of this Subsection (12), when calculating the adjusted income of a foreign operating
931
company, a foreign operating company may not deduct the subtractions allowable under this
932
Subsection (12) and Subsection (11);
933
(b) in determining income apportionable to this state, the factors for a foreign operating
934
company shall be included in the combined report factors in the same percentage its adjusted
935
income is included in the combined adjusted income;
936
(13) the amount of gain or loss which is included in unadjusted income but not
937
recognized for federal purposes on stock sold or exchanged by a member of a selling
938
consolidated group as defined in Section 338, Internal Revenue Code, if an election has been
939
made pursuant to Section 338(h)(10), Internal Revenue Code;
940
(14) the amount of gain or loss which is included in unadjusted income but not
941
recognized for federal purposes on stock sold, exchanged, or distributed by a corporation
942
pursuant to Section 336(e), Internal Revenue Code, if an election under Section 336(e), Internal
943
Revenue Code, has been made for federal purposes;
944
(15) (a) adjustments to gains, losses, depreciation expense, amortization expense, and
945
similar items due to a difference between basis for federal purposes and basis as computed
946
under Section
59-7-107
; and
947
(b) if there has been a reduction in federal basis for a federal tax credit where there is
948
no corresponding Utah tax credit, the amount of the reduction in basis shall be allowed as an
949
expense in the year of the federal credit;
950
(16) any interest expense not deducted on the federal corporate return under Section
951
265(b) or 291(e), Internal Revenue Code;
952
(17) 100% of the dividends received from subsidiaries which are insurance companies
953
exempt from this chapter under Subsection
59-7-102
(1)(c) and are under "common ownership"
954
as defined by Subsection
59-7-101
[(7)](8); [and]
955
(18) subject to Subsection
59-7-105
(12), the amount of a qualified investment as
956
defined in Section
53B-8a-102
that:
957
(a) a corporation that is an account owner as defined in Section
53B-8a-102
makes
958
during the taxable year;
959
(b) the corporation described in Subsection (18)(a) does not deduct on a federal
960
corporation income tax return; and
961
(c) does not exceed the maximum amount of the qualified investment that may be
962
subtracted from unadjusted income for a taxable year in accordance with Subsections
963
53B-8a-106
(1)(d) and (f)[.]; and
964
(19) for purposes of income included in a combined report under Part 4, Combined
965
Reporting, the entire amount of the dividends a member of a unitary group receives or is
966
considered to receive from a captive real estate investment trust.
967
Section 19.
Section
59-7-116.5
is amended to read:
968
59-7-116.5. Real estate investment trusts.
969
(1) A real estate investment trust[, as defined in Section 856, Internal Revenue Code,]
970
that is not a captive real estate investment trust shall be taxed on the same income taxed for
971
federal purposes under the Internal Revenue Code.
972
(2) Any income taxable under this section shall be taxed at the same rate and in the
973
same manner provided for in this chapter.
974
Section 20.
Section
59-7-402
is amended to read:
975
59-7-402. Water's edge combined report.
976
(1) Except as provided in Section
59-7-403
, if any corporation listed in Subsection
977
59-7-101
[(33)](38)(a) is doing business in Utah, the unitary group shall file a water's edge
978
combined report.
979
(2) (a) A group of corporations that are not otherwise a unitary group may elect to file a
980
water's edge combined report if each member of the group is:
981
(i) doing business in Utah;
982
(ii) part of the same affiliated group; and
983
(iii) qualified, under Section 1501, Internal Revenue Code, to file a federal
984
consolidated return.
985
(b) Each corporation within the affiliated group that is doing business in Utah must
986
consent to filing a combined report. If an affiliated group elects to file a combined report, each
987
corporation within the affiliated group that is doing business in Utah must file a combined
988
report.
989
(c) Corporations that elect to file a water's edge combined report under this section may
990
not thereafter elect to file a separate return without the consent of the commission.
991
Section 21.
Section
59-10-103
is amended to read:
992
59-10-103. Definitions.
993
(1) As used in this chapter:
994
(a) "Adjusted gross income":
995
(i) for a resident or nonresident individual, is as defined in Section 62, Internal
996
Revenue Code; or
997
(ii) for a resident or nonresident estate or trust, is as calculated in Section 67(e),
998
Internal Revenue Code.
999
[(b) "Adoption expenses" means:]
1000
[(i) any actual medical and hospital expenses of the mother of the adopted child which
1001
are incident to the child's birth;]
1002
[(ii) any welfare agency fees or costs;]
1003
[(iii) any child placement service fees or costs;]
1004
[(iv) any legal fees or costs; or]
1005
[(v) any other fees or costs relating to an adoption.]
1006
[(c) "Adult with a disability" means an individual who:]
1007
[(i) is 18 years of age or older;]
1008
[(ii) is eligible for services under Title 62A, Chapter 5, Services for People with
1009
Disabilities; and]
1010
[(iii) is not enrolled in:]
1011
[(A) an education program for students with disabilities that is authorized under
1012
Section
53A-15-301
; or]
1013
[(B) a school established under Title 53A, Chapter 25, Schools for the Deaf and Blind.]
1014
[(d) (i) For purposes of Subsection
59-10-114
(2)(l), "capital gain transaction" means a
1015
transaction that results in a:]
1016
[(A) short-term capital gain; or]
1017
[(B) long-term capital gain.]
1018
[(ii) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act,
1019
the commission may by rule define the term "transaction."]
1020
[(e) "Commercial domicile" means the principal place from which the trade or business
1021
of a Utah small business corporation is directed or managed.]
1022
[(f)] (b) "Corporation" includes:
1023
(i) [associations] an association;
1024
(ii) a joint stock [companies] company; and
1025
(iii) an insurance [companies] company.
1026
[(g) "Dependent child with a disability" means an individual 21 years of age or younger
1027
who:]
1028
[(i) (A) is diagnosed by a school district representative under rules adopted by the State
1029
Board of Education as having a disability classified as:]
1030
[(I) autism;]
1031
[(II) deafness;]
1032
[(III) preschool developmental delay;]
1033
[(IV) dual sensory impairment;]
1034
[(V) hearing impairment;]
1035
[(VI) intellectual disability;]
1036
[(VII) multidisability;]
1037
[(VIII) orthopedic impairment;]
1038
[(IX) other health impairment;]
1039
[(X) traumatic brain injury; or]
1040
[(XI) visual impairment;]
1041
[(B) is not receiving residential services from:]
1042
[(I) the Division of Services for People with Disabilities created under Section
1043
62A-5-102
; or]
1044
[(II) a school established under Title 53A, Chapter 25, Schools for the Deaf and Blind;
1045
and]
1046
[(C) is enrolled in:]
1047
[(I) an education program for students with disabilities that is authorized under Section
1048
53A-15-301
; or]
1049
[(II) a school established under Title 53A, Chapter 25, Schools for the Deaf and Blind;
1050
or]
1051
[(ii) is identified under guidelines of the Department of Health as qualified for:]
1052
[(A) Early Intervention; or]
1053
[(B) Infant Development Services.]
1054
[(h)] (c) "Distributable net income" is as defined in Section 643, Internal Revenue
1055
Code.
1056
[(i)] (d) "Employee" is as defined in Section
59-10-401
.
1057
[(j)] (e) "Employer" is as defined in Section
59-10-401
.
1058
[(k)] (f) "Federal taxable income":
1059
(i) for a resident or nonresident individual, means taxable income as defined by Section
1060
63, Internal Revenue Code; or
1061
(ii) for a resident or nonresident estate or trust, is as calculated in Section 641(a) and
1062
(b), Internal Revenue Code.
1063
[(l)] (g) "Fiduciary" means:
1064
(i) a guardian;
1065
(ii) a trustee;
1066
(iii) an executor;
1067
(iv) an administrator;
1068
(v) a receiver;
1069
(vi) a conservator; or
1070
(vii) any person acting in any fiduciary capacity for any individual.
1071
(h) "Guaranteed annuity interest" is as defined in 26 C.F.R. Sec. 1.170A-6(c)(2).
1072
[(m)] (i) "Homesteaded land diminished from the Uintah and Ouray Reservation"
1073
means the homesteaded land that was held to have been diminished from the Uintah and Ouray
1074
Reservation in Hagen v. Utah, 510 U.S. 399 (1994).
1075
[(n)] (j) "Individual" means a natural person and includes aliens and minors.
1076
[(o)] (k) "Irrevocable trust" means a trust in which the settlor may not revoke or
1077
terminate all or part of the trust without the consent of a person who has a substantial beneficial
1078
interest in the trust and the interest would be adversely affected by the exercise of the settlor's
1079
power to revoke or terminate all or part of the trust.
1080
[(p) For purposes of Subsection
59-10-114
(2)(l), "long-term capital gain" is as defined
1081
in Section 1222, Internal Revenue Code.]
1082
(l) "Military service" is as defined in Pub. L. No. 108-189, Sec. 101.
1083
[(q)] (m) "Nonresident individual" means an individual who is not a resident of this
1084
state.
1085
[(r)] (n) "Nonresident trust" or "nonresident estate" means a trust or estate which is not
1086
a resident estate or trust.
1087
[(s)] (o) (i) "Partnership" includes a syndicate, group, pool, joint venture, or other
1088
unincorporated organization:
1089
(A) through or by means of which any business, financial operation, or venture is
1090
carried on; and
1091
(B) which is not, within the meaning of this chapter:
1092
(I) a trust;
1093
(II) an estate; or
1094
(III) a corporation.
1095
(ii) "Partnership" does not include any organization not included under the definition of
1096
"partnership" in Section 761, Internal Revenue Code.
1097
(iii) "Partner" includes a member in a syndicate, group, pool, joint venture, or
1098
organization described in Subsection (1)[(s)](o)(i).
1099
[(t) "Qualifying military servicemember" means a member of:]
1100
[(i) The Utah Army National Guard;]
1101
[(ii) The Utah Air National Guard; or]
1102
[(iii) the following if the member is assigned to a unit that is located in the state:]
1103
[(A) The Army Reserve;]
1104
[(B) The Naval Reserve;]
1105
[(C) The Air Force Reserve;]
1106
[(D) The Marine Corps Reserve; or]
1107
[(E) The Coast Guard Reserve.]
1108
[(u) "Qualifying stock" means stock that is:]
1109
[(i) (A) common; or]
1110
[(B) preferred;]
1111
[(ii) as defined by the commission by rule, originally issued to:]
1112
[(A) a resident or nonresident individual; or]
1113
[(B) a partnership if the resident or nonresident individual making a subtraction from
1114
federal taxable income in accordance with Subsection
59-10-114
(2)(l):]
1115
[(I) was a partner when the stock was issued; and]
1116
[(II) remains a partner until the last day of the taxable year for which the resident or
1117
nonresident individual makes the subtraction from federal taxable income in accordance with
1118
Subsection
59-10-114
(2)(l); and]
1119
[(iii) issued:]
1120
[(A) by a Utah small business corporation;]
1121
[(B) on or after January 1, 2003; and]
1122
[(C) for:]
1123
[(I) money; or]
1124
[(II) other property, except for stock or securities.]
1125
(p) "Qualified nongrantor charitable lead trust" means a trust:
1126
(i) that is irrevocable;
1127
(ii) that has a trust term measured by:
1128
(A) a fixed term of years; or
1129
(B) the life of a person living on the day on which the trust is created;
1130
(iii) under which:
1131
(A) a portion of the value of the trust assets is distributed during the trust term:
1132
(I) to an organization described in Section 170(c), Internal Revenue Code; and
1133
(II) as a:
1134
(Aa) guaranteed annuity interest; or
1135
(Bb) unitrust interest; and
1136
(B) assets remaining in the trust at the termination of the trust term are distributed to a
1137
beneficiary:
1138
(I) designated in the trust; and
1139
(II) that is not an organization described in Section 170(c), Internal Revenue Code;
1140
(iv) for which the trust is allowed a deduction under Section 642(c), Internal Revenue
1141
Code; and
1142
(v) under which the grantor of the trust is not treated as the owner of any portion of the
1143
trust for federal income tax purposes.
1144
[(v)] (q) (i) "Resident individual" means:
1145
(A) an individual who is domiciled in this state for any period of time during the
1146
taxable year, but only for the duration of the period during which the individual is domiciled in
1147
this state; or
1148
(B) an individual who is not domiciled in this state but:
1149
(I) maintains a permanent place of abode in this state; and
1150
(II) spends in the aggregate 183 or more days of the taxable year in this state.
1151
(ii) For purposes of Subsection (1)[(v)] (q)(i)(B), a fraction of a calendar day shall be
1152
counted as a whole day.
1153
[(w)] (r) "Resident estate" or "resident trust" is as defined in Section
75-7-103
.
1154
[(x) For purposes of Subsection
59-10-114
(2)(l), "short-term capital gain" is as defined
1155
in Section 1222, Internal Revenue Code.]
1156
(s) "Servicemember" is as defined in Pub. L. No. 108-189, Sec. 101.
1157
(t) "State income tax percentage for a nonresident estate or trust" means a percentage
1158
equal to a nonresident estate's or trust's state taxable income for the taxable year divided by the
1159
nonresident estate's or trust's total adjusted gross income for that taxable year after making the
1160
adjustments required by:
1161
(i) Section
59-10-202
;
1162
(ii) Section
59-10-207
;
1163
(iii) Section
59-10-209.1
; or
1164
(iv) Section
59-10-210
;
1165
(u) "State income tax percentage for a nonresident individual" means a percentage
1166
equal to a nonresident individual's state taxable income for the taxable year divided by the
1167
difference between:
1168
(i) the nonresident individual's total adjusted gross income for that taxable year, after
1169
making the:
1170
(A) additions and subtractions required by Section
59-10-114
; and
1171
(B) adjustments required by Section
59-10-115
; and
1172
(ii) if the nonresident individual described in Subsection (1)(u)(i) is a servicemember,
1173
the compensation the servicemember receives for military service if the servicemember is
1174
serving in compliance with military orders.
1175
(v) "State income tax percentage for a part-year resident individual" means, for a
1176
taxable year, a fraction:
1177
(i) the numerator of which is the sum of:
1178
(A) subject to Subsections
59-10-1404
(3) and (4), for the time period during the
1179
taxable year that the part-year resident individual is a resident, the part-year resident
1180
individual's total adjusted gross income for that time period, after making the:
1181
(I) additions and subtractions required by Section
59-10-114
; and
1182
(II) adjustments required by Section
59-10-115
; and
1183
(B) for the time period during the taxable year that the part-year resident individual is a
1184
nonresident, an amount calculated by:
1185
(I) determining the part-year resident individual's adjusted gross income for that time
1186
period, after making the:
1187
(Aa) additions and subtractions required by Section
59-10-114
; and
1188
(Bb) adjustments required by Section
59-10-115
; and
1189
(II) calculating the portion of the amount determined under Subsection (1)(v)(i)(B)(I)
1190
that is derived from Utah sources in accordance with Section
59-10-117
; and
1191
(ii) the denominator of which is the difference between:
1192
(A) the part-year resident individual's total adjusted gross income for that taxable year,
1193
after making the:
1194
(I) additions and subtractions required by Section
59-10-114
; and
1195
(II) adjustments required by Section
59-10-115
; and
1196
(B) if the part-year resident individual is a servicemember, any compensation the
1197
servicemember receives for military service during the portion of the taxable year that the
1198
servicemember is a nonresident if the servicemember is serving in compliance with military
1199
orders.
1200
[(y)] (w) "Taxable income" or "state taxable income":
1201
(i) subject to Subsection [
59-10-302
(2)]
59-10-1404
(3), for a resident individual [other
1202
than a resident individual described in Subsection (1)(y)(iii)], means the resident individual's
1203
[federal taxable] adjusted gross income after making the:
1204
(A) additions and subtractions required by Section
59-10-114
; and
1205
(B) adjustments required by Section
59-10-115
;
1206
(ii) for a nonresident individual [other than a nonresident individual described in
1207
Subsection (1)(y)(iii), is as defined in Section
59-10-116
;], is an amount calculated by:
1208
(A) determining the nonresident individual's adjusted gross income for the taxable
1209
year, after making the:
1210
(I) additions and subtractions required by Section
59-10-114
; and
1211
(II) adjustments required by Section
59-10-115
; and
1212
(B) calculating the portion of the amount determined under Subsection (1)(w)(ii)(A)
1213
that is derived from Utah sources in accordance with Section
59-10-117
;
1214
[(iii) for a resident or nonresident individual that collects and pays a tax described in
1215
Part 12, Single Rate Individual Income Tax Act, is as defined in Section
59-10-1202
;]
1216
[(iv)] (iii) for a resident estate or trust, is as calculated under Section
59-10-201.1
; and
1217
[(v)] (iv) for a nonresident estate or trust, is as calculated under Section
59-10-204
.
1218
[(z)] (x) "Taxpayer" means any individual, estate, [or] trust, or beneficiary of an estate
1219
or trust, [whose income is] that has income subject in whole or part to the tax imposed by this
1220
chapter.
1221
(y) "Trust term" means a time period:
1222
(i) beginning on the day on which a qualified nongrantor charitable lead trust is
1223
created; and
1224
(ii) ending on the day on which the qualified nongrantor charitable lead trust described
1225
in Subsection (1)(y)(i) terminates.
1226
[(aa)] (z) "Uintah and Ouray Reservation" means the lands recognized as being
1227
included within the Uintah and Ouray Reservation in:
1228
(i) Hagen v. Utah, 510 U.S. 399 (1994); and
1229
(ii) Ute Indian Tribe v. Utah, 114 F.3d 1513 (10th Cir. 1997).
1230
[(bb) (i) "Utah small business corporation" means a corporation that:]
1231
[(A) is a small business corporation as defined in Section 1244(c)(3), Internal Revenue
1232
Code;]
1233
[(B) except as provided in Subsection (1)(bb)(ii), meets the requirements of Section
1234
1244(c)(1)(C), Internal Revenue Code; and]
1235
[(C) has its commercial domicile in this state.]
1236
[(ii) Notwithstanding Subsection (1)(bb)(i)(B), the time period described in Section
1237
1244(c)(1)(C) and Section 1244(c)(2), Internal Revenue Code, for determining the source of a
1238
corporation's aggregate gross receipts shall end on the last day of the taxable year for which the
1239
resident or nonresident individual makes a subtraction from federal taxable income in
1240
accordance with Subsection
59-10-114
(2)(l).]
1241
(aa) "Unadjusted income" means an amount equal to the difference between:
1242
(i) the total income required to be reported by a resident or nonresident estate or trust
1243
on the resident or nonresident estate's or trust's federal income tax return for estates and trusts
1244
for the taxable year; and
1245
(ii) the sum of the following:
1246
(A) fees paid or incurred to the fiduciary of a resident or nonresident estate or trust:
1247
(I) for administering the resident or nonresident estate or trust; and
1248
(II) that the resident or nonresident estate or trust deducts as allowed on the resident or
1249
nonresident estate's or trust's federal income tax return for estates and trusts for the taxable
1250
year;
1251
(B) the income distribution deduction that a resident or nonresident estate or trust
1252
deducts under Section 651 or 661, Internal Revenue Code, as allowed on the resident or
1253
nonresident estate's or trust's federal income tax return for estates and trusts for the taxable
1254
year;
1255
(C) the amount that a resident or nonresident estate or trust deducts as a deduction for
1256
estate tax or generation skipping transfer tax under Section 691(c), Internal Revenue Code, as
1257
allowed on the resident or nonresident estate's or trust's federal income tax return for estates
1258
and trusts for the taxable year; and
1259
(D) the amount that a resident or nonresident estate or trust deducts as a personal
1260
exemption under Section 642(b), Internal Revenue Code, as allowed on the resident or
1261
nonresident estate's or trust's federal income tax return for estates and trusts for the taxable
1262
year.
1263
(bb) "Unitrust interest" is as defined in 26 C.F.R. Sec. 1.170A-6(c)(2).
1264
(cc) "Ute tribal member" means a person who is enrolled as a member of the Ute
1265
Indian Tribe of the Uintah and Ouray Reservation.
1266
(dd) "Ute tribe" means the Ute Indian Tribe of the Uintah and Ouray Reservation.
1267
(ee) "Wages" is as defined in Section
59-10-401
.
1268
(2) (a) Any term used in this chapter has the same meaning as when used in
1269
comparable context in the laws of the United States relating to federal income taxes unless a
1270
different meaning is clearly required.
1271
(b) Any reference to the Internal Revenue Code or to the laws of the United States shall
1272
mean the Internal Revenue Code or other provisions of the laws of the United States relating to
1273
federal income taxes that are in effect for the taxable year.
1274
(c) Any reference to a specific section of the Internal Revenue Code or other provision
1275
of the laws of the United States relating to federal income taxes shall include any
1276
corresponding or comparable provisions of the Internal Revenue Code as [hereafter] amended,
1277
redesignated, or reenacted.
1278
Section 22.
Section
59-10-104
is amended to read:
1279
59-10-104. Tax basis -- Tax rate -- Exemption.
1280
(1) [Except as provided in Subsection (5) or Part 12, Single Rate Individual Income
1281
Tax Act, for] For taxable years beginning on or after January 1, [2006] 2008, [but beginning on
1282
or before December 31, 2007,] a tax is imposed on the state taxable income of [every] a
1283
resident individual as provided in this section.
1284
[(2) For an individual, other than a husband and wife or head of household required to
1285
use the tax table under Subsection (3), the tax under this section is imposed in accordance with
1286
the following income brackets:]
1287
[If the state taxable income is: The tax is:]
1288
[Less than or equal to $1,000 2.3% of the state taxable income]
1289
[Greater than $1,000 but less than $23, plus 3.3% of state taxable]
1290
[or equal to $2,000 income greater than $1,000]
1291
[Greater than $2,000 but less than $56, plus 4.2% of state taxable]
1292
[or equal to $3,000 income greater than $2,000]
1293
[Greater than $3,000 but less than $98, plus 5.2% of state taxable]
1294
[or equal to $4,000 income greater than $3,000]
1295
[Greater than $4,000 but less than $150, plus 6% of state taxable]
1296
[or equal to $5,500 income greater than $4,000]
1297
[Greater than $5,500 $240, plus 6.98% of state taxable]
1298
[income greater than $5,500]
1299
[(3) For a husband and wife filing a single return jointly, or a head of household as
1300
defined in Section 2(b), Internal Revenue Code, filing a single return, the tax under this section
1301
is imposed in accordance with the following income brackets:]
1302
[If the state taxable income is: The tax is:]
1303
[Less than or equal to $2,000 2.3% of the state taxable income]
1304
[Greater than $2,000 but less than $46, plus 3.3% of state taxable]
1305
[or equal to $4,000 income greater than $2,000]
1306
[Greater than $4,000 but less than $112, plus 4.2% of state taxable]
1307
[or equal to $6,000 income greater than $4,000]
1308
[Greater than $6,000 but less than $196, plus 5.2% of state taxable]
1309
[or equal to $8,000 income greater than $6,000]
1310
[Greater than $8,000 but less than $300, plus 6% of state taxable]
1311
[or equal to $11,000 income greater than $8,000]
1312
[Greater than $11,000 $480, plus 6.98% of state taxable]
1313
[income greater than $11,000]
1314
[(4) (a) For taxable years beginning on or after January 1, 2009, the commission shall:]
1315
[(i) make the following adjustments to the income brackets under Subsection (2):]
1316
[(A) increase or decrease the income brackets under Subsection (2) by a percentage
1317
equal to the percentage difference between the consumer price index for the preceding calendar
1318
year and the consumer price index for the calendar year 2007; and]
1319
[(B) after making an increase or decrease under Subsection (4)(a)(i)(A), round the
1320
income brackets under Subsection (2) to the nearest whole dollar;]
1321
[(ii) after making the adjustments described in Subsection (4)(a)(i) to the income
1322
brackets under Subsection (2), adjust the income brackets under Subsection (3) so that for each
1323
income bracket under Subsection (2) there is a corresponding income bracket under Subsection
1324
(3) that is equal to the product of:]
1325
[(A) each income bracket under Subsection (2); and]
1326
[(B) two; and]
1327
[(iii) to the extent necessary to reflect an adjustment under Subsection (4)(a)(i) or (ii):]
1328
[(A) increase or decrease the amount of tax under Subsection (2) or (3) prior to adding
1329
in the portion of the tax calculated as a percentage of state taxable income; and]
1330
[(B) after making an increase or decrease under Subsection (4)(a)(iii)(A), round the
1331
amount of tax under Subsection (2) or (3) to the nearest whole dollar.]
1332
[(b) The commission may not increase or decrease the tax rate percentages provided in
1333
Subsection (2) or (3).]
1334
[(c) For purposes of Subsection (4)(a)(i), the commission shall calculate the consumer
1335
price index as provided in Sections 1(f)(4) and 1(f)(5), Internal Revenue Code.]
1336
(2) For purposes of Subsection (1), for a taxable year, the tax is an amount equal to the
1337
product of:
1338
(a) the resident individual's state taxable income for that taxable year; and
1339
(b) 5%.
1340
[(5)] (3) This section does not apply to a resident individual exempt from taxation
1341
under Section
59-10-104.1
.
1342
Section 23.
Section
59-10-104.1
is amended to read:
1343
59-10-104.1. Exemption from taxation.
1344
(1) For purposes of this section:
1345
(a) "Personal exemptions" means the total exemption amount an individual is allowed
1346
to claim for the taxable year under Section 151, Internal Revenue Code, for:
1347
(i) the individual;
1348
(ii) the individual's spouse; and
1349
(iii) the individual's dependents.
1350
(b) "Standard deduction":
1351
(i) [except as provided in Subsection (1)(b)(ii),] means the standard deduction an
1352
individual is allowed to claim for the taxable year under Section 63, Internal Revenue Code;
1353
and
1354
(ii) notwithstanding Subsection (1)(b)(i), does not include an additional amount
1355
allowed under Section 63(f), Internal Revenue Code, for an individual or an individual's spouse
1356
who is:
1357
(A) blind; or
1358
(B) 65 years of age or older.
1359
(2) For taxable years beginning on or after January 1, 2002, an individual is exempt
1360
from a tax imposed by Section
59-10-104
or
59-10-116
[or described in Section
59-10-1203
]
1361
if the individual's adjusted gross income on the individual's federal individual income tax
1362
return for the taxable year is less than or equal to the sum of the individual's:
1363
(a) personal exemptions for that taxable year; and
1364
(b) standard deduction for that taxable year.
1365
Section 24.
Section
59-10-110
is amended to read:
1366
59-10-110. Disallowance of federal tax credits.
1367
[No] A credit applied directly to the income tax calculated for federal income tax
1368
purposes [pursuant to] in accordance with the Internal Revenue Code [shall] may not be
1369
applied in calculating the tax due under this chapter.
1370
Section 25.
Section
59-10-114
is amended to read:
1371
59-10-114. Additions to and subtractions from adjusted gross income of an
1372
individual.
1373
(1) There shall be added to [federal taxable] adjusted gross income of a resident or
1374
nonresident individual:
1375
[(a) the amount of any income tax imposed by this or any predecessor Utah individual
1376
income tax law and the amount of any income tax imposed by the laws of another state, the
1377
District of Columbia, or a possession of the United States, to the extent deducted from adjusted
1378
gross income in determining federal taxable income;]
1379
[(b)] (a) a lump sum distribution that the taxpayer does not include in adjusted gross
1380
income on the taxpayer's federal individual income tax return for the taxable year;
1381
[(c)] (b) [for taxable years beginning on or after January 1, 2002,] the amount of a
1382
child's income calculated under Subsection [(5)] (4) that:
1383
(i) a parent elects to report on the parent's federal individual income tax return for the
1384
taxable year; and
1385
(ii) the parent does not include in adjusted gross income on the parent's federal
1386
individual income tax return for the taxable year;
1387
[(d) 25% of the personal exemptions, as defined and calculated in the Internal Revenue
1388
Code;]
1389
[(e)] (c) (i) a withdrawal from a medical care savings account and any penalty imposed
1390
[in] for the taxable year if:
1391
[(i)] (A) the resident or nonresident individual [did] does not deduct [or include] the
1392
amounts on the resident or nonresident individual's federal individual income tax return
1393
[pursuant to] under Section 220, Internal Revenue Code;
1394
[(ii)] (I) the withdrawal is subject to Subsections
31A-32a-105
(1) and (2); and
1395
[(iii)] (II) the withdrawal is [deducted
by]:
1396
(Aa) subtracted on a return the resident or nonresident individual [under Subsection
1397
(2)(h);] files under this chapter for a taxable year beginning on or before December 31, 2007;
1398
or
1399
(Bb) used as the basis for a resident or nonresident individual to claim a tax credit
1400
under Section
59-10-1021
;
1401
(ii) a disbursement required to be added to adjusted gross income in accordance with
1402
Subsection
31A-32a-105
(3); or
1403
(iii) an amount required to be added to adjusted gross income in accordance with
1404
Subsection
31A-32a-105
(5)(c);
1405
[(f)] (d) the amount withdrawn under Title 53B, Chapter 8a, Higher Education Savings
1406
Incentive Program, from the account of a resident or nonresident individual who is an account
1407
owner as defined in Section
53B-8a-102
, for the taxable year for which the amount is
1408
withdrawn, if that amount withdrawn from the account of the resident or nonresident individual
1409
who is the account owner:
1410
(i) is not expended for higher education costs as defined in Section
53B-8a-102
; and
1411
(ii) is:
1412
(A) subtracted by the resident or nonresident individual:
1413
(I) who is the account owner; and
1414
[(II) in accordance with Subsection (2)(i); or]
1415
(II) on the resident or nonresident individual's return filed under this chapter for a
1416
taxable year beginning on or before December 31, 2007; or
1417
(B) used as the basis for the resident or nonresident individual who is the account
1418
owner to claim a tax credit under Section [
59-10-1206.1
]
59-10-1017
;
1419
[(g)] (e) except as provided in Subsection (6), [for taxable years beginning on or after
1420
January 1, 2003,] for bonds, notes, and other evidences of indebtedness acquired on or after
1421
January 1, 2003, the interest from bonds, notes, and other evidences of indebtedness issued by
1422
one or more of the following entities:
1423
(i) a state other than this state;
1424
(ii) the District of Columbia;
1425
(iii) a political subdivision of a state other than this state; or
1426
(iv) an agency or instrumentality of an entity described in Subsections (1)[(g)](e)(i)
1427
through (iii);
1428
[(h)] (f) subject to Subsection (2)[(n)](c), any distribution received by a resident
1429
beneficiary of a resident trust of income that was taxed at the trust level for federal tax
1430
purposes, but was subtracted from state taxable income of the trust pursuant to Subsection
1431
59-10-202
(2)[(c)](b);
1432
[(i)] (g) any distribution received by a resident beneficiary of a nonresident trust of
1433
undistributed distributable net income realized by the trust on or after January 1, 2004, if that
1434
undistributed distributable net income was taxed at the trust level for federal tax purposes, but
1435
was not taxed at the trust level by any state, with undistributed distributable net income
1436
considered to be distributed from the most recently accumulated undistributed distributable net
1437
income; and
1438
[(j)] (h) any adoption expense:
1439
(i) for which a resident or nonresident individual receives reimbursement from another
1440
person; and
1441
(ii) to the extent to which the resident or nonresident individual [deducts] subtracts that
1442
adoption expense:
1443
[(A) under Subsection (2)(c); or]
1444
(A) on a return filed under this chapter for a taxable year beginning on or before
1445
December 31, 2007; or
1446
(B) from federal taxable income on a federal individual income tax return.
1447
(2) There shall be subtracted from [federal taxable] adjusted gross income of a resident
1448
or nonresident individual:
1449
(a) the difference between:
1450
[(a)] (i) the interest or a dividend on [obligations or securities] an obligation or security
1451
of the United States [and its possessions or of any] or an authority, commission, [or]
1452
instrumentality, or possession of the United States, to the extent that interest or dividend is:
1453
(A) included in adjusted gross income for federal income tax purposes for the taxable
1454
year [but]; and
1455
(B) exempt from state income taxes under the laws of the United States[, but the
1456
amount subtracted under this Subsection (2)(a) shall be reduced by]; and
1457
(ii) any interest on indebtedness incurred or continued to purchase or carry the
1458
[obligations or securities] obligation or security described in [this] Subsection (2)(a)(i)[, and by
1459
any expenses incurred in the production of interest or dividend income described in this
1460
Subsection (2)(a) to the extent that such expenses, including amortizable bond premiums, are
1461
deductible in determining federal taxable income];
1462
[(b) 1/2 of the net amount of any income tax paid or payable to the United States after
1463
all allowable credits, as reported on the United States individual income tax return of the
1464
taxpayer for the same taxable year;]
1465
[(c) the amount of adoption expenses for one of the following taxable years as elected
1466
by the resident or nonresident individual:]
1467
[(i) regardless of whether a court issues an order granting the adoption, the taxable year
1468
in which the adoption expenses are:]
1469
[(A) paid; or]
1470
[(B) incurred;]
1471
[(ii) the taxable year in which a court issues an order granting the adoption; or]
1472
[(iii) any year in which the resident or nonresident individual may claim the federal
1473
adoption expenses credit under Section 23, Internal Revenue Code;]
1474
[(d) amounts received by taxpayers under age 65 as retirement income which, for
1475
purposes of this section, means pensions and annuities, paid from an annuity contract
1476
purchased by an employer under a plan which meets the requirements of Section 404(a)(2),
1477
Internal Revenue Code, or purchased by an employee under a plan which meets the
1478
requirements of Section 408, Internal Revenue Code, or paid by the United States, a state, or
1479
political subdivision thereof, or the District of Columbia, to the employee involved or the
1480
surviving spouse;]
1481
[(e) for each taxpayer age 65 or over before the close of the taxable year, a $7,500
1482
personal retirement exemption;]
1483
[(f) 75% of the amount of the personal exemption, as defined and calculated in the
1484
Internal Revenue Code, for each dependent child with a disability and adult with a disability
1485
who is claimed as a dependent on a taxpayer's return;]
1486
[(g) subject to the limitations of Subsection (3)(e), amounts a taxpayer pays during the
1487
taxable year for health care insurance, as defined in Title 31A, Chapter 1, General Provisions:]
1488
[(i) for:]
1489
[(A) the taxpayer;]
1490
[(B) the taxpayer's spouse; and]
1491
[(C) the taxpayer's dependents; and]
1492
[(ii) to the extent the taxpayer does not deduct the amounts under Section 125, 162, or
1493
213, Internal Revenue Code, in determining federal taxable income for the taxable year;]
1494
[(h) (i) except as provided in this Subsection (2)(h), the amount of a contribution made
1495
during the taxable year on behalf of the taxpayer to a medical care savings account and interest
1496
earned on a contribution to a medical care savings account established pursuant to Title 31A,
1497
Chapter 32a, Medical Care Savings Account Act, to the extent the contribution is accepted by
1498
the account administrator as provided in the Medical Care Savings Account Act, and if the
1499
taxpayer did not deduct or include amounts on the taxpayer's federal individual income tax
1500
return pursuant to Section 220, Internal Revenue Code; and]
1501
[(ii) a contribution deductible under this Subsection (2)(h) may not exceed either of the
1502
following:]
1503
[(A) the maximum contribution allowed under the Medical Care Savings Account Act
1504