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S.B. 23 Enrolled
1
INCOME TAXATION OF PASS-THROUGH
2
ENTITIES AND PASS-THROUGH ENTITY
3
TAXPAYERS
4
2009 GENERAL SESSION
5
STATE OF UTAH
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Chief Sponsor: Wayne L. Niederhauser
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House Sponsor:
John Dougall
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LONG TITLE
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General Description:
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This bill amends the Corporate Franchise and Income Taxes chapter and the Individual
12
Income Tax Act to address the income taxation of a pass-through entity and a taxpayer
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to whom income, gain, loss, deduction, or credit of the pass-through entity is passed
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through.
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Highlighted Provisions:
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This bill:
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. provides that corporate franchise and income taxes are imposed on an S
18
corporation through the taxable year beginning on or after January 1, 2012, but
19
beginning on or before December 31, 2012;
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. requires the Revenue and Taxation Interim Committee to conduct a study and
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prescribes the scope of the study;
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. repeals provisions governing the taxation of a limited liability company;
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. addresses the income taxation of a taxpayer to whom income, gain, loss, deduction,
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or credit of a pass-through entity is passed through;
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. expands withholding requirements to provide that a pass-through entity, including
26
a general partnership, limited partnership, limited liability partnership, limited
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liability company, or an S corporation, is required to pay or withhold a tax on
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behalf of a resident or nonresident business entity or a nonresident individual;
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. provides exceptions to the withholding requirements;
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. provides withholding procedures;
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. addresses return filing requirements for a pass-through entity or a taxpayer to
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whom income, gain, loss, deduction, or credit of a pass-through entity is passed
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through;
34
. addresses the characterization of items of income, gain, loss, deduction, or credit
35
for purposes of state income taxation of a taxpayer to whom income, gain, loss,
36
deduction, or credit of a pass-through entity is passed through;
37
. addresses the determination of a taxpayer's share of certain additions to income,
38
deductions from income, or adjustments to income required by state statute;
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. addresses a refundable tax credit for a taxpayer to whom income, gain, loss,
40
deduction, or credit of a pass-through entity is passed through; and
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. makes technical changes.
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Monies Appropriated in this Bill:
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None
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Other Special Clauses:
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This bill provides an immediate effective date.
46
This bill has retrospective operation for a taxable year beginning on or after January 1,
47
2009.
48
This bill provides revisor instructions.
49
Utah Code Sections Affected:
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AMENDS:
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59-7-101, as last amended by Laws of Utah 2008, Chapters 382 and 389
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59-7-102, as last amended by Laws of Utah 2002, Chapters 76 and 286
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59-7-106, as last amended by Laws of Utah 2008, Chapter 389
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59-7-402, as last amended by Laws of Utah 2008, Chapter 389
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59-7-701, as last amended by Laws of Utah 1995, Chapter 311
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59-7-705, as enacted by Laws of Utah 1993, Chapter 169
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59-7-706, as enacted by Laws of Utah 1993, Chapter 169
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59-7-707, as enacted by Laws of Utah 1993, Chapter 169
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59-10-103, as last amended by Laws of Utah 2008, Chapters 382 and 389
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59-10-117, as last amended by Laws of Utah 2008, Chapters 382 and 389
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59-10-507, as last amended by Laws of Utah 2008, Chapter 389
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59-10-1103, as renumbered and amended by Laws of Utah 2006, Chapter 223
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59-10-1401, as enacted by Laws of Utah 2008, Chapter 389
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59-10-1402, as enacted by Laws of Utah 2008, Chapter 389
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59-10-1403, as renumbered and amended by Laws of Utah 2008, Chapter 389
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59-10-1404, as renumbered and amended by Laws of Utah 2008, Chapter 389
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59-10-1405, as renumbered and amended by Laws of Utah 2008, Chapter 389
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ENACTS:
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59-7-614.4, Utah Code Annotated 1953
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59-10-1403.1, Utah Code Annotated 1953
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59-10-1403.2, Utah Code Annotated 1953
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59-10-1404.5, Utah Code Annotated 1953
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REPEALS:
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48-2c-117, as last amended by Laws of Utah 2008, Chapter 389
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59-7-702, as last amended by Laws of Utah 2003, Chapter 110
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59-7-703, as last amended by Laws of Utah 2008, Chapter 382
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59-7-704, as enacted by Laws of Utah 1993, Chapter 169
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Be it enacted by the Legislature of the state of Utah:
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Section 1.
Section
59-7-101
is amended to read:
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59-7-101. Definitions.
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As used in this chapter:
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(1) "Adjusted income" means unadjusted income as modified by Sections
59-7-105
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and
59-7-106
.
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(2) (a) "Affiliated group" means one or more chains of corporations that are connected
86
through stock ownership with a common parent corporation that meet the following
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requirements:
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(i) at least 80% of the stock of each of the corporations in the group, excluding the
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common parent corporation, is owned by one or more of the other corporations in the group;
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and
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(ii) the common parent directly owns at least 80% of the stock of at least one of the
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corporations in the group.
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(b) "Affiliated group" does not include corporations that are qualified to do business
94
but are not otherwise doing business in this state.
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(c) For purposes of this Subsection (2), "stock" does not include nonvoting stock
96
which is limited and preferred as to dividends.
97
(3) "Apportionable income" means adjusted income less nonbusiness income net of
98
related expenses, to the extent included in adjusted income.
99
(4) "Apportioned income" means apportionable income multiplied by the
100
apportionment fraction as determined in Section
59-7-311
.
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(5) "Business income" is as defined in Section
59-7-302
.
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(6) (a) "Captive real estate investment trust" means a real estate investment trust if:
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(i) the shares or beneficial interests of the real estate investment trust are not regularly
104
traded on an established securities market; and
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(ii) more than 50% of the voting power or value of the shares or beneficial interests of
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the real estate investment trust are directly, indirectly, or constructively:
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(A) owned by a controlling entity of the real estate investment trust; or
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(B) controlled by a controlling entity of the real estate investment trust.
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(b) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act,
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the commission may make rules defining "established securities market."
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[(8)] (7) (a) "Common ownership" means the direct or indirect control or ownership of
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more than 50% of the outstanding voting stock of:
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(i) a parent-subsidiary controlled group as defined in Section 1563, Internal Revenue
114
Code, except that 50% shall be substituted for 80%;
115
(ii) a brother-sister controlled group as defined in Section 1563, Internal Revenue
116
Code, except that 50% shall be substituted for 80%; or
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(iii) three or more corporations each of which is a member of a group of corporations
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described in Subsection (2)(a)(i) or (2)(a)(ii), and one of which is:
119
(A) a common parent corporation included in a group of corporations described in
120
Subsection (2)(a)(i); and
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(B) included in a group of corporations described in Subsection (2)(a)(ii).
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(b) Ownership of outstanding voting stock shall be determined by Section 1563,
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Internal Revenue Code.
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[(7)] (8) (a) "Controlling entity of a captive real estate investment trust" means an
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entity that:
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(i) is treated as an association taxable as a corporation under the Internal Revenue
127
Code;
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(ii) is not exempt from federal income taxation under Section 501(a), Internal Revenue
129
Code; and
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(iii) directly, indirectly, or constructively holds more than 50% of:
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(A) the voting power of a captive real estate investment trust; or
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(B) the value of the shares or beneficial interests of a captive real estate investment
133
trust.
134
(b) "Controlling entity of a captive real estate investment trust" does not include:
135
(i) a real estate investment trust, except for a captive real estate investment trust;
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(ii) a qualified real estate investment subsidiary described in Section 856(i), Internal
137
Revenue Code, except for a qualified real estate investment trust subsidiary of a captive real
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estate investment trust; or
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(iii) a foreign real estate investment trust.
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(c) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
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commission may make rules defining "established securities market."
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(9) "Corporate return" or "return" includes a combined report.
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(10) "Corporation" includes:
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(a) entities defined as corporations under Sections 7701(a) and 7704, Internal Revenue
145
Code; and
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(b) other organizations that are taxed as corporations for federal income tax purposes
147
under the Internal Revenue Code.
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(11) "Dividend" means any distribution, including money or other type of property,
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made by a corporation to its shareholders out of its earnings or profits accumulated after
150
December 31, 1930.
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(12) (a) "Doing business" includes any transaction in the course of its business by a
152
domestic corporation, or by a foreign corporation qualified to do or doing intrastate business
153
in this state.
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(b) Except as provided in Subsection
59-7-102
(2), "doing business" includes:
155
(i) the right to do business through incorporation or qualification;
156
(ii) the owning, renting, or leasing of real or personal property within this state; and
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(iii) the participation in joint ventures, working and operating agreements, the
158
performance of which takes place in this state.
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(13) "Domestic corporation" means a corporation that is incorporated or organized
160
under the laws of this state.
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(14) (a) "Farmers' cooperative" means an association, corporation, or other
162
organization that is:
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(i) (A) an association, corporation, or other organization of:
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(I) farmers; or
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(II) fruit growers; or
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(B) an association, corporation, or other organization that is similar to an association,
167
corporation, or organization described in Subsection (14)(a)(i)(A); and
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(ii) organized and operated on a cooperative basis to:
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(A) (I) market the products of members of the cooperative or the products of other
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producers; and
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(II) return to the members of the cooperative or other producers the proceeds of sales
172
less necessary marketing expenses on the basis of the quantity of the products of a member or
173
producer or the value of the products of a member or producer; or
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(B) (I) purchase supplies and equipment for the use of members of the cooperative or
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other persons; and
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(II) turn over the supplies and equipment described in Subsection (14)(a)(ii)(B)(I) at
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actual costs plus necessary expenses to the members of the cooperative or other persons.
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(b) (i) Subject to Subsection (14)(b)(ii), for purposes of this Subsection (14), the
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commission by rule, made in accordance with Title 63G, Chapter 3, Utah Administrative
180
Rulemaking Act, shall define:
181
(A) the terms:
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(I) "member"; and
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(II) "producer"; and
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(B) what constitutes an association, corporation, or other organization that is similar to
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an association, corporation, or organization described in Subsection (14)(a)(i)(A).
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(ii) The rules made under this Subsection (14)(b) shall be consistent with the filing
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requirements under federal law for a farmers' cooperative.
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(15) "Foreign corporation" means a corporation that is not incorporated or organized
189
under the laws of this state.
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(16) (a) "Foreign operating company" means a corporation that:
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(i) is incorporated in the United States; and
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(ii) 80% or more of whose business activity, as determined under Section
59-7-401
, is
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conducted outside the United States.
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(b) "Foreign operating company" does not include a corporation that qualifies for the
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Puerto Rico and Possession Tax Credit as provided in Section 936, Internal Revenue Code.
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(17) (a) "Foreign real estate investment trust" means:
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(i) a business entity organized outside the laws of the United States if:
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(A) at least 75% of the business entity's total asset value at the close of the business
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entity's taxable year is represented by:
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(I) real estate assets, as defined in Section 856(c)(5)(B), Internal Revenue Code;
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(II) cash or cash equivalents; or
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(III) one or more securities issued or guaranteed by the United States;
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(B) the business entity is:
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(I) not subject to income taxation:
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(Aa) on amounts distributed to the business entity's beneficial owners; and
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(Bb) in the jurisdiction in which the business entity is organized; or
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(II) exempt from income taxation on an entity level in the jurisdiction in which the
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business entity is organized;
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(C) the business entity distributes at least 85% of the business entity's taxable income,
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as computed in the jurisdiction in which the business entity is organized, to the holders of the
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business entity's:
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(I) shares or beneficial interests; and
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(II) on an annual basis;
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(D) (I) not more than 10% of the following is held directly, indirectly, or
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constructively by a single person:
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(Aa) the voting power of the business entity; or
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(Bb) the value of the shares or beneficial interests of the business entity; or
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(II) the shares of the business entity are regularly traded on an established securities
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market; and
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(E) the business entity is organized in a country that has a tax treaty with the United
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States; or
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(ii) a listed Australian property trust.
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(b) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act,
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the commission may make rules defining:
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(i) "cash or cash equivalents";
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(ii) "established securities market"; or
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(iii) "listed Australian property trust."
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(18) "Income" includes losses.
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(19) "Internal Revenue Code" means Title 26 of the United States Code as effective
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during the year in which Utah taxable income is determined.
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(20) "Nonbusiness income" is as defined in Section
59-7-302
.
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[(21) "Nonresident shareholder" means any shareholder of an S corporation who on
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the last day of the taxable year of the S corporation, is:]
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[(a) an individual not domiciled in Utah; or]
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[(b) a nonresident trust or nonresident estate, as defined in Section
59-10-103
.]
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[(22)] (21) "Real estate investment trust" is as defined in Section 856, Internal
237
Revenue Code.
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[(23)] (22) "Related expenses" means:
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(a) expenses directly attributable to nonbusiness income; and
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(b) the portion of interest or other expense indirectly attributable to both nonbusiness
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and business income which bears the same ratio to the aggregate amount of such interest or
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other expense, determined without regard to this Subsection [(23)] (22), as the average amount
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of the asset producing the nonbusiness income bears to the average amount of all assets of the
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taxpayer within the taxable year.
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[(24) "Resident shareholder" means any shareholder of an S corporation who is not a
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nonresident shareholder.]
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[(25)] (23) "Safe harbor lease" means a lease that qualified as a safe harbor lease under
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Section 168, Internal Revenue Code.
249
[(26)] (24) "S corporation" means an S corporation as defined in Section 1361,
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Internal Revenue Code.
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[(27)] (25) "State of the United States" includes any of the 50 states or the District of
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Columbia.
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[(28)] (26) (a) "Taxable year" means the calendar year or the fiscal year ending during
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such calendar year upon the basis of which the adjusted income is computed.
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(b) In the case of a return made for a fractional part of a year under this chapter or
256
under rules prescribed by the commission, "taxable year" includes the period for which such
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return is made.
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[(29)] (27) "Taxpayer" means any corporation subject to the tax imposed by this
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chapter.
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[(30)] (28) "Threshold level of business activity" means business activity in the United
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States equal to or greater than 20% of the corporation's total business activity as determined
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under Section
59-7-401
.
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[(31)] (29) "Unadjusted income" means federal taxable income as determined on a
264
separate return basis before intercompany eliminations as determined by the Internal Revenue
265
Code, before the net operating loss deduction and special deductions for dividends received.
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[(32)] (30) (a) "Unitary group" means a group of corporations that:
267
(i) are related through common ownership; and
268
(ii) by a preponderance of the evidence as determined by a court of competent
269
jurisdiction or the commission, are economically interdependent with one another as
270
demonstrated by the following factors:
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(A) centralized management;
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(B) functional integration; and
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(C) economies of scale.
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(b) "Unitary group" includes a captive real estate investment trust.
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(c) "Unitary group" does not include an S corporation.
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[(33)] (31) "United States" includes the 50 states and the District of Columbia.
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[(34)] (32) "Utah net loss" means the current year Utah taxable income before Utah
278
net loss deduction, if determined to be less than zero.
279
[(35)] (33) "Utah net loss deduction" means the amount of Utah net losses from other
280
taxable years that may be carried back or carried forward to the current taxable year in
281
accordance with Section
59-7-110
.
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[(36)] (34) (a) "Utah taxable income" means Utah taxable income before net loss
283
deduction less Utah net loss deduction.
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(b) "Utah taxable income" includes income from tangible or intangible property
285
located or having situs in this state, regardless of whether carried on in intrastate, interstate, or
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foreign commerce.
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[(37)] (35) "Utah taxable income before net loss deduction" means apportioned
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income plus nonbusiness income allocable to Utah net of related expenses.
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[(38)] (36) (a) "Water's edge combined report" means a report combining the income
290
and activities of:
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(i) all members of a unitary group that are:
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(A) corporations organized or incorporated in the United States, including those
293
corporations qualifying for the Puerto Rico and Possession Tax Credit as provided in Section
294
936, Internal Revenue Code, in accordance with Subsection [(38)] (36)(b); and
295
(B) corporations organized or incorporated outside of the United States meeting the
296
threshold level of business activity; and
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(ii) an affiliated group electing to file a water's edge combined report under Subsection
298
59-7-402
(2).
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(b) There is a rebuttable presumption that a corporation which qualifies for the Puerto
300
Rico and Possession Tax Credit provided in Section 936, Internal Revenue Code, is part of a
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unitary group.
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[(39)] (37) "Worldwide combined report" means the combination of the income and
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activities of all members of a unitary group irrespective of the country in which the
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corporations are incorporated or conduct business activity.
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Section 2.
Section
59-7-102
is amended to read:
306
59-7-102. Exemptions.
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(1) Except as provided in this section, the following are exempt from a tax under this
308
chapter:
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(a) an organization exempt under Section 501, Internal Revenue Code;
310
(b) an organization exempt under Section 528, Internal Revenue Code;
311
(c) an insurance company that is otherwise taxed on the insurance company's
312
premiums under Chapter 9, Taxation of Admitted Insurers;
313
(d) a building authority as defined in Section
17A-3-902
;
314
(e) a farmers' cooperative; or
315
(f) a public agency, as defined in Section
11-13-103
, with respect to or as a result of
316
an ownership interest in:
317
(i) a project, as defined in Section
11-13-103
; or
318
(ii) facilities providing additional project capacity, as defined in Section
11-13-103
.
319
(2) Notwithstanding any other provision in this chapter or Chapter 8, Gross Receipts
320
Tax on Certain Corporations Not Required to Pay Corporate Franchise or Income Tax Act, a
321
person not otherwise subject to the tax imposed by this chapter or Chapter 8 is not subject to
322
[the] a tax imposed by [Sections] Section
59-7-104
,
59-7-201
,
59-7-701
, [and] or
59-8-104
,
323
because of:
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(a) that person's ownership of tangible personal property located at the premises of a
325
printer's facility in this state with which the person has contracted for printing; or
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(b) the activities of the person's employees or agents who are:
327
(i) located solely at the premises of a printer's facility; and
328
(ii) performing services:
329
(A) related to:
330
(I) quality control;
331
(II) distribution; or
332
(III) printing services; and
333
(B) performed by the printer's facility in this state with which the person has
334
contracted for printing.
335
(3) Notwithstanding Subsection (1), an organization, company, authority, farmers'
336
cooperative, or public agency exempt from this chapter under Subsection (1) is subject to Part
337
8, Unrelated Business Income, to the extent provided in Part 8.
338
(4) Notwithstanding Subsection (1)(b), to the extent the income of an organization
339
described in Subsection (1)(b) is taxable for federal tax purposes under Section 528, Internal
340
Revenue Code, the organization's income is also taxable under this chapter.
341
Section 3.
Section
59-7-106
is amended to read:
342
59-7-106. Subtractions from unadjusted income.
343
In computing adjusted income the following amounts shall be subtracted from
344
unadjusted income:
345
(1) the foreign dividend gross-up included in gross income for federal income tax
346
purposes under Section 78, Internal Revenue Code;
347
(2) the net capital loss, as defined for federal purposes, if the taxpayer elects to deduct
348
the loss on the current Utah return. The deduction shall be made by claiming the deduction on
349
the current Utah return which shall be filed by the due date of the return, including extensions.
350
For the purposes of this Subsection (2) all capital losses in a given year must be:
351
(a) deducted in the year incurred; or
352
(b) carried forward as provided in Sections 1212(a)(1)(B) and (C), Internal Revenue
353
Code;
354
(3) the decrease in salary expense deduction for federal income tax purposes due to
355
claiming the federal jobs credit under Section 51, Internal Revenue Code;
356
(4) the decrease in qualified research and basic research expense deduction for federal
357
income tax purposes due to claiming the federal research and development credit under
358
Section 41, Internal Revenue Code;
359
(5) the decrease in qualified clinical testing expense deduction for federal income tax
360
purposes due to claiming the federal orphan drug credit under Section 28, Internal Revenue
361
Code;
362
(6) any decrease in any expense deduction for federal income tax purposes due to
363
claiming any other federal credit;
364
(7) the safe harbor lease adjustment required under Subsections
59-7-111
(1)(b) and
365
(2)(b);
366
(8) any income on the federal corporate return that has been previously taxed by Utah;
367
(9) amounts included in federal taxable income that are due to refunds of taxes
368
imposed for the privilege of doing business, or exercising a corporate franchise, including
369
income, franchise, corporate stock and business and occupation taxes paid by the corporation
370
to Utah, another state of the United States, a foreign country, a United States possession, or
371
the Commonwealth of Puerto Rico to the extent that the taxes were added to unadjusted
372
income under Section
59-7-105
;
373
(10) charitable contributions, to the extent allowed as a subtraction under Section
374
59-7-109
;
375
(11) (a) 50% of the dividends deemed received or received from subsidiaries which
376
are members of the unitary group and are organized or incorporated outside of the United
377
States unless such subsidiaries are included in a combined report under Section
59-7-402
or
378
59-7-403
. In arriving at the amount of the dividend exclusion, the taxpayer shall first deduct
379
from the dividends deemed received or received, the expense directly attributable to those
380
dividends. Interest expense attributable to excluded dividends shall be determined by
381
multiplying interest expense by a fraction, the numerator of which is the taxpayer's average
382
investment in such dividend paying subsidiaries, and the denominator of which is the
383
taxpayer's average total investment in assets;
384
(b) in determining income apportionable to this state, a portion of the factors of a
385
foreign subsidiary whose dividends are partially excluded under Subsection (11)(a) shall be
386
included in the combined report factors. The portion to be included shall be determined by
387
multiplying each factor of the foreign subsidiary by a fraction, but not to exceed 100%, the
388
numerator of which is the amount of the dividend paid by the foreign subsidiary which is
389
included in adjusted income, and the denominator of which is the current year earnings and
390
profits of the foreign subsidiary as determined under the Internal Revenue Code;
391
(12) (a) 50% of the adjusted income of a foreign operating company unless the
392
taxpayer has elected to file a worldwide combined report as provided in Section
59-7-403
. For
393
purposes of this Subsection (12), when calculating the adjusted income of a foreign operating
394
company, a foreign operating company may not deduct the subtractions allowable under this
395
Subsection (12) and Subsection (11);
396
(b) in determining income apportionable to this state, the factors for a foreign
397
operating company shall be included in the combined report factors in the same percentage its
398
adjusted income is included in the combined adjusted income;
399
(13) the amount of gain or loss which is included in unadjusted income but not
400
recognized for federal purposes on stock sold or exchanged by a member of a selling
401
consolidated group as defined in Section 338, Internal Revenue Code, if an election has been
402
made pursuant to Section 338(h)(10), Internal Revenue Code;
403
(14) the amount of gain or loss which is included in unadjusted income but not
404
recognized for federal purposes on stock sold, exchanged, or distributed by a corporation
405
pursuant to Section 336(e), Internal Revenue Code, if an election under Section 336(e),
406
Internal Revenue Code, has been made for federal purposes;
407
(15) (a) adjustments to gains, losses, depreciation expense, amortization expense, and
408
similar items due to a difference between basis for federal purposes and basis as computed
409
under Section
59-7-107
; and
410
(b) if there has been a reduction in federal basis for a federal tax credit where there is
411
no corresponding Utah tax credit, the amount of the reduction in basis shall be allowed as an
412
expense in the year of the federal credit;
413
(16) any interest expense not deducted on the federal corporate return under Section
414
265(b) or 291(e), Internal Revenue Code;
415
(17) 100% of the dividends received from subsidiaries which are insurance companies
416
exempt from this chapter under Subsection
59-7-102
(1)(c) and are under ["]common
417
ownership[" as defined by Subsection
59-7-101
(8)];
418
(18) subject to Subsection
59-7-105
(12), the amount of a qualified investment as
419
defined in Section
53B-8a-102
that:
420
(a) a corporation that is an account owner as defined in Section
53B-8a-102
makes
421
during the taxable year;
422
(b) the corporation described in Subsection (18)(a) does not deduct on a federal
423
corporation income tax return; and
424
(c) does not exceed the maximum amount of the qualified investment that may be
425
subtracted from unadjusted income for a taxable year in accordance with Subsections
426
53B-8a-106
(1)(d) and (f); and
427
(19) for purposes of income included in a combined report under Part 4, Combined
428
Reporting, the entire amount of the dividends a member of a unitary group receives or is
429
considered to receive from a captive real estate investment trust.
430
Section 4.
Section
59-7-402
is amended to read:
431
59-7-402. Water's edge combined report.
432
(1) Except as provided in Section
59-7-403
, if any corporation listed in Subsection
433
59-7-101
[(38)](36)(a) is doing business in Utah, the unitary group shall file a water's edge
434
combined report.
435
(2) (a) A group of corporations that are not otherwise a unitary group may elect to file
436
a water's edge combined report if each member of the group is:
437
(i) doing business in Utah;
438
(ii) part of the same affiliated group; and
439
(iii) qualified, under Section 1501, Internal Revenue Code, to file a federal
440
consolidated return.
441
(b) Each corporation within the affiliated group that is doing business in Utah must
442
consent to filing a combined report. If an affiliated group elects to file a combined report,
443
each corporation within the affiliated group that is doing business in Utah must file a
444
combined report.
445
(c) Corporations that elect to file a water's edge combined report under this section
446
may not thereafter elect to file a separate return without the consent of the commission.
447
Section 5.
Section
59-7-614.4
is enacted to read:
448
59-7-614.4. Tax credit for pass-through entity taxpayer.
449
(1) As used in this section:
450
(a) "Pass-through entity" is as defined in Section
59-10-1402
.
451
(b) "Pass-through entity taxpayer" is as defined in Section
59-10-1402
.
452
(2) A pass-through entity taxpayer may claim a refundable tax credit against the tax
453
otherwise due under this chapter.
454
(3) The tax credit described in Subsection (2) is equal to the amount paid or withheld
455
by the pass-through entity on behalf of the pass-through entity taxpayer described in
456
Subsection (2) in accordance with Section
59-10-1403.2
.
457
(4) A pass-through entity taxpayer may not claim a tax credit under this section for an
458
amount for which the pass-through entity taxpayer claims a tax credit under Section
459
59-10-1103
.
460
Section 6.
Section
59-7-701
is amended to read:
461
59-7-701. Taxation of S corporations -- Revenue and Taxation Interim
462
Committee study.
463
[An] (1) Except as provided in Section
59-7-102
and subject to the other provisions of
464
this part, beginning on July 1, 1994, and ending on the last day of the taxable year that begins
465
on or after January 1, 2012, but begins on or before December 31, 2012, an S corporation[,
466
except one described in Subsection
59-7-102
(2), shall be taxed for state purposes] is subject to
467
taxation in the same manner as that S corporation is taxed [for federal purposes as provided in
468
Subtitle A, Chapter 1S] under Subchapter S - Tax Treatment of S Corporations and Their
469
Shareholders, Sec. 1361 et seq., Internal Revenue Code[, and as modified by this chapter. The
470
tax rate for S corporations shall be the rate provided for corporations under Section
59-7-104
.
471
Taxes owed under this section shall be subject to the estimated tax payments as provided in
472
Section
59-7-504
].
473
(2) An S corporation is taxed at the tax rate provided in Section
59-7-104
.
474
(3) The business income and nonbusiness income of an S corporation is subject to Part
475
3, Allocation and Apportionment of Income - Utah UDITPA Provisions.
476
(4) An S corporation having income derived from or connected with Utah sources
477
shall make a return in accordance with Section
59-10-507
.
478
(5) An S corporation shall make payments of estimated tax as required by Section
479
59-7-504
.
480
(6) An S corporation is subject to Chapter 10, Part 14, Pass-Through Entities and
481
Pass-Through Entity Taxpayers Act.
482
(7) A pass-through entity taxpayer as defined in Section
59-10-1402
of an S
483
corporation is subject to Chapter 10, Part 14, Pass-Through Entities and Pass-Through Entity
484
Taxpayers Act.
485
(8) Provisions under this chapter governing the following apply to an S corporation:
486
(a) an assessment;
487
(b) a penalty;
488
(c) a refund; or
489
(d) a record required for an S corporation.
490
(9) (a) During the 2011 interim, the Revenue and Taxation Interim Committee shall
491
study the fiscal impacts of:
492
(i) the enactment of this bill; and
493
(ii) the taxation of S corporations under this part.
494
(b) On or before November 30, 2011, the Revenue and Taxation Interim Committee
495
shall report its findings and recommendations on the study to the Executive Appropriations
496
Committee.
497
Section 7.
Section
59-7-705
is amended to read:
498
59-7-705. Minimum tax not applicable to an S corporation.
499
The minimum tax provided in Section
59-7-104
does not apply to [S corporations
500
taxed under this part] an S corporation subject to taxation under Section
59-7-701
.
501
Section 8.
Section
59-7-706
is amended to read:
502
59-7-706. Distribution and credit of revenues.
503
[Any revenues] Revenues collected or received by the commission under this part shall
504
be deposited daily with the state treasurer and distributed and credited as provided in Section
505
59-10-544
.
506
Section 9.
Section
59-7-707
is amended to read:
507
59-7-707. Commission rulemaking authority.
508
[The] In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act,
509
the commission may [adopt] make rules to implement this part.
510
Section 10.
Section
59-10-103
is amended to read:
511
59-10-103. Definitions.
512
(1) As used in this chapter:
513
(a) "Adjusted gross income":
514
(i) for a resident or nonresident individual, is as defined in Section 62, Internal
515
Revenue Code; or
516
(ii) for a resident or nonresident estate or trust, is as calculated in Section 67(e),
517
Internal Revenue Code.
518
(b) "Corporation" includes:
519
(i) an association;
520
(ii) a joint stock company; and
521
(iii) an insurance company.
522
(c) "Distributable net income" is as defined in Section 643, Internal Revenue Code.
523
(d) "Employee" is as defined in Section
59-10-401
.
524
(e) "Employer" is as defined in Section
59-10-401
.
525
(f) "Federal taxable income":
526
(i) for a resident or nonresident individual, means taxable income as defined by
527
Section 63, Internal Revenue Code; or
528
(ii) for a resident or nonresident estate or trust, is as calculated in Section 641(a) and
529
(b), Internal Revenue Code.
530
(g) "Fiduciary" means:
531
(i) a guardian;
532
(ii) a trustee;
533
(iii) an executor;
534
(iv) an administrator;
535
(v) a receiver;
536
(vi) a conservator; or
537
(vii) any person acting in any fiduciary capacity for any individual.
538
(h) "Guaranteed annuity interest" is as defined in 26 C.F.R. Sec. 1.170A-6(c)(2).
539
(i) "Homesteaded land diminished from the Uintah and Ouray Reservation" means the
540
homesteaded land that was held to have been diminished from the Uintah and Ouray
541
Reservation in Hagen v. Utah, 510 U.S. 399 (1994).
542
(j) "Individual" means a natural person and includes aliens and minors.
543
(k) "Irrevocable trust" means a trust in which the settlor may not revoke or terminate
544
all or part of the trust without the consent of a person who has a substantial beneficial interest
545
in the trust and the interest would be adversely affected by the exercise of the settlor's power to
546
revoke or terminate all or part of the trust.
547
(l) "Military service" is as defined in Pub. L. No. 108-189, Sec. 101.
548
(m) "Nonresident individual" means an individual who is not a resident of this state.
549
(n) "Nonresident trust" or "nonresident estate" means a trust or estate which is not a
550
resident estate or trust.
551
(o) (i) "Partnership" includes a syndicate, group, pool, joint venture, or other
552
unincorporated organization:
553
(A) through or by means of which any business, financial operation, or venture is
554
carried on; and
555
(B) which is not, within the meaning of this chapter:
556
(I) a trust;
557
(II) an estate; or
558
(III) a corporation.
559
(ii) "Partnership" does not include any organization not included under the definition
560
of "partnership" in Section 761, Internal Revenue Code.
561
(iii) "Partner" includes a member in a syndicate, group, pool, joint venture, or
562
organization described in Subsection (1)(o)(i).
563
(p) "Qualified nongrantor charitable lead trust" means a trust:
564
(i) that is irrevocable;
565
(ii) that has a trust term measured by:
566
(A) a fixed term of years; or
567
(B) the life of a person living on the day on which the trust is created;
568
(iii) under which:
569
(A) a portion of the value of the trust assets is distributed during the trust term:
570
(I) to an organization described in Section 170(c), Internal Revenue Code; and
571
(II) as a:
572
(Aa) guaranteed annuity interest; or
573
(Bb) unitrust interest; and
574
(B) assets remaining in the trust at the termination of the trust term are distributed to a
575
beneficiary:
576
(I) designated in the trust; and
577
(II) that is not an organization described in Section 170(c), Internal Revenue Code;
578
(iv) for which the trust is allowed a deduction under Section 642(c), Internal Revenue
579
Code; and
580
(v) under which the grantor of the trust is not treated as the owner of any portion of the
581
trust for federal income tax purposes.
582
(q) (i) "Resident individual" means:
583
(A) an individual who is domiciled in this state for any period of time during the
584
taxable year, but only for the duration of the period during which the individual is domiciled
585
in this state; or
586
(B) an individual who is not domiciled in this state but:
587
(I) maintains a permanent place of abode in this state; and
588
(II) spends in the aggregate 183 or more days of the taxable year in this state.
589
(ii) For purposes of Subsection (1)(q)(i)(B), a fraction of a calendar day shall be
590
counted as a whole day.
591
(r) "Resident estate" or "resident trust" is as defined in Section
75-7-103
.
592
(s) "Servicemember" is as defined in Pub. L. No. 108-189, Sec. 101.
593
(t) "State income tax percentage for a nonresident estate or trust" means a percentage
594
equal to a nonresident estate's or trust's state taxable income for the taxable year divided by the
595
nonresident estate's or trust's total adjusted gross income for that taxable year after making the
596
adjustments required by:
597
(i) Section
59-10-202
;
598
(ii) Section
59-10-207
;
599
(iii) Section
59-10-209.1
; or
600
(iv) Section
59-10-210
.
601
(u) "State income tax percentage for a nonresident individual" means a percentage
602
equal to a nonresident individual's state taxable income for the taxable year divided by the
603
difference between:
604
(i) subject to Section
59-10-1405
, the nonresident individual's total adjusted gross
605
income for that taxable year, after making the:
606
(A) additions and subtractions required by Section
59-10-114
; and
607
(B) adjustments required by Section
59-10-115
; and
608
(ii) if the nonresident individual described in Subsection (1)(u)(i) is a servicemember,
609
the compensation the servicemember receives for military service if the servicemember is
610
serving in compliance with military orders.
611
(v) "State income tax percentage for a part-year resident individual" means, for a
612
taxable year, a fraction:
613
(i) the numerator of which is the sum of:
614
(A) subject to [Subsections
59-10-1404
(3) and (4)] Section
59-10-1404.5
, for the time
615
period during the taxable year that the part-year resident individual is a resident, the part-year
616
resident individual's total adjusted gross income for that time period, after making the:
617
(I) additions and subtractions required by Section
59-10-114
; and
618
(II) adjustments required by Section
59-10-115
; and
619
(B) for the time period during the taxable year that the part-year resident individual is
620
a nonresident, an amount calculated by:
621
(I) determining the part-year resident individual's adjusted gross income for that time
622
period, after making the:
623
(Aa) additions and subtractions required by Section
59-10-114
; and
624
(Bb) adjustments required by Section
59-10-115
; and
625
(II) calculating the portion of the amount determined under Subsection (1)(v)(i)(B)(I)
626
that is derived from Utah sources in accordance with Section
59-10-117
; and
627
(ii) the denominator of which is the difference between:
628
(A) the part-year resident individual's total adjusted gross income for that taxable year,
629
after making the:
630
(I) additions and subtractions required by Section
59-10-114
; and
631
(II) adjustments required by Section
59-10-115
; and
632
(B) if the part-year resident individual is a servicemember, any compensation the
633
servicemember receives for military service during the portion of the taxable year that the
634
servicemember is a nonresident if the servicemember is serving in compliance with military
635
orders.
636
(w) "Taxable income" or "state taxable income":
637
(i) subject to [Subsection
59-10-1404
(3)] Section
59-10-1404.5
, for a resident
638
individual, means the resident individual's adjusted gross income after making the:
639
(A) additions and subtractions required by Section
59-10-114
; and
640
(B) adjustments required by Section
59-10-115
;
641
(ii) for a nonresident individual, is an amount calculated by:
642
(A) determining the nonresident individual's adjusted gross income for the taxable
643
year, after making the:
644
(I) additions and subtractions required by Section
59-10-114
; and
645
(II) adjustments required by Section
59-10-115
; and
646
(B) calculating the portion of the amount determined under Subsection (1)(w)(ii)(A)
647
that is derived from Utah sources in accordance with Section
59-10-117
;
648
(iii) for a resident estate or trust, is as calculated under Section
59-10-201.1
; and
649
(iv) for a nonresident estate or trust, is as calculated under Section
59-10-204
.
650
(x) "Taxpayer" means any individual, estate, trust, or beneficiary of an estate or trust,
651
that has income subject in whole or part to the tax imposed by this chapter.
652
(y) "Trust term" means a time period:
653
(i) beginning on the day on which a qualified nongrantor charitable lead trust is
654
created; and
655
(ii) ending on the day on which the qualified nongrantor charitable lead trust described
656
in Subsection (1)(y)(i) terminates.
657
(z) "Uintah and Ouray Reservation" means the lands recognized as being included
658
within the Uintah and Ouray Reservation in:
659
(i) Hagen v. Utah, 510 U.S. 399 (1994); and
660
(ii) Ute Indian Tribe v. Utah, 114 F.3d 1513 (10th Cir. 1997).
661
(aa) "Unadjusted income" means an amount equal to the difference between:
662
(i) the total income required to be reported by a resident or nonresident estate or trust
663
on the resident or nonresident estate's or trust's federal income tax return for estates and trusts
664
for the taxable year; and
665
(ii) the sum of the following:
666
(A) fees paid or incurred to the fiduciary of a resident or nonresident estate or trust:
667
(I) for administering the resident or nonresident estate or trust; and
668
(II) that the resident or nonresident estate or trust deducts as allowed on the resident or
669
nonresident estate's or trust's federal income tax return for estates and trusts for the taxable
670
year;
671
(B) the income distribution deduction that a resident or nonresident estate or trust
672
deducts under Section 651 or 661, Internal Revenue Code, as allowed on the resident or
673
nonresident estate's or trust's federal income tax return for estates and trusts for the taxable
674
year;
675
(C) the amount that a resident or nonresident estate or trust deducts as a deduction for
676
estate tax or generation skipping transfer tax under Section 691(c), Internal Revenue Code, as
677
allowed on the resident or nonresident estate's or trust's federal income tax return for estates
678
and trusts for the taxable year; and
679
(D) the amount that a resident or nonresident estate or trust deducts as a personal
680
exemption under Section 642(b), Internal Revenue Code, as allowed on the resident or
681
nonresident estate's or trust's federal income tax return for estates and trusts for the taxable
682
year.
683
(bb) "Unitrust interest" is as defined in 26 C.F.R. Sec. 1.170A-6(c)(2).
684
(cc) "Ute tribal member" means a person who is enrolled as a member of the Ute
685
Indian Tribe of the Uintah and Ouray Reservation.
686
(dd) "Ute tribe" means the Ute Indian Tribe of the Uintah and Ouray Reservation.
687
(ee) "Wages" is as defined in Section
59-10-401
.
688
(2) (a) Any term used in this chapter has the same meaning as when used in
689
comparable context in the laws of the United States relating to federal income taxes unless a
690
different meaning is clearly required.
691
(b) Any reference to the Internal Revenue Code or to the laws of the United States
692
shall mean the Internal Revenue Code or other provisions of the laws of the United States
693
relating to federal income taxes that are in effect for the taxable year.
694
(c) Any reference to a specific section of the Internal Revenue Code or other provision
695
of the laws of the United States relating to federal income taxes shall include any
696
corresponding or comparable provisions of the Internal Revenue Code as amended,
697
redesignated, or reenacted.
698
Section 11.
Section
59-10-117
is amended to read:
699
59-10-117. State taxable income derived from Utah sources.
700
(1) For purposes of Section
59-10-116
, state taxable income includes those items
701
includable in state taxable income attributable to or resulting from:
702
(a) the ownership in this state of any interest in real or tangible personal property,
703
including real property or property rights from which gross income from mining as defined by
704
Section 613(c), Internal Revenue Code, is derived; or
705
(b) the carrying on of a business, trade, profession, or occupation in this state.
706
(2) For the purposes of Subsection (1):
707
(a) income from intangible personal property, including annuities, dividends, interest,
708
and gains from the disposition of intangible personal property shall constitute income derived
709
from Utah sources only to the extent that the income is from property employed in a trade,
710
business, profession, or occupation carried on in this state;
711
(b) a deduction with respect to a capital loss, net long-term capital gain, or net
712
operating loss shall be based solely on income, gain, loss, and deduction connected with Utah
713
sources, under rules prescribed by the commission in accordance with Title 63G, Chapter 3,
714
Utah Administrative Rulemaking Act, but otherwise shall be determined in the same manner
715
as the corresponding federal deductions;
716
(c) a salary, wage, commission, or compensation for personal services rendered outside
717
this state may not be considered to be derived from Utah sources;
718
(d) a nonresident shareholder's distributive share of ordinary income, gain, loss, and
719
deduction derived from or connected with Utah sources shall be determined under Section
720
59-10-118
;
721
(e) a nonresident, other than a dealer holding property primarily for sale to customers
722
in the ordinary course of the dealer's trade or business, may not be considered to carry on a
723
trade, business, profession, or occupation in this state solely by reason of the purchase or sale
724
of property for the nonresident's own account;
725
(f) if a trade, business, profession, or occupation is carried on partly within and partly
726
without this state, an item of income, gain, loss, or a deduction derived from or connected with
727
Utah sources shall be determined in accordance with Section
59-10-118
;
728
(g) a nonresident partner's distributive share of partnership income, gain, loss, [and]
729
deduction, or credit derived from or connected with Utah sources shall be determined under
730
[Section
59-10-1405
] Part 14, Pass-Through Entities and Pass-Through Entity Taxpayers Act;
731
(h) the share of a nonresident estate or trust or a nonresident beneficiary of any estate
732
or trust in income, gain, loss, or deduction derived from or connected with Utah sources shall
733
be determined under Section
59-10-207
; and
734
(i) any dividend, interest, or distributive share of income, gain, or loss from a real
735
estate investment trust, as defined in Section
59-7-101
, distributed or allocated to a
736
nonresident investor in the trust, including any shareholder, beneficiary, or owner of a
737
beneficial interest in the trust, shall be income from intangible personal property under
738
Subsection (2)(a), and shall constitute income derived from Utah sources only to the extent the
739
nonresident investor is employing its beneficial interest in the trust in a trade, business,
740
profession, or occupation carried on by the investor in this state.
741
Section 12.
Section
59-10-507
is amended to read:
742
59-10-507. Return by a pass-through entity.
743
(1) As used in this section:
744
(a) "Pass-through entity" is as defined in Section
59-10-1402
.
745
(b) "Taxable year" means a year or other time period that would be a taxable year of a
746
pass-through entity if the pass-through entity were subject to taxation under this chapter.
747
(2) A pass-through entity having any income derived from or connected with Utah
748
sources [in this state] shall make a return for the taxable year as prescribed by the commission.
749
[(3) For purposes of Subsection (2), a pass-through entity's income derived from
750
sources in this state shall be determined in accordance with the principles of Section
751
59-10-1405
.]
752
Section 13.
Section
59-10-1103
is amended to read:
753
59-10-1103. Tax credit for pass-through entity taxpayer.
754
[(1) (a) A nonresident shareholder of an S corporation]
755
(1) As used in this section:
756
(a) "Pass-through entity" is as defined in Section
59-10-1402
.
757
(b) "Pass-through entity taxpayer" is as defined in Section
59-10-1402
.
758
(2) A pass-through entity taxpayer may claim a refundable tax credit against the tax
759
otherwise due under this chapter if that [nonresident shareholder] pass-through entity taxpayer
760
is a:
761
[(i)] (a) [nonresident] claimant;
762
[(ii)] (b) [nonresident] estate; or
763
[(iii)] (c) [nonresident] trust.
764
[(b)] (3) The tax credit described in Subsection [(1)(a)] (2) is equal to the amount
765
paid or withheld by the [S corporation] pass-through entity on behalf of the [nonresident
766
shareholder] pass-through entity taxpayer described in Subsection [(1)(a)] (2) in accordance
767
with Section [
59-7-703
]
59-10-1403.2
.
768
[(2) A nonresident shareholder described in Subsection (1)(a) that has no other Utah
769
source income may elect:]
770
[(a) not to claim the tax credit provided in Subsection (1); and]
771
[(b) not to file a tax return under this chapter for the taxable year.]
772
[(3) If a nonresident shareholder described in Subsection (1)(a) may claim a
773
nonrefundable tax credit as defined in Section
59-10-1002
or a refundable tax credit other than
774
the tax credit described in Subsection (1), the nonresident shareholder described in Subsection
775
(1)(a) shall file a tax return under this chapter to claim those nonrefundable tax credits or
776
refundable tax credits.]
777
(4) A pass-through entity taxpayer may not claim a tax credit under this section for an
778
amount for which the pass-through entity taxpayer claims a tax credit under Section
779
59-7-614.4
.
780
Section 14.
Section
59-10-1401
is amended to read:
781
Part 14. Pass-Through Entities and Pass-Through Entity Taxpayers Act
782
59-10-1401. Title.
783
This part is known as the "[Income Tax Treatment of] Pass-Through Entities and
784
Pass-Through Entity Taxpayers Act."
785
Section 15.
Section
59-10-1402
is amended to read:
786
59-10-1402. Definitions.
787
As used in this part:
788
[(1) "Limited liability company" includes a foreign limited liability company.]
789
(1) "Addition, subtraction, or adjustment" means:
790
(a) for a pass-through entity taxpayer that is classified as a C corporation for federal
791
income tax purposes, under Chapter 7, Corporate Franchise and Income Taxes:
792
(i) an addition to unadjusted income described in Section
59-7-105
; or
793
(ii) a subtraction from unadjusted income described in Section
59-7-106
;
794
(b) for a pass-through entity taxpayer that is classified as an individual, partnership, or
795
S corporation for federal income tax purposes:
796
(i) an addition to or subtraction from adjusted gross income described in Section
797
59-10-114
; or
798
(ii) an adjustment to adjusted gross income described in Section
59-10-115
; or
799
(c) for a pass-through entity taxpayer that is classified as an estate or a trust for federal
800
income tax purposes:
801
(i) an addition to or subtraction from unadjusted income described in Section
802
59-10-202
; or
803
(ii) an adjustment to unadjusted income described in Section
59-10-209.1
.
804
(2) "Business income" means income arising from transactions and activity in the
805
regular course of a pass-through entity's trade or business and includes income from tangible
806
and intangible property if the acquisition, management, and disposition of the property
807
constitutes integral parts of the pass-through entity's regular trade or business operations.
808
(3) "C corporation" is as defined in Section 1361, Internal Revenue Code.
809
(4) "Commercial domicile" means the principal place from which the trade or business
810
of a business entity is directed or managed.
811
(5) "Derived from or connected with Utah sources" means:
812
(a) if a pass-through entity taxpayer is classified as a C corporation for federal income
813
tax purposes, derived from or connected with Utah sources in accordance with Chapter 7, Part
814
3, Allocation and Apportionment of Income - Utah UDITPA Provisions; or
815
(b) if a pass-through entity or pass-through entity taxpayer is classified as an estate,
816
individual, partnership, S corporation, or a trust for federal income tax purposes, derived from
817
or connected with Utah sources in accordance with Sections
59-10-117
and
59-10-118
.
818
(6) "Nonbusiness income" means all income of a pass-through entity other than
819
business income.
820
(7) "Nonresident business entity" means a business entity that does not have its
821
commercial domicile in this state.
822
(8) "Nonresident pass-through entity taxpayer" means a pass-through entity taxpayer
823
that is a:
824
(a) nonresident individual; or
825
(b) nonresident business entity.
826
[(2)] (9) (a) "Pass-through entity" means a business entity that is:
827
(i) the following if classified as a partnership for federal income tax purposes:
828
[(i)] (A) a general partnership;
829
[(ii)] (B) a limited liability company;
830
[(iii)] (C) a limited liability partnership; or
831
[(iv)] (D) a limited partnership; [or]
832
(ii) an S corporation; or
833
[(v)] (iii) a business entity similar to [Subsections (2)(a)(i) through (iv)] Subsection
834
(9)(a)(i) or (ii):
835
(A) with respect to which the business entity's income [or losses are], gain, loss,
836
deduction, or credit is divided among and passed through to [taxpayers] one or more
837
pass-through entity taxpayers; and
838
(B) as defined by the commission by rule made in accordance with Title 63G, Chapter
839
3, Utah Administrative Rulemaking Act.
840
(b) "Pass-through entity" does not include [a trust] an estate or trust that is classified
841
as an estate or trust for federal income tax purposes.
842
[(3) "Taxpayer" means:]
843
(10) "Pass-through entity taxpayer " means a resident or nonresident individual, a
844
resident or nonresident business entity, or a resident or nonresident estate or trust:
845
(a) that is:
846
[(a)] (i) for a general partnership, a partner;
847
[(b)] (ii) for a limited liability company, a member;
848
[(c)] (iii) for a limited liability partnership, a partner;
849
[(d)] (iv) for a limited partnership, a partner; [or]
850
(v) for an S corporation, a shareholder; or
851
[(e)] (vi) for a business entity described in Subsection [(2)(a)(v)] (9)(a)(iii), a member,
852
partner, shareholder, or other title designated by the commission by rule made in accordance
853
with Title 63G, Chapter 3, Utah Administrative Rulemaking Act[.]; and
854
(b) to which the income, gain, loss, deduction, or credit of a pass-through entity is
855
passed through.
856
(11) "Resident business entity" means a business entity that is not a nonresident
857
business entity.
858
(12) "Resident pass-through entity taxpayer" means a pass-through entity taxpayer that
859
is a:
860
(a) resident individual; or
861
(b) resident business entity.
862
(13) "Return" means a return that a pass-through entity taxpayer files:
863
(a) for a pass-through entity taxpayer that is classified as a C corporation for federal
864
income tax purposes, under Chapter 7, Corporate Franchise and Income Taxes; or
865
(b) for a pass-through entity taxpayer that is classified as an estate, individual,
866
partnership, S corporation, or a trust for federal income tax purposes, under this chapter.
867
(14) "S corporation" is as defined in Section 1361, Internal Revenue Code.
868
(15) "Share of income, gain, loss, deduction, or credit of a pass-through entity" means:
869
(a) for a pass-through entity except for a pass-through entity that is an S corporation:
870
(i) for a resident pass-through entity taxpayer, the resident pass-through entity
871
taxpayer's distributive share of income, gain, loss, deduction, or credit of the pass-through
872
entity as determined under Section 704 et seq., Internal Revenue Code; and
873
(ii) for a nonresident pass-through entity taxpayer, the nonresident pass-through entity
874
taxpayer's distributive share of income, gain, loss, deduction, or credit of the pass-through
875
entity:
876
(A) as determined under Section 704 et seq., Internal Revenue Code; and
877
(B) derived from or connected with Utah sources; or
878
(b) for an S corporation:
879
(i) for a resident pass-through entity taxpayer, the resident pass-through entity
880
taxpayer's pro rata share of income, gain, loss, deduction, or credit of the S corporation, as
881
determined under Sec. 1366 et seq., Internal Revenue Code; or
882
(ii) for a nonresident pass-through entity taxpayer, the nonresident pass-through entity
883
taxpayer's pro rata share of income, gain, loss, deduction, or credit of the S corporation:
884
(A) as determined under Section 1366 et seq., Internal Revenue Code; and
885
(B) derived from or connected with Utah sources.
886
Section 16.
Section
59-10-1403
is amended to read:
887
59-10-1403. Income tax treatment of a pass-through entity -- Returns --
888
Classification same as under Internal Revenue Code.
889
(1) Subject to Subsection (3), a pass-through entity is not subject to a tax imposed by
890
this chapter.
891
(2) The income [or losses], gain, loss, deduction, or credit of a pass-through entity
892
shall be [divided among and] passed through to one or more pass-through entity taxpayers as
893
provided in this part.
894
(3) A pass-through entity is subject to the return filing requirements of Section
895
59-10-507
.
896
(4) A pass-through entity that [is a limited liability company that] transacts business in
897
the state shall be classified for purposes of taxation under this title in the same manner as the
898
[limited liability company] pass-through entity is classified for federal income tax purposes.
899
Section 17.
Section
59-10-1403.1
is enacted to read:
900
59-10-1403.1. Income tax treatment of a pass-through entity taxpayer -- Return
901
filing requirements.
902
(1) Subject to the other provisions of this part, a pass-through entity taxpayer is
903
subject to taxation:
904
(a) for a pass-through entity taxpayer that is classified as a C corporation for federal
905
income tax purposes:
906
(i) if that pass-through entity taxpayer is a resident pass-through entity taxpayer, as a
907
domestic corporation is taxed under Chapter 7, Corporate Franchise and Income Taxes; or
908
(ii) if that pass-through entity taxpayer is a nonresident pass-through entity taxpayer,
909
as a foreign corporation is taxed under Chapter 7, Corporate Franchise and Income Taxes; or
910
(b) for a pass-through entity taxpayer that is classified as an estate, individual,
911
partnership, S corporation, or a trust for federal income tax purposes:
912
(i) if that pass-through entity taxpayer is a resident pass-through entity taxpayer, as a
913
resident estate, resident individual, resident partnership, resident S corporation, or resident
914
trust is taxed under this chapter; or
915
(ii) if that pass-through entity taxpayer is a nonresident pass-through entity taxpayer,
916
as a nonresident estate, nonresident individual, nonresident partnership, nonresident S
917
corporation, or nonresident trust is taxed under this chapter.
918
(2) A pass-through entity taxpayer is subject to taxation on the pass-through entity
919
taxpayer's share of income, gain, loss, deduction, or credit of the pass-through entity.
920
(3) (a) Subject to Subsection (3)(b)(iii), a resident pass-through entity taxpayer shall
921
file a return:
922
(i) if the resident pass-through entity taxpayer is classified as a C corporation for
923
federal income tax purposes, as a domestic corporation under Chapter 7, Corporate Franchise
924
and Income Taxes; or
925
(ii) if the resident pass-through entity taxpayer is classified as an estate, individual,
926
partnership, S corporation, or a trust for federal income tax purposes, as a resident estate,
927
resident individual, resident partnership, resident S corporation, or resident trust under this
928
chapter.
929
(b) (i) Except as provided in Subsection (3)(b)(ii) and subject to Subsection (3)(b)(iii)
930
or (iv), a nonresident pass-through entity taxpayer shall file a return:
931
(A) if the nonresident pass-through entity taxpayer is classified as a C corporation for
932
federal income tax purposes, as a foreign corporation under Chapter 7, Corporate Franchise
933
and Income Taxes; or
934
(B) if the nonresident pass-through entity taxpayer is classified as an estate,
935
individual, partnership, S corporation, or a trust for federal income tax purposes, as a
936
nonresident estate, nonresident individual, nonresident partnership, nonresident S corporation,
937
or nonresident trust under this chapter.
938
(ii) A nonresident pass-through entity taxpayer is not required to file a return if:
939
(A) the nonresident pass-through entity taxpayer does not have:
940
(I) for a nonresident pass-through entity taxpayer that is classified as a C corporation
941
for federal income tax purposes, unadjusted income as defined in Section
59-7-101
derived
942
from or connected with Utah sources, except for the nonresident pass-through entity taxpayer's
943
share of income, gain, loss, deduction, or credit of the pass-through entity;
944
(II) for a nonresident pass-through entity taxpayer that is classified as an individual,
945
partnership, or S corporation for federal income tax purposes, adjusted gross income derived
946
from or connected with Utah sources, except for the nonresident pass-through entity taxpayer's
947
share of income, gain, loss, deduction, or credit of the pass-through entity; or
948
(III) for a nonresident pass-through entity taxpayer that is classified as an estate or a
949
trust for federal income tax purposes, unadjusted income as defined in Section
59-10-103
950
derived from or connected with Utah sources, except for the nonresident pass-through entity
951
taxpayer's share of income, gain, loss, deduction, or credit of the pass-through entity;
952
(B) the nonresident pass-through entity taxpayer does not seek to claim a tax credit
953
allowed against a tax imposed under:
954
(I) Chapter 7, Corporate Franchise and Income Taxes; or
955
(II) this chapter;
956
(C) the pass-through entity pays or withholds a tax on behalf of the nonresident
957
pass-through entity taxpayer and remits that tax to the commission:
958
(I) in accordance with Section
59-10-1403.2
; and
959
(II) if a nonresident pass-through entity taxpayer is classified as a C corporation for
960
federal income tax purposes, in an amount that is equal to or greater than the minimum tax
961
under Section
59-7-104
; and
962
(D) the nonresident pass-through entity taxpayer is not a member of a unitary group as
963
defined in Section
59-7-101
that is required to file a return in this state.
964
(iii) A nonresident pass-through entity taxpayer that is not otherwise required to file a
965
return under this Subsection (3) may file a return under:
966
(A) Chapter 7, Corporate Franchise and Income Taxes; or
967
(B) this chapter.
968
(iv) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act,
969
the commission may make rules for a pass-through entity taxpayer, except for a pass-through
970
entity taxpayer who is a resident individual, to file a return under this section if two or more
971
pass-through entities pay or withhold a tax in accordance with Section
59-10-1403.2
on behalf
972
of the pass-through entity taxpayer.
973
Section 18.
Section
59-10-1403.2
is enacted to read:
974
59-10-1403.2. Pass-through entity payment or withholding of tax on behalf of a
975
pass-through entity taxpayer -- Exceptions to payment or withholding requirement --
976
Procedures and requirements -- Failure to pay or withhold a tax on behalf of a
977
pass-through entity taxpayer.
978
(1) (a) Except as provided in Subsection (1)(b), for a taxable year, a pass-through
979
entity shall pay or withhold a tax:
980
(i) on:
981
(A) the business income of the pass-through entity; and
982
(B) the nonbusiness income of the pass-through entity derived from or connected with
983
Utah sources; and
984
(ii) on behalf of a pass-through entity taxpayer.
985
(b) A pass-through entity is not required to pay or withhold a tax under Subsection
986
(1)(a):
987
(i) on behalf of a pass-through entity taxpayer who is a resident individual;
988
(ii) if the pass-through entity is an organization exempt from taxation under
989
Subsection
59-7-102
(1)(a); or
990
(iii) if the pass-through entity is a publicly traded partnership:
991
(A) as defined in Section 7704(b), Internal Revenue Code;
992
(B) that is classified as a partnership for federal income tax purposes; and
993
(C) that files an annual information return reporting the following with respect to each
994
partner of the publicly traded partnership with income derived from or connected with Utah
995
sources that exceeds $500 in a taxable year:
996
(I) the partner's name;
997
(II) the partner's address;
998
(III) the partner's taxpayer identification number; and
999
(IV) other information required by the commission.
1000
(2) (a) Subject to Subsection (2)(b), the tax a pass-through entity shall pay or withhold
1001
on behalf of a pass-through entity taxpayer for a taxable year is an amount:
1002
(i) determined by the commission by rule made in accordance with Title 63G, Chapter
1003
3, Utah Administrative Rulemaking Act; and
1004
(ii) that the commission estimates will be sufficient to pay the tax liability of the
1005
pass-through entity taxpayer under this chapter with respect to the income described in
1006
Subsection (1)(a)(i) of that pass-through entity for the taxable year.
1007
(b) The rules the commission makes in accordance with Subsection (2)(a):
1008
(i) except as provided in Subsection (2)(c):
1009
(A) shall:
1010
(I) for a pass-through entity except for a pass-through entity that is an S corporation,
1011
take into account items of income, gain, loss, deduction, and credit as analyzed on the
1012
schedule for reporting partners' distributive share items as part of the federal income tax return
1013
for the pass-through entity; or
1014
(II) for a pass-through entity that is an S corporation, take into account items of
1015
income, gain, loss, deduction, and credit as reconciled on the schedule for reporting
1016
shareholders' pro rata share items as part of the federal income tax return for the pass-through
1017
entity; and
1018
(B) notwithstanding Subsection (2)(b)(ii)(D), take into account the refundable tax
1019
credit provided in Section
59-6-102
; and
1020
(ii) may not take into account the following items if taking those items into account
1021
does not result in an accurate estimate of a pass-through entity taxpayer's tax liability under
1022
this chapter for the taxable year:
1023
(A) a capital loss;
1024
(B) a passive loss;
1025
(C) another item of deduction or loss if that item of deduction or loss is generally
1026
subject to significant reduction or limitation in calculating:
1027
(I) for a pass-through entity taxpayer that is classified as a C corporation for federal
1028
income tax purposes, unadjusted income as defined in Section
59-7-101
;
1029
(II) for a pass-through entity that is classified as an individual, partnership, or S
1030
corporation for federal income tax purposes, adjusted gross income; or
1031
(III) for a pass-through entity that is classified as an estate or a trust for federal income
1032
tax purposes, unadjusted income as defined in Section
59-10-103
; or
1033
(D) a tax credit allowed against a tax imposed under:
1034
(I) Chapter 7, Corporate Franchise and Income Taxes; or
1035
(II) this chapter.
1036
(c) The rules the commission makes in accordance with Subsection (2)(a) may
1037
establish a method for taking into account items of income, gain, loss, deduction, or credit of a
1038
pass-through entity if:
1039
(i) for a pass-through entity except for a pass-through entity that is an S corporation,
1040
the pass-through entity does not analyze the items of income, gain, loss, deduction, or credit
1041
on the schedule for reporting partners' distributive share items as part of the federal income tax
1042
return for the pass-through entity; or
1043
(ii) for a pass-through entity that is an S corporation, the pass-through entity does not
1044
reconcile the items of income, gain, loss, deduction, or credit on the schedule for reporting
1045
shareholders' pro rata share items as part of the federal income tax return for the pass-through
1046
entity.
1047
(3) A pass-through entity shall remit to the commission the tax the pass-through entity
1048
pays or withholds on behalf of a pass-through entity taxpayer under this section:
1049
(a) on or before the due date of the pass-through entity's return, not including
1050
extensions; and
1051
(b) on a form provided by the commission.
1052
(4) A pass-through entity shall provide a statement to a pass-through entity taxpayer
1053
on behalf of whom the pass-through entity pays or withholds a tax under this section showing
1054
the amount of tax the pass-through entity pays or withholds under this section for the taxable
1055
year on behalf of the pass-through entity taxpayer.
1056
(5) Notwithstanding Section
59-1-401
or
59-1-402
, the commission may not collect an
1057
amount under this section for a taxable year from a pass-through entity and shall waive a
1058
penalty or interest on that amount if:
1059
(a) the pass-through entity fails to pay or withhold the tax on the amount as required
1060
by this section on behalf of the pass-through entity taxpayer;
1061
(b) the pass-through entity taxpayer:
1062
(i) files a return on or before the due date for filing the pass-through entity's return,
1063
including extensions; and
1064
(ii) on or before the due date including extensions described in Subsection (5)(b)(i),
1065
pays the tax on the amount for the taxable year:
1066
(A) if the pass-through entity taxpayer is classified as a C corporation for federal
1067
income tax purposes, under Chapter 7, Corporate Franchise and Income Taxes; or
1068
(B) if the pass-through entity taxpayer is classified as an estate, individual,
1069
partnership, S corporation, or a trust for federal income tax purposes, under this chapter; and
1070
(c) the pass-through entity applies to the commission.
1071
Section 19.
Section
59-10-1404
is amended to read:
1072
59-10-1404. Character of an item of income, gain, loss, deduction, or credit.
1073
[(1) Each item of income, gain, loss, or deduction of a pass-through entity has the
1074
same character for a taxpayer under this chapter as that item of income, gain, loss, or
1075
deduction has for federal income tax purposes.]
1076
[(2) If] Regardless of whether or how an item of income, gain, loss, [or] deduction
1077
[described in Subsection (1) is not], or credit is characterized for federal income tax purposes,
1078
that item of income, gain, loss, [or] deduction [has the same character for a taxpayer], or credit
1079
is from the same source and incurred in the same manner for a pass-through entity taxpayer as
1080
if the item of income, gain, loss, [or] deduction, or credit is:
1081
[(a)] (1) realized directly from the source from which the item of income, gain, loss,
1082
[or] deduction, or credit is realized by the pass-through entity; or
1083
[(b)] (2) incurred in the same manner as incurred by the pass-through entity.
1084
[(3) In determining state taxable income of a resident taxpayer, any addition or
1085
subtraction described in Section
59-10-114
that relates to an item of income, gain, loss, or
1086
deduction of a pass-through entity shall be made in accordance with the taxpayer's distributive
1087
share:]
1088
[(a) of the item to which the addition or subtraction relates; and]
1089
[(b) for federal income tax purposes.]
1090
[(4) If a taxpayer's distributive share of an item of income, gain, loss, or deduction
1091
described in Subsection (3) is not required to be taken into account separately for federal
1092
income tax purposes, the taxpayer's distributive share of that item of income, gain, loss, or
1093
deduction shall be determined in accordance with that taxpayer's distributive share:]
1094
[(a) of income or loss relating to the pass-through entity generally; and]
1095
[(b) for federal income tax purposes.]
1096
Section 20.
Section
59-10-1404.5
is enacted to read:
1097
59-10-1404.5. Resident pass-through entity taxpayer's share of an addition,
1098
subtraction, or adjustment that relates to an item of income, gain, loss, deduction, or
1099
credit of a pass-through entity.
1100
(1) In determining the taxable income of a resident pass-through entity taxpayer, an
1101
addition, subtraction, or adjustment that relates to an item of income, gain, loss, deduction, or
1102
credit of a pass-through entity shall be made in accordance with this section.
1103
(2) For a resident pass-through entity taxpayer of a pass-through entity except for a
1104
pass-through entity that is an S corporation, the resident pass-through entity taxpayer's share
1105
of an addition, subtraction, or adjustment that relates to an item of income, gain, loss,
1106
deduction, or credit is:
1107
(a) if the item of income, gain, loss, deduction, or credit is required to be taken into
1108
account separately for federal income tax purposes, the resident pass-through entity taxpayer's
1109
distributive share of the item of income, gain, loss, deduction, or credit:
1110
(i) for federal income tax purposes; and
1111
(ii) determined under Section 704 et seq., Internal Revenue Code; or
1112
(b) if the item of income, gain, loss, deduction, or credit is not required to be taken
1113
into account separately for federal income tax purposes, determined in accordance with the
1114
resident pass-through entity taxpayer's distributive share of income, gain, loss, deduction, or
1115
credit:
1116
(i) relating to the pass-through entity generally;
1117
(ii) for federal income tax purposes; and
1118
(iii) under Section 704 et seq., Internal Revenue Code.
1119
(3) For a resident pass-through entity taxpayer of a pass-through entity that is an S
1120
corporation, the resident pass-through entity taxpayer's share of an addition, subtraction, or
1121
adjustment that relates to an item of income, gain, loss, deduction, or credit is:
1122
(a) if the item of income, gain, loss, deduction, or credit is required to be taken into
1123
account separately for federal income tax purposes, the resident pass-through entity taxpayer's
1124
pro rata share of the item of income, gain, loss, deduction, or credit:
1125
(i) for federal income tax purposes; and
1126
(ii) determined under Section 1366 et seq., Internal Revenue Code; or
1127
(b) if the item of income, gain, loss, deduction, or credit is not required to be taken
1128
into account separately for federal income tax purposes, determined in accordance with the
1129
resident pass-through entity taxpayer's pro rata share of the item of income, gain, loss,
1130
deduction, or credit:
1131
(i) relating to the pass-through entity generally;
1132
(ii) for federal income tax purposes; and
1133
(iii) under Section 1366 et seq., Internal Revenue Code.
1134
Section 21.
Section
59-10-1405
is amended to read:
1135
59-10-1405. Nonresident pass-through entity taxpayer's share of an addition,
1136
subtraction, or adjustment that relates to an item of income, gain, loss, deduction, or
1137
credit of a pass-through entity -- In determining source of nonresident pass-through
1138
entity taxpayer's income certain provisions of pass-through entity agreement may not be
1139
considered -- Rulemaking authority.
1140
[(1) Subject to Subsection (2), the adjusted gross income of a nonresident taxpayer
1141
shall be adjusted by only that portion of the taxpayer's distributive share of an item of income,
1142
gain, loss, or deduction of a pass-through entity derived from or connected with sources in this
1143
state.]
1144
[(2) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act,
1145
the commission may make rules for determining the adjustment required by Subsection (1) if
1146
those rules are consistent with the principles of Section
59-10-116
.]
1147
(1) (a) Except as provided in Subsection (3), in determining the taxable income of a
1148
nonresident pass-through entity taxpayer, an addition, subtraction, or adjustment that relates to
1149
an item of income, gain, loss, deduction, or credit of a pass-through entity shall be made in
1150
accordance with this Subsection (1).
1151
(b) For a nonresident pass-through entity taxpayer of a pass-through entity except for a
1152
pass-through entity that is an S corporation, the nonresident pass-through entity taxpayer's
1153
share of an addition, subtraction, or adjustment that relates to an item of income, gain, loss,
1154
deduction, or credit is:
1155
(i) if the item of income, gain, loss, deduction, or credit is required to be taken into
1156
account separately for federal income tax purposes, the nonresident pass-through entity
1157
taxpayer's distributive share of the item of income, gain, loss, deduction, or credit:
1158
(A) for federal income tax purposes;
1159
(B) determined under Section 704 et seq., Internal Revenue Code; and
1160
(C) derived from or connected with Utah sources; or
1161
(ii) if the item of income, gain, loss, deduction, or credit is not required to be taken
1162
into account separately for federal income tax purposes, determined in accordance with the
1163
nonresident pass-through entity taxpayer's distributive share of income, gain, loss, deduction,
1164
or credit:
1165
(A) relating to the pass-through entity generally;
1166
(B) for federal income tax purposes;
1167
(C) under Section 704 et seq., Internal Revenue Code; and
1168
(D) derived from or connected with Utah sources.
1169
(c) For a nonresident pass-through entity taxpayer of a pass-through entity that is an S
1170
corporation, the nonresident pass-through entity taxpayer's share of an addition, subtraction, or
1171
adjustment that relates to an item of income, gain, loss, deduction, or credit is:
1172
(i) if the item of income, gain, loss, deduction, or credit is required to be taken into
1173
account separately for federal income tax purposes, the nonresident pass-through entity
1174
taxpayer's pro rata share of the item of income, gain, loss, deduction, or credit:
1175
(A) for federal income tax purposes;
1176
(B) determined under Section 1366 et seq., Internal Revenue Code; and
1177
(C) derived from or connected with Utah sources; or
1178
(ii) if the item of income, gain, loss, deduction, or credit is not required to be taken
1179
into account separately for federal income tax purposes, determined in accordance with the
1180
nonresident pass-through entity taxpayer's pro rata share of the item of income, gain, loss,
1181
deduction, or credit:
1182
(A) relating to the pass-through entity generally;
1183
(B) for federal income tax purposes;
1184
(C) under Section 1366 et seq., Internal Revenue Code; and
1185
(D) derived from or connected with Utah sources.
1186
[(3)] (2) In determining the source of a nonresident pass-through entity taxpayer's
1187
income, the following provisions in a pass-through entity agreement may not be considered:
1188
[(a) a provision that characterizes a payment to the taxpayer as being for:]
1189
[(i) a service; or]
1190
[(ii) the use of capital;]
1191
[(b) except as provided in Subsection (5),]
1192
(a) a provision that allocates to the nonresident pass-through entity taxpayer, as
1193
income [or], gain, or credit from a source outside this state, a greater proportion of the
1194
nonresident pass-through entity taxpayer's [distributive] share of income [or], gain, or credit of
1195
the pass-through entity than the ratio of income [or], gain, or credit of the pass-through entity
1196
from sources outside this state to income [or], gain, or credit of the pass-through entity from
1197
all sources; or
1198
[(c) except as provided in Subsection (5),]
1199
(b) a provision that allocates to the nonresident pass-through entity taxpayer a greater
1200
proportion of an item of loss or deduction of the pass-through entity derived from or connected
1201
with Utah sources [in this state] than the taxpayer's [proportionate] share of loss or deduction
1202
generally:
1203
(i) relating to the pass-through entity; and
1204
(ii) for federal income tax purposes.
1205
[(4) Any addition or subtraction described in Section
59-10-114
that relates to an item
1206
of income, gain, loss, or deduction of a pass-through entity shall be made in accordance with
1207
the taxpayer's distributive share:]
1208
[(a) of the portion of the item of income, gain, loss, or deduction required to be added
1209
or subtracted under Section
59-10-114
that is derived from or connected with sources in the
1210
state; and]
1211
[(b) for federal income tax purposes.]
1212
[(5) (a) Subject to Subsection (5)(b), the]
1213
(3) The commission may by rule, made in accordance with Title 63G, Chapter 3, Utah
1214
Administrative Rulemaking Act, [authorize the use of one or more methods, other than a
1215
method described in Subsections (1) through (4), for determining: (i) a nonresident taxpayer's
1216
portion of an] authorize the use of a calculation other than the calculation provided in
1217
Subsection (1), for determining a nonresident pass-through entity taxpayer's share of an
1218
addition, subtraction, or adjustment that relates to an item of income, gain, loss, [or]
1219
deduction, or credit of a pass-through entity derived from or connected with [sources in the
1220
state; and] Utah sources if:
1221
[(ii) the portion of an item of income, gain, loss, or deduction required to be added or
1222
subtracted under Section
59-10-114
that is derived from or connected with sources in the
1223
state.]
1224
[(b) For purposes of Subsection (5)(a), the commission may authorize the use of one
1225
or more methods, other than a method described in Subsections (1) through (4), if:]
1226
[(i) the commission finds that the use of the method is appropriate and equitable; and]
1227
[(ii) the taxpayer applies to the commission.]
1228
[(6) (a) A nonresident taxpayer's distributive share of an item of income, gain, loss, or
1229
deduction shall be determined in accordance with the principles of Subsections
59-10-1404
(3)
1230
and (4).]
1231
[(b) The character of an item of income, gain, loss, or deduction for a nonresident
1232
taxpayer shall be determined in accordance with the principles of Subsections
59-10-1404
(1)
1233
and (2).]
1234
(a) the nonresident pass-through entity taxpayer applies to the commission; and
1235
(b) the commission finds that the use of the calculation is appropriate and equitable.
1236
Section 22. Repealer.
1237
This bill repeals:
1238
Section 48-2c-117, Taxation of limited liability companies.
1239
Section 59-7-702, Taxation of shareholders.
1240
Section 59-7-703, Payment or withholding of tax on behalf of nonresident
1241
shareholders -- Rate.
1242
Section 59-7-704, Amount taxable.
1243
Section 23. Effective date -- Retrospective operation.
1244
This bill:
1245
(1) if approved by two-thirds of all the members elected to each house, takes effect
1246
upon approval by the governor, or the day following the constitutional time limit of Utah
1247
Constitution Article VII, Section 8, without the governor's signature, or in the case of a veto,
1248
the date of veto override; and
1249
(2) has retrospective operation for a taxable year beginning on or after January 1,
1250
2009.
1251
Section 24. Revisor instructions.
1252
It is the intent of the Legislature that, in preparing the Utah Code database for
1253
publication, the Office of Legislative Research and General Counsel shall replace the reference
1254
in Subsection
59-7-701
(9) from "this bill" to the bill's designated chapter and section number
1255
in the Laws of Utah.
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