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S.B. 37 Enrolled

             1     

INCOME TAX - TAXATION OF

             2     
INDIVIDUALS, ESTATES, AND TRUSTS

             3     
2006 GENERAL SESSION

             4     
STATE OF UTAH

             5     
Chief Sponsor: Lyle W. Hillyard

             6     
House Sponsor: Wayne A. Harper

             7     
             8      LONG TITLE
             9      General Description:
             10          This bill amends the Revenue and Taxation title and the State Affairs in General title
             11      relating to the income taxation of individuals, estates, and trusts.
             12      Highlighted Provisions:
             13          This bill:
             14          .    provides and modifies definitions;
             15          .    modifies the additions to and subtractions from federal taxable income of a resident
             16      or nonresident individual;
             17          .    modifies the adjustments to state taxable income for purposes of individual income
             18      taxes;
             19          .    addresses the calculation of state taxable income of a resident or nonresident estate
             20      or trust;
             21          .    modifies the additions to and subtractions from federal taxable income of a resident
             22      or nonresident estate or trust;
             23          .    modifies the adjustments to state taxable income for purposes of income taxes on
             24      estates and trusts;
             25          .    modifies the fiduciary adjustments for purposes of income taxes on estates and
             26      trusts;
             27          .    creates the Nonrefundable Tax Credit Act and renumbers and amends as part of this
             28      Act the nonrefundable income tax credits authorized under the Individual Income
             29      Tax Act;


             30          .    creates the Refundable Tax Credit Act and renumbers and amends as part of this
             31      Act the refundable income tax credits authorized under the Individual Income Tax
             32      Act;
             33          .    addresses which of the nonrefundable and refundable income tax credits an estate or
             34      trust may claim;
             35          .    repeals obsolete language; and
             36          .    makes technical changes.
             37      Monies Appropriated in this Bill:
             38          None
             39      Other Special Clauses:
             40          This bill has retrospective operation for taxable years beginning on or after January 1,
             41      2006.
             42      Utah Code Sections Affected:
             43      AMENDS:
             44          19-1-403, as last amended by Chapter 108 and renumbered and amended by Chapter
             45      294, Laws of Utah 2005
             46          19-1-404, as renumbered and amended by Chapter 294, Laws of Utah 2005
             47          19-2-104, as last amended by Chapter 131, Laws of Utah 2003
             48          53B-8a-106, as last amended by Chapter 109, Laws of Utah 2005
             49          59-2-102, as last amended by Chapters 162, 243, 281 and 303, Laws of Utah 2004
             50          59-6-101, as last amended by Chapter 3, Laws of Utah 1988
             51          59-6-102, as last amended by Chapter 28, Laws of Utah 2002
             52          59-7-607, as last amended by Chapter 113, Laws of Utah 2005
             53          59-7-614, as last amended by Chapters 217, 244 and 294, Laws of Utah 2005
             54          59-7-703, as last amended by Chapter 110, Laws of Utah 2003
             55          59-10-103, as last amended by Chapter 241, Laws of Utah 2005
             56          59-10-112, as last amended by Chapter 345, Laws of Utah 1995
             57          59-10-114, as last amended by Chapters 109 and 241, Laws of Utah 2005


             58          59-10-115, as renumbered and amended by Chapter 2, Laws of Utah 1987
             59          59-10-201, as last amended by Chapter 109, Laws of Utah 2005
             60          59-10-201.1, as enacted by Chapter 345, Laws of Utah 1995
             61          59-10-202, as last amended by Chapter 3, Laws of Utah 2003, Second Special Session
             62          59-10-204, as last amended by Chapter 345, Laws of Utah 1995
             63          59-10-205, as last amended by Chapter 345, Laws of Utah 1995
             64          59-10-207, as last amended by Chapter 345, Laws of Utah 1995
             65          59-10-210, as last amended by Chapter 345, Laws of Utah 1995
             66          59-13-202, as last amended by Chapter 86, Laws of Utah 2000
             67          62A-4a-607, as last amended by Chapter 327, Laws of Utah 2001
             68          63-38f-402, as renumbered and amended by Chapter 148, Laws of Utah 2005
             69          63-38f-412, as renumbered and amended by Chapter 148, Laws of Utah 2005
             70          63-38f-413, as renumbered and amended by Chapter 148, Laws of Utah 2005
             71          63-38f-501, as renumbered and amended by Chapter 148, Laws of Utah 2005
             72          63-38f-502, as renumbered and amended by Chapter 148, Laws of Utah 2005
             73          63-38f-503, as renumbered and amended by Chapter 148, Laws of Utah 2005
             74          63-38f-1102, as renumbered and amended by Chapter 148, Laws of Utah 2005
             75          63-38f-1110, as renumbered and amended by Chapter 148, Laws of Utah 2005
             76          63-38f-1203, as renumbered and amended by Chapter 148, Laws of Utah 2005
             77          63-55-209, as last amended by Chapters 37 and 90, Laws of Utah 2004
             78      ENACTS:
             79          59-10-209.1, Utah Code Annotated 1953
             80          59-10-1001, Utah Code Annotated 1953
             81          59-10-1002, Utah Code Annotated 1953
             82          59-10-1101, Utah Code Annotated 1953
             83          59-10-1102, Utah Code Annotated 1953
             84      RENUMBERS AND AMENDS:
             85          59-10-1003, (Renumbered from 59-10-106, as renumbered and amended by Chapter 2,


             86      Laws of Utah 1987)
             87          59-10-1004, (Renumbered from 59-10-108, as last amended by Chapter 73, Laws of
             88      Utah 2001)
             89          59-10-1005, (Renumbered from 59-10-108.1, as enacted by Chapter 272, Laws of Utah
             90      1999)
             91          59-10-1006, (Renumbered from 59-10-108.5, as last amended by Chapter 25, Laws of
             92      Utah 1995)
             93          59-10-1007, (Renumbered from 59-10-108.7, as last amended by Chapter 148, Laws of
             94      Utah 2005)
             95          59-10-1008, (Renumbered from 59-10-109, as last amended by Chapter 198, Laws of
             96      Utah 2003)
             97          59-10-1009, (Renumbered from 59-10-127, as last amended by Chapters 108 and 294,
             98      Laws of Utah 2005)
             99          59-10-1010, (Renumbered from 59-10-129, as last amended by Chapter 113, Laws of
             100      Utah 2005)
             101          59-10-1011, (Renumbered from 59-10-130, as last amended by Chapter 145, Laws of
             102      Utah 2002)
             103          59-10-1012, (Renumbered from 59-10-131, as last amended by Chapter 59, Laws of
             104      Utah 1999)
             105          59-10-1013, (Renumbered from 59-10-132, as last amended by Chapter 59, Laws of
             106      Utah 1999)
             107          59-10-1014, (Renumbered from 59-10-134, as last amended by Chapters 217, 244 and
             108      294, Laws of Utah 2005)
             109          59-10-1015, (Renumbered from 59-10-134.2, as enacted by Chapter 290, Laws of Utah
             110      2005)
             111          59-10-1016, (Renumbered from 59-10-135, as enacted by Chapter 62, Laws of Utah
             112      2002)
             113          59-10-1103, (Renumbered from 59-10-108.2, as last amended by Chapter 110, Laws of


             114      Utah 2003)
             115          59-10-1104, (Renumbered from 59-10-133, as last amended by Chapter 263, Laws of
             116      Utah 2005)
             117          59-10-1105, (Renumbered from 59-10-134.1, as enacted by Chapter 312, Laws of Utah
             118      2003)
             119      REPEALS:
             120          59-10-107, as renumbered and amended by Chapter 2, Laws of Utah 1987
             121          59-10-128, as last amended by Chapter 198, Laws of Utah 2003
             122          59-10-209, as last amended by Chapter 345, Laws of Utah 1995
             123     
             124      Be it enacted by the Legislature of the state of Utah:
             125          Section 1. Section 19-1-403 is amended to read:
             126           19-1-403. Clean Fuels Vehicle Fund -- Contents -- Loans or grants made with
             127      fund monies.
             128          (1) (a) There is created a revolving fund known as the Clean Fuels Vehicle Fund.
             129          (b) The fund consists of:
             130          (i) appropriations to the fund;
             131          (ii) other public and private contributions made under Subsection (1)(d);
             132          (iii) interest earnings on cash balances; and
             133          (iv) all monies collected for loan repayments and interest on loans.
             134          (c) All money appropriated to the fund is nonlapsing.
             135          (d) The department may accept contributions from other public and private sources for
             136      deposit into the fund.
             137          (2) (a) Except as provided in Subsection (3), the department may make loans or grants
             138      with monies available in the fund for:
             139          (i) the conversion of private sector business vehicles and government vehicles to use a
             140      clean fuel, if certified by the Air Quality Board; or
             141          (ii) the purchase of OEM vehicles for use as private sector business vehicles or


             142      government vehicles.
             143          (b) The amount of a loan for any vehicle may not exceed:
             144          (i) the actual cost of the vehicle conversion;
             145          (ii) the incremental cost of purchasing the OEM vehicle; or
             146          (iii) the cost of purchasing the OEM vehicle if there is no documented incremental
             147      cost.
             148          (c) The amount of a grant for any vehicle may not exceed:
             149          (i) 50% of the actual cost of the vehicle conversion minus the amount of any tax credit
             150      claimed under Section 59-7-605 or [ 59-10-127 ] 59-10-1009 for the vehicle for which a grant is
             151      requested; or
             152          (ii) 50% of the incremental cost of purchasing an OEM vehicle minus the amount of
             153      any tax credit claimed under Section 59-7-605 or [ 59-10-127 ] 59-10-1009 for the vehicle for
             154      which a grant is requested.
             155          (d) (i) Except as provided in Subsection (3) and subject to the availability of monies in
             156      the fund, the department may make loans for the purchase of vehicle refueling equipment for
             157      private sector business vehicles and government vehicles.
             158          (ii) The maximum amount loaned per installation of refueling equipment may not
             159      exceed the actual cost of the refueling equipment.
             160          (3) Notwithstanding Subsection (2)(a) or (2)(d), the department may not make a loan or
             161      grant under this part with respect to an electric-hybrid vehicle.
             162          (4) Administrative costs of the fund shall be paid from the fund.
             163          (5) (a) The fund balance may not exceed $10,000,000.
             164          (b) Interest on cash balances and repayment of loans in excess of the amount necessary
             165      to maintain the fund balance at $10,000,000 shall be deposited in the General Fund.
             166          (6) (a) Loans made from monies in the fund shall be supported by loan documents
             167      evidencing the intent of the borrower to repay the loan.
             168          (b) The original loan documents shall be filed with the Division of Finance and a copy
             169      shall be filed with the department.


             170          Section 2. Section 19-1-404 is amended to read:
             171           19-1-404. Department duties -- Rulemaking -- Loan repayment.
             172          (1) The department shall:
             173          (a) establish and administer the loan and grant program to encourage government
             174      officials and private sector business vehicle owners and operators to obtain and use clean-fuel
             175      vehicles; and
             176          (b) make rules in accordance with Title 63, Chapter 46a, Utah Administrative
             177      Rulemaking Act:
             178          (i) specifying the amount of money in the fund to be dedicated annually for grants;
             179          (ii) limiting the amount of a grant given to any person claiming a tax credit under
             180      Section 59-7-605 or [ 59-10-127 ] 59-10-1009 for the motor vehicle for which a grant is
             181      requested to assure that the sum of the tax credit and grant does not exceed:
             182          (A) 50% of the incremental cost of the OEM vehicle; or
             183          (B) 50% of the cost of conversion equipment;
             184          (iii) limiting the number of motor vehicles per fleet operator that may be eligible for a
             185      grant in a year;
             186          (iv) specifying criteria the department shall consider in prioritizing and awarding loans
             187      and grants;
             188          (v) specifying repayment periods;
             189          (vi) specifying procedures for:
             190          (A) awarding loans and grants; and
             191          (B) collecting loans; and
             192          (vii) requiring all loan and grant applicants to:
             193          (A) apply on forms provided by the department;
             194          (B) agree in writing to use the clean fuel for which each vehicle is converted or
             195      purchased using loan or grant proceeds for a minimum of 70% of the vehicle miles traveled
             196      beginning from the time of conversion or purchase of the vehicle;
             197          (C) agree in writing to notify the department if a vehicle converted or purchased using


             198      loan or grant proceeds becomes inoperable through mechanical failure or accident and to
             199      pursue a remedy outlined in department rules;
             200          (D) provide reasonable data to the department on vehicles converted or purchased with
             201      loan or grant proceeds; and
             202          (E) submit vehicles converted or purchased with loan or grant proceeds to inspections
             203      by the department as required in department rules and as necessary for administration of the
             204      loan and grant program.
             205          (2) (a) When developing repayment schedules for the loans, the department shall
             206      consider the projected savings from use of the clean-fuel vehicle.
             207          (b) A repayment schedule may not exceed ten years.
             208          (c) Loans made from the fund for private sector vehicles shall be made at an interest
             209      rate equal to the annual return earned in the state treasurer's Public Treasurer's Pool as
             210      determined the month immediately preceding the closing date of the loan.
             211          (d) Loans made from the fund for government vehicles shall be made at a zero interest
             212      rate.
             213          (3) The Division of Finance is responsible for collection of and accounting for the
             214      loans and has custody of all loan documents, including all notes and contracts, evidencing the
             215      indebtedness of the fund.
             216          Section 3. Section 19-2-104 is amended to read:
             217           19-2-104. Powers of board.
             218          (1) The board may make rules in accordance with Title 63, Chapter 46a, Utah
             219      Administrative Rulemaking Act:
             220          (a) regarding the control, abatement, and prevention of air pollution from all sources
             221      and the establishment of the maximum quantity of air contaminants that may be emitted by any
             222      air contaminant source;
             223          (b) establishing air quality standards;
             224          (c) requiring persons engaged in operations which result in air pollution to:
             225          (i) install, maintain, and use emission monitoring devices, as the board finds necessary;


             226          (ii) file periodic reports containing information relating to the rate, period of emission,
             227      and composition of the air contaminant; and
             228          (iii) provide access to records relating to emissions which cause or contribute to air
             229      pollution;
             230          (d) implementing 15 U.S.C.A. 2601 et seq. Toxic Substances Control Act, Subchapter
             231      II - Asbestos Hazard Emergency Response, and reviewing and approving asbestos management
             232      plans submitted by local education agencies under that act;
             233          (e) establishing a requirement for a diesel emission opacity inspection and maintenance
             234      program for diesel-powered motor vehicles;
             235          (f) implementing an operating permit program as required by and in conformity with
             236      Titles IV and V of the federal Clean Air Act Amendments of 1990;
             237          (g) establishing requirements for county emissions inspection and maintenance
             238      programs after obtaining agreement from the counties that would be affected by the
             239      requirements;
             240          (h) with the approval of the governor, implementing in air quality nonattainment areas
             241      employer-based trip reduction programs applicable to businesses having more than 100
             242      employees at a single location and applicable to federal, state, and local governments to the
             243      extent necessary to attain and maintain ambient air quality standards consistent with the state
             244      implementation plan and federal requirements under the standards set forth in Subsection (2);
             245      and
             246          (i) implementing lead-based paint remediation training, certification, and performance
             247      requirements in accordance with 15 U.S.C.A. 2601 et seq., Toxic Substances Control Act,
             248      Subchapter IV -- Lead Exposure Reduction, Sections 402 and 406.
             249          (2) When implementing Subsection (1)(h) the board shall take into consideration:
             250          (a) the impact of the business on overall air quality; and
             251          (b) the need of the business to use automobiles in order to carry out its business
             252      purposes.
             253          (3) The board may:


             254          (a) hold hearings relating to any aspect of or matter in the administration of this chapter
             255      and compel the attendance of witnesses and the production of documents and other evidence,
             256      administer oaths and take testimony, and receive evidence as necessary;
             257          (b) issue orders necessary to enforce the provisions of this chapter, enforce the orders
             258      by appropriate administrative and judicial proceedings, and institute judicial proceedings to
             259      secure compliance with this chapter;
             260          (c) settle or compromise any civil action initiated to compel compliance with this
             261      chapter and the rules made under this chapter;
             262          (d) secure necessary scientific, technical, administrative, and operational services,
             263      including laboratory facilities, by contract or otherwise;
             264          (e) prepare and develop a comprehensive plan or plans for the prevention, abatement,
             265      and control of air pollution in this state;
             266          (f) encourage voluntary cooperation by persons and affected groups to achieve the
             267      purposes of this chapter;
             268          (g) encourage local units of government to handle air pollution within their respective
             269      jurisdictions on a cooperative basis and provide technical and consultative assistance to them;
             270          (h) encourage and conduct studies, investigations, and research relating to air
             271      contamination and air pollution and their causes, effects, prevention, abatement, and control;
             272          (i) determine by means of field studies and sampling the degree of air contamination
             273      and air pollution in all parts of the state;
             274          (j) monitor the effects of the emission of air contaminants from motor vehicles on the
             275      quality of the outdoor atmosphere in all parts of this state and take appropriate action with
             276      respect to them;
             277          (k) collect and disseminate information and conduct educational and training programs
             278      relating to air contamination and air pollution;
             279          (l) advise, consult, contract, and cooperate with other agencies of the state, local
             280      governments, industries, other states, interstate or interlocal agencies, the federal government,
             281      and with interested persons or groups;


             282          (m) consult, upon request, with any person proposing to construct, install, or otherwise
             283      acquire an air contaminant source in the state concerning the efficacy of any proposed control
             284      device, or system for this source, or the air pollution problem which may be related to the
             285      source, device, or system, but a consultation does not relieve any person from compliance with
             286      this chapter, the rules adopted under it, or any other provision of law;
             287          (n) accept, receive, and administer grants or other funds or gifts from public and
             288      private agencies, including the federal government, for the purpose of carrying out any of the
             289      functions of this chapter;
             290          (o) require the owner and operator of each new source which directly emits or has the
             291      potential to emit 100 tons per year or more of any air contaminant or the owner or operator of
             292      each existing source which by modification will increase emissions or have the potential of
             293      increasing emissions by 100 tons per year or more of any air contaminant, to pay a fee
             294      sufficient to cover the reasonable costs of:
             295          (i) reviewing and acting upon the notice required under Section 19-2-108 ; and
             296          (ii) implementing and enforcing requirements placed on the sources by any approval
             297      order issued pursuant to notice, not including any court costs associated with any enforcement
             298      action;
             299          (p) assess and collect noncompliance penalties as required in Section 120 of the federal
             300      Clean Air Act, 42 U.S.C. Sec. 7420;
             301          (q) meet the requirements of federal air pollution laws;
             302          (r) establish work practice, certification, and clearance air sampling requirements for
             303      persons who:
             304          (i) contract for hire to conduct demolition, renovation, salvage, encapsulation work
             305      involving friable asbestos-containing materials, or asbestos inspections; [or]
             306          (ii) conduct work described in Subsection (3)(r)(i) in areas to which the general public
             307      has unrestrained access or in school buildings that are subject to the federal Asbestos Hazard
             308      Emergency Response Act of 1986;
             309          (iii) conduct asbestos inspections in facilities subject to 15 U.S.C.A. 2601 et seq.,


             310      Toxic Substances Control Act, Subchapter II - Asbestos Hazard Emergency Response; or
             311          (iv) conduct lead paint inspections in facilities subject to 15 U.S.C.A. 2601 et seq.,
             312      Toxic Substances Control Act, Subchapter IV -- Lead Exposure Reduction;
             313          (s) establish certification requirements for persons required under 15 U.S.C.A. 2601 et
             314      seq., Toxic Substances Control Act, Subchapter II - Asbestos Hazard Emergency Response, to
             315      be accredited as inspectors, management planners, abatement project designers, asbestos
             316      abatement contractors and supervisors, or asbestos abatement workers;
             317          (t) establish certification requirements for asbestos project monitors, which shall
             318      provide for experience-based certification of persons who, prior to establishment of the
             319      certification requirements, had received relevant asbestos training, as defined by rule, and had
             320      acquired at least 1,000 hours of experience as project monitors;
             321          (u) establish certification procedures and requirements for certification of the
             322      conversion of a motor vehicle to a clean-fuel vehicle, certifying the vehicle is eligible for the
             323      tax credit granted in Section 59-7-605 or [ 59-10-127 ] 59-10-1009 ;
             324          (v) establish a program to certify private sector air quality permitting professionals
             325      (AQPP), as described in Section 19-2-109.5 ; and
             326          (w) establish certification requirements for persons required under 15 U.S.C.A. 2601 et
             327      seq., Toxic Control Act, Subchapter IV -- Lead Exposure Reduction, to be accredited as
             328      inspectors, risk assessors, supervisors, project designers, or abatement workers.
             329          (4) Any rules adopted under this chapter shall be consistent with provisions of federal
             330      laws, if any, relating to control of motor vehicles or motor vehicle emissions.
             331          (5) Nothing in this chapter authorizes the board to require installation of or payment for
             332      any monitoring equipment by the owner or operator of a source if the owner or operator has
             333      installed or is operating monitoring equipment that is equivalent to equipment which the board
             334      would require under this section.
             335          Section 4. Section 53B-8a-106 is amended to read:
             336           53B-8a-106. Account agreements.
             337          The trust may enter into account agreements with account owners on behalf of


             338      beneficiaries under the following terms and agreements:
             339          (1) (a) An account agreement may require an account owner to agree to invest a
             340      specific amount of money in the trust for a specific period of time for the benefit of a specific
             341      beneficiary, not to exceed an amount determined by the program administrator.
             342          (b) Account agreements may be amended to provide for adjusted levels of payments
             343      based upon changed circumstances or changes in educational plans.
             344          (c) An account owner may make additional optional payments as long as the total
             345      payments for a specific beneficiary do not exceed the total estimated higher education costs as
             346      determined by the program administrator.
             347          (d) The maximum amount of investments that may be subtracted from federal taxable
             348      income of a resident or nonresident individual under Subsection 59-10-114 (2)[(j)] (i) shall be
             349      $1,510 for each individual beneficiary for the 2005 calendar year and an amount adjusted
             350      annually thereafter to reflect increases in the Consumer Price Index.
             351          (2) (a) (i) Beneficiaries designated in account agreements must be designated after
             352      birth and before age 19 for the participant to subtract allowable investments from federal
             353      taxable income under Subsection 59-10-114 (2)[(j)] (i).
             354          (ii) If the beneficiary is designated after birth and before age 19, the payment of
             355      benefits provided under the account agreement must begin not later than the beneficiary's 27th
             356      birthday.
             357          (b) (i) Account owners may designate beneficiaries age 19 or older, but investments for
             358      those beneficiaries are not eligible for subtraction from federal taxable income.
             359          (ii) If a beneficiary age 19 or older is designated, the payment of benefits provided
             360      under the account agreement must begin not later than ten years from the account agreement
             361      date.
             362          (3) Each account agreement shall state clearly that there are no guarantees regarding
             363      moneys in the trust as to the return of principal and that losses could occur.
             364          (4) Each account agreement shall provide that:
             365          (a) no contributor to, or designated beneficiary under, an account agreement may direct


             366      the investment of any contributions or earnings on contributions;
             367          (b) no part of the money in any account may be used as security for a loan; and
             368          (c) no account owner may borrow from the trust.
             369          (5) The execution of an account agreement by the trust may not guarantee in any way
             370      that higher education costs will be equal to projections and estimates provided by the trust or
             371      that the beneficiary named in any participation agreement will:
             372          (a) be admitted to an institution of higher education;
             373          (b) if admitted, be determined a resident for tuition purposes by the institution of
             374      higher education, unless the account agreement is vested;
             375          (c) be allowed to continue attendance at the institution of higher education following
             376      admission; or
             377          (d) graduate from the institution of higher education.
             378          (6) Beneficiaries may be changed as permitted by the rules and regulations of the board
             379      upon written request of the account owner prior to the date of admission of any beneficiary
             380      under an account agreement by an institution of higher education so long as the substitute
             381      beneficiary is eligible for participation.
             382          (7) Account agreements may be freely amended throughout their terms in order to
             383      enable account owners to increase or decrease the level of participation, change the designation
             384      of beneficiaries, and carry out similar matters as authorized by rule.
             385          (8) Each account agreement shall provide that:
             386          (a) the account agreement may be canceled upon the terms and conditions, and upon
             387      payment of the fees and costs set forth and contained in the board's rules and regulations; and
             388          (b) the program administrator may amend the agreement unilaterally and retroactively,
             389      if necessary, to maintain the trust as a qualified tuition program under Section 529 Internal
             390      Revenue Code.
             391          Section 5. Section 59-2-102 is amended to read:
             392           59-2-102. Definitions.
             393          As used in this chapter and title:


             394          (1) "Aerial applicator" means aircraft or rotorcraft used exclusively for the purpose of
             395      engaging in dispensing activities directly affecting agriculture or horticulture with an
             396      airworthiness certificate from the Federal Aviation Administration certifying the aircraft or
             397      rotorcraft's use for agricultural and pest control purposes.
             398          (2) "Air charter service" means an air carrier operation which requires the customer to
             399      hire an entire aircraft rather than book passage in whatever capacity is available on a scheduled
             400      trip.
             401          (3) "Air contract service" means an air carrier operation available only to customers
             402      who engage the services of the carrier through a contractual agreement and excess capacity on
             403      any trip and is not available to the public at large.
             404          (4) "Aircraft" is as defined in Section 72-10-102 .
             405          (5) "Airline" means any air carrier operating interstate routes on a scheduled basis
             406      which offers to fly passengers or cargo on the basis of available capacity on regularly scheduled
             407      routes.
             408          (6) "Assessment roll" means a permanent record of the assessment of property as
             409      assessed by the county assessor and the commission and may be maintained manually or as a
             410      computerized file as a consolidated record or as multiple records by type, classification, or
             411      categories.
             412          (7) "Certified revenue levy" means a property tax levy that provides the same amount
             413      of ad valorem property tax revenue as was collected for the prior year, plus new growth, but
             414      exclusive of revenue from collections from redemptions, interest, and penalties.
             415          (8) "County-assessed commercial vehicle" means:
             416          (a) any commercial vehicle, trailer, or semitrailer which is not apportioned under
             417      Section 41-1a-301 and is not operated interstate to transport the vehicle owner's goods or
             418      property in furtherance of the owner's commercial enterprise;
             419          (b) any passenger vehicle owned by a business and used by its employees for
             420      transportation as a company car or vanpool vehicle; and
             421          (c) vehicles which are:


             422          (i) especially constructed for towing or wrecking, and which are not otherwise used to
             423      transport goods, merchandise, or people for compensation;
             424          (ii) used or licensed as taxicabs or limousines;
             425          (iii) used as rental passenger cars, travel trailers, or motor homes;
             426          (iv) used or licensed in this state for use as ambulances or hearses;
             427          (v) especially designed and used for garbage and rubbish collection; or
             428          (vi) used exclusively to transport students or their instructors to or from any private,
             429      public, or religious school or school activities.
             430          (9) (a) Except as provided in Subsection (9)(b), for purposes of Section 59-2-801 ,
             431      "designated tax area" means a tax area created by the overlapping boundaries of only the
             432      following taxing entities:
             433          (i) a county; and
             434          (ii) a school district.
             435          (b) Notwithstanding Subsection (9)(a), "designated tax area" includes a tax area created
             436      by the overlapping boundaries of:
             437          (i) the taxing entities described in Subsection (9)(a); and
             438          (ii) (A) a city or town if the boundaries of the school district under Subsection (9)(a)
             439      and the boundaries of the city or town are identical; or
             440          (B) a special service district if the boundaries of the school district under Subsection
             441      (9)(a) are located entirely within the special service district.
             442          (10) "Eligible judgment" means a final and unappealable judgment or order under
             443      Section 59-2-1330 :
             444          (a) that became a final and unappealable judgment or order no more than 14 months
             445      prior to the day on which the notice required by Subsection 59-2-919 (4) is required to be
             446      mailed; and
             447          (b) for which a taxing entity's share of the final and unappealable judgment or order is
             448      greater than or equal to the lesser of:
             449          (i) $5,000; or


             450          (ii) 2.5% of the total ad valorem property taxes collected by the taxing entity in the
             451      previous fiscal year.
             452          (11) (a) "Escaped property" means any property, whether personal, land, or any
             453      improvements to the property, subject to taxation and is:
             454          (i) inadvertently omitted from the tax rolls, assigned to the incorrect parcel, or assessed
             455      to the wrong taxpayer by the assessing authority;
             456          (ii) undervalued or omitted from the tax rolls because of the failure of the taxpayer to
             457      comply with the reporting requirements of this chapter; or
             458          (iii) undervalued because of errors made by the assessing authority based upon
             459      incomplete or erroneous information furnished by the taxpayer.
             460          (b) Property which is undervalued because of the use of a different valuation
             461      methodology or because of a different application of the same valuation methodology is not
             462      "escaped property."
             463          (12) "Fair market value" means the amount at which property would change hands
             464      between a willing buyer and a willing seller, neither being under any compulsion to buy or sell
             465      and both having reasonable knowledge of the relevant facts. For purposes of taxation, "fair
             466      market value" shall be determined using the current zoning laws applicable to the property in
             467      question, except in cases where there is a reasonable probability of a change in the zoning laws
             468      affecting that property in the tax year in question and the change would have an appreciable
             469      influence upon the value.
             470          (13) "Farm machinery and equipment," for purposes of the exemption provided under
             471      Section 59-2-1101 , means tractors, milking equipment and storage and cooling facilities, feed
             472      handling equipment, irrigation equipment, harvesters, choppers, grain drills and planters, tillage
             473      tools, scales, combines, spreaders, sprayers, haying equipment, and any other machinery or
             474      equipment used primarily for agricultural purposes; but does not include vehicles required to be
             475      registered with the Motor Vehicle Division or vehicles or other equipment used for business
             476      purposes other than farming.
             477          (14) "Geothermal fluid" means water in any form at temperatures greater than 120


             478      degrees centigrade naturally present in a geothermal system.
             479          (15) "Geothermal resource" means:
             480          (a) the natural heat of the earth at temperatures greater than 120 degrees centigrade;
             481      and
             482          (b) the energy, in whatever form, including pressure, present in, resulting from, created
             483      by, or which may be extracted from that natural heat, directly or through a material medium.
             484          (16) (a) For purposes of Section 59-2-103 :
             485          (i) "household" means the association of persons who live in the same dwelling,
             486      sharing its furnishings, facilities, accommodations, and expenses; and
             487          (ii) "household" includes married individuals, who are not legally separated, that have
             488      established domiciles at separate locations within the state.
             489          (b) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
             490      commission may make rules defining the term "domicile."
             491          (17) (a) Except as provided in Subsection (17)(c), "improvement" means a building,
             492      structure, fixture, fence, or other item that is permanently attached to land, regardless of
             493      whether the title has been acquired to the land, if:
             494          (i) (A) attachment to land is essential to the operation or use of the item; and
             495          (B) the manner of attachment to land suggests that the item will remain attached to the
             496      land in the same place over the useful life of the item; or
             497          (ii) removal of the item would:
             498          (A) cause substantial damage to the item; or
             499          (B) require substantial alteration or repair of a structure to which the item is attached.
             500          (b) "Improvement" includes:
             501          (i) an accessory to an item described in Subsection (17)(a) if the accessory is:
             502          (A) essential to the operation of the item described in Subsection (17)(a); and
             503          (B) installed solely to serve the operation of the item described in Subsection (17)(a);
             504      and
             505          (ii) an item described in Subsection (17)(a) that:


             506          (A) is temporarily detached from the land for repairs; and
             507          (B) remains located on the land.
             508          (c) Notwithstanding Subsections (17)(a) and (b), "improvement" does not include:
             509          (i) an item considered to be personal property pursuant to rules made in accordance
             510      with Section 59-2-107 ;
             511          (ii) a moveable item that is attached to land:
             512          (A) for stability only; or
             513          (B) for an obvious temporary purpose;
             514          (iii) (A) manufacturing equipment and machinery; or
             515          (B) essential accessories to manufacturing equipment and machinery; or
             516          (iv) an item attached to the land in a manner that facilitates removal without substantial
             517      damage to:
             518          (A) the land; or
             519          (B) the item; or
             520          (v) a transportable factory-built housing unit as defined in Section 59-2-1502 if that
             521      transportable factory-built housing unit is considered to be personal property under Section
             522      59-2-1503 .
             523          (18) "Intangible property" means:
             524          (a) property that is capable of private ownership separate from tangible property,
             525      including:
             526          (i) moneys;
             527          (ii) credits;
             528          (iii) bonds;
             529          (iv) stocks;
             530          (v) representative property;
             531          (vi) franchises;
             532          (vii) licenses;
             533          (viii) trade names;


             534          (ix) copyrights; and
             535          (x) patents; or
             536          (b) a low-income housing tax credit.
             537          (19) "Low-income housing tax credit" means:
             538          (a) a federal low-income housing tax credit under Section 42, Internal Revenue Code;
             539      or
             540          (b) a low-income housing tax credit under:
             541          (i) Section 59-7-607 ; or
             542          (ii) Section [ 59-10-129 ] 59-10-1010 .
             543          (20) "Metalliferous minerals" includes gold, silver, copper, lead, zinc, and uranium.
             544          (21) "Mine" means a natural deposit of either metalliferous or nonmetalliferous
             545      valuable mineral.
             546          (22) "Mining" means the process of producing, extracting, leaching, evaporating, or
             547      otherwise removing a mineral from a mine.
             548          (23) (a) "Mobile flight equipment" means tangible personal property that is:
             549          (i) owned or operated by an:
             550          (A) air charter service;
             551          (B) air contract service; or
             552          (C) airline; and
             553          (ii) (A) capable of flight;
             554          (B) attached to an aircraft that is capable of flight; or
             555          (C) contained in an aircraft that is capable of flight if the tangible personal property is
             556      intended to be used:
             557          (I) during multiple flights;
             558          (II) during a takeoff, flight, or landing; and
             559          (III) as a service provided by an air charter service, air contract service, or airline.
             560          (b) (i) "Mobile flight equipment" does not include a spare part other than a spare
             561      engine that is rotated:


             562          (A) at regular intervals; and
             563          (B) with an engine that is attached to the aircraft.
             564          (ii) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act,
             565      the commission may make rules defining the term "regular intervals."
             566          (24) "Nonmetalliferous minerals" includes, but is not limited to, oil, gas, coal, salts,
             567      sand, rock, gravel, and all carboniferous materials.
             568          (25) "Personal property" includes:
             569          (a) every class of property as defined in Subsection (26) which is the subject of
             570      ownership and not included within the meaning of the terms "real estate" and "improvements";
             571          (b) gas and water mains and pipes laid in roads, streets, or alleys;
             572          (c) bridges and ferries;
             573          (d) livestock which, for the purposes of the exemption provided under Section
             574      59-2-1112 , means all domestic animals, honeybees, poultry, fur-bearing animals, and fish; and
             575          (e) outdoor advertising structures as defined in Section 72-7-502 .
             576          (26) (a) "Property" means property that is subject to assessment and taxation according
             577      to its value.
             578          (b) "Property" does not include intangible property as defined in this section.
             579          (27) "Public utility," for purposes of this chapter, means the operating property of a
             580      railroad, gas corporation, oil or gas transportation or pipeline company, coal slurry pipeline
             581      company, electrical corporation, telephone corporation, sewerage corporation, or heat
             582      corporation where the company performs the service for, or delivers the commodity to, the
             583      public generally or companies serving the public generally, or in the case of a gas corporation
             584      or an electrical corporation, where the gas or electricity is sold or furnished to any member or
             585      consumers within the state for domestic, commercial, or industrial use. Public utility also
             586      means the operating property of any entity or person defined under Section 54-2-1 except water
             587      corporations.
             588          (28) "Real estate" or "real property" includes:
             589          (a) the possession of, claim to, ownership of, or right to the possession of land;


             590          (b) all mines, minerals, and quarries in and under the land, all timber belonging to
             591      individuals or corporations growing or being on the lands of this state or the United States, and
             592      all rights and privileges appertaining to these; and
             593          (c) improvements.
             594          (29) "Residential property," for the purposes of the reductions and adjustments under
             595      this chapter, means any property used for residential purposes as a primary residence. It does
             596      not include property used for transient residential use or condominiums used in rental pools.
             597          (30) For purposes of Subsection 59-2-801 (1)(e), "route miles" means the number of
             598      miles calculated by the commission that is:
             599          (a) measured in a straight line by the commission; and
             600          (b) equal to the distance between a geographical location that begins or ends:
             601          (i) at a boundary of the state; and
             602          (ii) where an aircraft:
             603          (A) takes off; or
             604          (B) lands.
             605          (31) (a) "State-assessed commercial vehicle" means:
             606          (i) any commercial vehicle, trailer, or semitrailer which operates interstate or intrastate
             607      to transport passengers, freight, merchandise, or other property for hire; or
             608          (ii) any commercial vehicle, trailer, or semitrailer which operates interstate and
             609      transports the vehicle owner's goods or property in furtherance of the owner's commercial
             610      enterprise.
             611          (b) "State-assessed commercial vehicle" does not include vehicles used for hire which
             612      are specified in Subsection (8)(c) as county-assessed commercial vehicles.
             613          (32) "Taxable value" means fair market value less any applicable reduction allowed for
             614      residential property under Section 59-2-103 .
             615          (33) "Tax area" means a geographic area created by the overlapping boundaries of one
             616      or more taxing entities.
             617          (34) "Taxing entity" means any county, city, town, school district, special taxing


             618      district, or any other political subdivision of the state with the authority to levy a tax on
             619      property.
             620          (35) "Tax roll" means a permanent record of the taxes charged on property, as extended
             621      on the assessment roll and may be maintained on the same record or records as the assessment
             622      roll or may be maintained on a separate record properly indexed to the assessment roll. It
             623      includes tax books, tax lists, and other similar materials.
             624          Section 6. Section 59-6-101 is amended to read:
             625           59-6-101. Definitions.
             626          As used in this chapter:
             627          (1) (a) Except as provided in Subsection (1)(b), "claimant" means a resident or
             628      nonresident person.
             629          (b) "Claimant" does not include an estate or trust.
             630          (2) "Estate" means a nonresident estate or a resident estate.
             631          [(1)] (3) "Minerals" means either metalliferous minerals as defined in Section
             632      59-2-102 , nonmetalliferous minerals as defined in Section 59-2-102 , or both.
             633          [(2)] (4) "Producer" means any person who produces or extracts minerals from deposits
             634      in this state or who is the first purchaser of minerals produced or extracted from deposits in this
             635      state.
             636          (5) "Refundable tax credit" or "tax credit" means a tax credit that a claimant, estate, or
             637      trust may claim:
             638          (a) as provided by statute; and
             639          (b) regardless of whether the claimant, estate, or trust has a tax liability for a tax
             640      described in Subsection 59-6-102 (3) for the taxable year for which the claimant, estate, or trust
             641      claims the tax credit.
             642          (6) "Trust" means a nonresident trust or a resident trust.
             643          Section 7. Section 59-6-102 is amended to read:
             644           59-6-102. Producer's obligation to deduct and withhold payments -- Amount --
             645      Exempt payments -- Credit against tax.


             646          (1) Except as provided in Subsection (2), each producer shall deduct and withhold
             647      from each payment being made to any person in respect to production of minerals in this state,
             648      but not including that to which the producer is entitled, an amount equal to 5% of the amount
             649      which would have otherwise been payable to the person entitled to the payment.
             650          (2) Notwithstanding Subsection (1), the obligation to deduct and withhold from
             651      payments as provided in Subsection (1) does not apply to those payments which are payable to:
             652          (a) the United States, this state, or an agency or political subdivision of the United
             653      States or this state;
             654          (b) an organization that is exempt from the taxes imposed by Chapter 7, Corporate
             655      Franchise and Income Taxes, in accordance with Subsection 59-7-102 (1)(a); or
             656          (c) an Indian or Indian tribe if the amounts accruing are subject to the supervision of
             657      the United States or an agency of the United States.
             658          (3) [(a)] A [person who] claimant, estate, or trust that files a tax return with the state in
             659      accordance with the following is entitled to a refundable tax credit against the tax reflected on
             660      the return for the amount withheld by the producer under Subsection (1):
             661          [(i)] (a) Chapter 7, Corporate Franchise and Income Taxes;
             662          [(ii)] (b) Chapter 8, Gross Receipts Tax on Certain Corporations not Required to Pay
             663      Corporate Franchise or Income Tax Act;
             664          [(iii)] (c) Chapter 8a, Gross Receipts Tax on Electrical Corporations Act; or
             665          [(iv)] (d) Chapter 10, Individual Income Tax Act.
             666          [(b) If the amount withheld under Subsection (1) is greater than the tax due on the
             667      return, the person making the return is entitled to a refund in the amount of the overpayment.]
             668          Section 8. Section 59-7-607 is amended to read:
             669           59-7-607. Utah low-income housing tax credit.
             670          (1) As used in this section:
             671          (a) "Allocation certificate" means:
             672          (i) the certificate prescribed by the commission and issued by the Utah Housing
             673      Corporation to each taxpayer that specifies the percentage of the annual federal low-income


             674      housing tax credit that each taxpayer may take as an annual credit against state income tax; or
             675          (ii) a copy of the allocation certificate that the housing sponsor provides to the
             676      taxpayer.
             677          (b) "Building" means a qualified low-income building as defined in Section 42(c),
             678      Internal Revenue Code.
             679          (c) "Federal low-income housing tax credit" means the tax credit under Section 42,
             680      Internal Revenue Code.
             681          (d) "Housing sponsor" means a corporation in the case of a C corporation, a partnership
             682      in the case of a partnership, a corporation in the case of an S corporation, or a limited liability
             683      company in the case of a limited liability company.
             684          (e) "Qualified allocation plan" means the qualified allocation plan adopted by the Utah
             685      Housing Corporation pursuant to Section 42(m), Internal Revenue Code.
             686          (f) "Special low-income housing tax credit certificate" means a certificate:
             687          (i) prescribed by the commission;
             688          (ii) that a housing sponsor issues to a taxpayer for a taxable year; and
             689          (iii) that specifies the amount of tax credit a taxpayer may claim under this section if
             690      the taxpayer meets the requirements of this section.
             691          (g) "Taxpayer" means a person that is allowed a tax credit in accordance with this
             692      section which is the corporation in the case of a C corporation, the partners in the case of a
             693      partnership, the shareholders in the case of an S corporation, and the members in the case of a
             694      limited liability company.
             695          (2) (a) For taxable years beginning on or after January 1, 1995, there is allowed a
             696      nonrefundable tax credit against taxes otherwise due under this chapter or Chapter 8, Gross
             697      Receipts Tax on Certain Corporations Not Required to Pay Corporate Franchise or Income Tax
             698      Act, for taxpayers issued an allocation certificate.
             699          (b) The tax credit shall be in an amount equal to the greater of the amount of:
             700          (i) federal low-income housing tax credit to which the taxpayer is allowed during that
             701      year multiplied by the percentage specified in an allocation certificate issued by the Utah


             702      Housing Corporation; or
             703          (ii) tax credit specified in the special low-income housing tax credit certificate that the
             704      housing sponsor issues to the taxpayer as provided in Subsection (2)(c).
             705          (c) For purposes of Subsection (2)(b)(ii), the tax credit is equal to the product of:
             706          (i) the total amount of low-income housing tax credit under this section that:
             707          (A) a housing sponsor is allowed for a building; and
             708          (B) all of the taxpayers may claim with respect to the building if the taxpayers meet the
             709      requirements of this section; and
             710          (ii) the percentage of tax credit a taxpayer may claim:
             711          (A) under this section if the taxpayer meets the requirements of this section; and
             712          (B) as provided in the agreement between the taxpayer and the housing sponsor.
             713          (d) (i) For the calendar year beginning on January 1, 1995, through the calendar year
             714      beginning on January 1, 2015, the aggregate annual tax credit that the Utah Housing
             715      Corporation may allocate for the credit period described in Section 42(f), Internal Revenue
             716      Code, pursuant to this section and Section [ 59-10-129 ] 59-10-1010 is an amount equal to the
             717      product of:
             718          (A) 12.5 cents; and
             719          (B) the population of Utah.
             720          (ii) For purposes of this section, the population of Utah shall be determined in
             721      accordance with Section 146(j), Internal Revenue Code.
             722          (3) (a) By October 1, 1994, the Utah Housing Corporation shall determine criteria and
             723      procedures for allocating the tax credit under this section and Section [ 59-10-129 ] 59-10-1010
             724      and incorporate the criteria and procedures into the Utah Housing Corporation's qualified
             725      allocation plan.
             726          (b) The Utah Housing Corporation shall create the criteria under Subsection (3)(a)
             727      based on:
             728          (i) the number of affordable housing units to be created in Utah for low and moderate
             729      income persons in the residential housing development of which the building is a part;


             730          (ii) the level of area median income being served by the development;
             731          (iii) the need for the tax credit for the economic feasibility of the development; and
             732          (iv) the extended period for which the development commits to remain as affordable
             733      housing.
             734          (4) (a) The following may apply to the Utah Housing Corporation for a tax credit under
             735      this section:
             736          (i) any housing sponsor that has received an allocation of the federal low-income
             737      housing tax credit; or
             738          (ii) any applicant for an allocation of the federal low-income housing tax credit.
             739          (b) The Utah Housing Corporation may not require fees for applications of the tax
             740      credit under this section in addition to those fees required for applications for the federal
             741      low-income housing tax credit.
             742          (5) (a) The Utah Housing Corporation shall determine the amount of the tax credit to
             743      allocate to a qualifying housing sponsor in accordance with the qualified allocation plan of the
             744      Utah Housing Corporation.
             745          (b) (i) The Utah Housing Corporation shall allocate the tax credit to housing sponsors
             746      by issuing an allocation certificate to qualifying housing sponsors.
             747          (ii) The allocation certificate under Subsection (5)(b)(i) shall specify the allowed
             748      percentage of the federal low-income housing tax credit as determined by the Utah Housing
             749      Corporation.
             750          (c) The percentage specified in an allocation certificate may not exceed 100% of the
             751      federal low-income housing tax credit.
             752          (6) A housing sponsor shall provide a copy of the allocation certificate to each taxpayer
             753      that is issued a special low-income housing tax credit certificate.
             754          (7) (a) A housing sponsor shall provide to the commission a list of:
             755          (i) the taxpayers issued a special low-income housing tax credit certificate; and
             756          (ii) for each taxpayer described in Subsection (7)(a)(i), the amount of tax credit listed
             757      on the special low-income housing tax credit certificate.


             758          (b) A housing sponsor shall provide the list required by Subsection (7)(a):
             759          (i) to the commission;
             760          (ii) on a form provided by the commission; and
             761          (iii) with the housing sponsor's tax return for each taxable year for which the housing
             762      sponsor issues a special low-income housing tax credit certificate described in this Subsection
             763      (7).
             764          (8) (a) All elections made by the taxpayer pursuant to Section 42, Internal Revenue
             765      Code, shall apply to this section.
             766          (b) (i) If a taxpayer is required to recapture a portion of any federal low-income
             767      housing tax credit, the taxpayer shall also be required to recapture a portion of any state tax
             768      credits authorized by this section.
             769          (ii) The state recapture amount shall be equal to the percentage of the state tax credit
             770      that equals the proportion the federal recapture amount bears to the original federal low-income
             771      housing tax credit amount subject to recapture.
             772          (9) (a) Any tax credits returned to the Utah Housing Corporation in any year may be
             773      reallocated within the same time period as provided in Section 42, Internal Revenue Code.
             774          (b) Tax credits that are unallocated by the Utah Housing Corporation in any year may
             775      be carried over for allocation in the subsequent year.
             776          (10) (a) Amounts otherwise qualifying for the tax credit, but not allowable because the
             777      tax credit exceeds the tax, may be carried back three years or may be carried forward five years
             778      as a credit against the tax.
             779          (b) Carryover tax credits under Subsection (10)(a) shall be applied against the tax:
             780          (i) before the application of the tax credits earned in the current year; and
             781          (ii) on a first-earned first-used basis.
             782          (11) Any tax credit taken in this section may be subject to an annual audit by the
             783      commission.
             784          (12) The Utah Housing Corporation shall provide an annual report to the Revenue and
             785      Taxation Interim Committee which shall include at least:


             786          (a) the purpose and effectiveness of the tax credits; and
             787          (b) the benefits of the tax credits to the state.
             788          (13) The commission may, in consultation with the Utah Housing Corporation,
             789      promulgate rules to implement this section.
             790          Section 9. Section 59-7-614 is amended to read:
             791           59-7-614. Renewable energy systems tax credit -- Definitions -- Limitations --
             792      State tax credit in addition to allowable federal credits -- Certification -- Rulemaking
             793      authority -- Reimbursement of Uniform School Fund.
             794          (1) As used in this section:
             795          (a) "Active solar system":
             796          (i) means a system of equipment capable of collecting and converting incident solar
             797      radiation into thermal, mechanical, or electrical energy, and transferring these forms of energy
             798      by a separate apparatus to storage or to the point of use; and
             799          (ii) includes water heating, space heating or cooling, and electrical or mechanical
             800      energy generation.
             801          (b) "Biomass system" means any system of apparatus and equipment capable of
             802      converting organic plant, wood, or waste products into electrical and thermal energy and
             803      transferring these forms of energy by a separate apparatus to the point of use or storage.
             804          (c) "Business entity" means any sole proprietorship, estate, trust, partnership,
             805      association, corporation, cooperative, or other entity under which business is conducted or
             806      transacted.
             807          (d) "Commercial energy system" means any active solar, passive solar, wind,
             808      hydroenergy, or biomass system used to supply energy to a commercial unit or as a commercial
             809      enterprise.
             810          (e) "Commercial enterprise" means a business entity whose purpose is to produce
             811      electrical, mechanical, or thermal energy for sale from a commercial energy system.
             812          (f) (i) "Commercial unit" means any building or structure which a business entity uses
             813      to transact its business except as provided in Subsection (1)(f)(ii); and


             814          (ii) (A) in the case of an active solar system used for agricultural water pumping or a
             815      wind system, each individual energy generating device shall be a commercial unit; and
             816          (B) if an energy system is the building or structure which a business entity uses to
             817      transact its business, a commercial unit is the complete energy system itself.
             818          (g) "Hydroenergy system" means a system of apparatus and equipment capable of
             819      intercepting and converting kinetic water energy into electrical or mechanical energy and
             820      transferring this form of energy by separate apparatus to the point of use or storage.
             821          (h) "Individual taxpayer" means any person who is a taxpayer as defined in Section
             822      59-10-103 and an individual as defined in Section 59-10-103 .
             823          (i) "Passive solar system":
             824          (i) means a direct thermal system which utilizes the structure of a building and its
             825      operable components to provide for collection, storage, and distribution of heating or cooling
             826      during the appropriate times of the year by utilizing the climate resources available at the site;
             827      and
             828          (ii) includes those portions and components of a building that are expressly designed
             829      and required for the collection, storage, and distribution of solar energy.
             830          (j) "Residential energy system" means any active solar, passive solar, wind, or
             831      hydroenergy system used to supply energy to or for any residential unit.
             832          (k) "Residential unit" means any house, condominium, apartment, or similar dwelling
             833      unit which serves as a dwelling for a person, group of persons, or a family but does not include
             834      property subject to a fee under:
             835          (i) Section 59-2-404 ;
             836          (ii) Section 59-2-405 ;
             837          (iii) Section 59-2-405.1 ;
             838          (iv) Section 59-2-405.2 ; or
             839          (v) Section 59-2-405.3 .
             840          (l) "Utah Geological Survey" means the Utah Geological Survey established in Section
             841      63-73-5 .


             842          (m) "Wind system" means a system of apparatus and equipment capable of intercepting
             843      and converting wind energy into mechanical or electrical energy and transferring these forms of
             844      energy by a separate apparatus to the point of use or storage.
             845          (2) (a) (i) For taxable years beginning on or after January 1, 2001, but beginning on or
             846      before December 31, 2006, a business entity that purchases and completes or participates in the
             847      financing of a residential energy system to supply all or part of the energy required for a
             848      residential unit owned or used by the business entity and situated in Utah is entitled to a tax
             849      credit as provided in this Subsection (2)(a).
             850          (ii) (A) A business entity is entitled to a tax credit equal to 25% of the costs of a
             851      residential energy system installed with respect to each residential unit it owns or uses,
             852      including installation costs, against any tax due under this chapter for the taxable year in which
             853      the energy system is completed and placed in service.
             854          (B) The total amount of the credit under this Subsection (2)(a) may not exceed $2,000
             855      per residential unit.
             856          (C) The credit under this Subsection (2)(a) is allowed for any residential energy system
             857      completed and placed in service on or after January 1, 2001, but on or before December 31,
             858      2006.
             859          (iii) If a business entity sells a residential unit to an individual taxpayer prior to making
             860      a claim for the tax credit under this Subsection (2)(a), the business entity may:
             861          (A) assign its right to this tax credit to the individual taxpayer; and
             862          (B) if the business entity assigns its right to the tax credit to an individual taxpayer
             863      under Subsection (2)(a)(iii)(A), the individual taxpayer may claim the tax credit as if the
             864      individual taxpayer had completed or participated in the costs of the residential energy system
             865      under Section [ 59-10-134 ] 59-10-1014 .
             866          (b) (i) For taxable years beginning on or after January 1, 2001, but beginning on or
             867      before December 31, 2006, a business entity that purchases or participates in the financing of a
             868      commercial energy system is entitled to a tax credit as provided in this Subsection (2)(b) if:
             869          (A) the commercial energy system supplies all or part of the energy required by


             870      commercial units owned or used by the business entity; or
             871          (B) the business entity sells all or part of the energy produced by the commercial
             872      energy system as a commercial enterprise.
             873          (ii) (A) A business entity is entitled to a tax credit equal to 10% of the costs of any
             874      commercial energy system installed, including installation costs, against any tax due under this
             875      chapter for the taxable year in which the commercial energy system is completed and placed in
             876      service.
             877          (B) The total amount of the credit under this Subsection (2)(b) may not exceed $50,000
             878      per commercial unit.
             879          (C) The credit under this Subsection (2)(b) is allowed for any commercial energy
             880      system completed and placed in service on or after January 1, 2001, but on or before December
             881      31, 2006.
             882          (iii) A business entity that leases a commercial energy system installed on a
             883      commercial unit is eligible for the tax credit under this Subsection (2)(b) if the lessee can
             884      confirm that the lessor irrevocably elects not to claim the credit.
             885          (iv) Only the principal recovery portion of the lease payments, which is the cost
             886      incurred by a business entity in acquiring a commercial energy system, excluding interest
             887      charges and maintenance expenses, is eligible for the tax credit under this Subsection (2)(b).
             888          (v) A business entity that leases a commercial energy system is eligible to use the tax
             889      credit under this Subsection (2)(b) for a period no greater than seven years from the initiation
             890      of the lease.
             891          (c) (i) A tax credit under this section may be claimed for the taxable year in which the
             892      energy system is completed and placed in service.
             893          (ii) Additional energy systems or parts of energy systems may be claimed for
             894      subsequent years.
             895          (iii) If the amount of a tax credit under this section exceeds a business entity's tax
             896      liability under this chapter for a taxable year, the amount of the credit exceeding the liability
             897      may be carried over for a period which does not exceed the next four taxable years.


             898          (3) (a) The tax credits provided for under Subsection (2) are in addition to any tax
             899      credits provided under the laws or rules and regulations of the United States.
             900          (b) (i) The Utah Geological Survey may set standards for residential and commercial
             901      energy systems that cover the safety, reliability, efficiency, leasing, and technical feasibility of
             902      the systems to ensure that the systems eligible for the tax credit use the state's renewable and
             903      nonrenewable energy resources in an appropriate and economic manner.
             904          (ii) A tax credit may not be taken under Subsection (2) until the Utah Geological
             905      Survey has certified that the energy system has been completely installed and is a viable system
             906      for saving or production of energy from renewable resources.
             907          (c) The Utah Geological Survey and the commission are authorized to promulgate rules
             908      in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, which are
             909      necessary to implement this section.
             910          (d) The Uniform School Fund shall be reimbursed by transfers from the General Fund
             911      for any credits taken under this section.
             912          Section 10. Section 59-7-703 is amended to read:
             913           59-7-703. Payment or withholding of tax on behalf of nonresident shareholders --
             914      Rate.
             915          (1) As used in this section, "return" means:
             916          (a) if a nonresident shareholder is required to file a return under this chapter, a return
             917      filed under this chapter; or
             918          (b) if a nonresident shareholder is required to file a return under Chapter 10, Individual
             919      Income Tax Act, a return filed under Chapter 10, Individual Income Tax Act.
             920          (2) (a) Except as provided in Subsection (4), an S corporation shall pay or withhold a
             921      tax on behalf of any nonresident shareholder.
             922          (b) The amount paid or withheld by an S corporation under Subsection (2)(a) shall be
             923      determined by:
             924          (i) calculating the items of income or loss from federal form 1120S, Schedule K;
             925          (ii) applying the apportionment formula to determine the amount apportioned to Utah;


             926          (iii) reducing the amount apportioned to Utah by the percentage of ownership
             927      attributable to resident shareholders; and
             928          (iv) applying the rate to the remaining balance.
             929          (3) (a) For a nonresident shareholder who is required to file a return under this chapter:
             930          (i) the nonresident shareholder may claim a credit on the nonresident shareholder's
             931      return for the amount of tax paid or withheld by the S corporation on behalf of the nonresident
             932      shareholder;
             933          (ii) if the nonresident shareholder has no other Utah source income, the nonresident
             934      shareholder may elect:
             935          (A) not to claim the credit provided under Subsection (3)(a)(i); and
             936          (B) not to file a return for the taxable year; and
             937          (iii) if the nonresident shareholder may claim credits other than the credit described in
             938      Subsection (3)(a)(i), the nonresident shareholder shall file a return to claim those credits.
             939          (b) If a nonresident shareholder is required to file a return under Chapter 10, Individual
             940      Income Tax Act, the nonresident shareholder is subject to Section [ 59-10-108.2 ] 59-10-1103 .
             941          (4) Notwithstanding Subsection (2), the obligation to pay or withhold a tax under
             942      Subsection (2) does not apply to an organization that is exempt under Subsection
             943      59-7-102 (1)(a) from the taxes imposed by this chapter.
             944          (5) (a) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act,
             945      the commission shall by rule determine the rate at which an S corporation shall withhold for
             946      nonresident shareholders.
             947          (b) The rate described in Subsection (5)(a) shall be consistent with the composite tax
             948      rate paid by partnerships.
             949          (6) (a) If an S corporation fails to pay or withhold a tax as provided in this section, and
             950      thereafter the income subject to payment or withholding is reported and the resulting tax is paid
             951      by a nonresident shareholder, any tax required to be paid or withheld may not be collected from
             952      the S corporation.
             953          (b) A nonresident shareholder's payment under Subsection (6)(a) does not relieve the S


             954      corporation from liability for penalties or interest associated with failure to pay or withhold a
             955      tax as provided in this section.
             956          (7) Penalties, refunds, assessments, and required records for S corporations shall be
             957      governed by:
             958          (a) this chapter if a nonresident shareholder is subject to this chapter; or
             959          (b) Chapter 10, Individual Income Tax Act, if a nonresident shareholder is subject to
             960      Chapter 10, Individual Income Tax Act.
             961          (8) (a) An S corporation shall furnish each nonresident shareholder a statement
             962      showing:
             963          (i) the amount of the nonresident shareholder's share of the corporate earnings from
             964      Utah sources; and
             965          (ii) the amount of the withholding from the nonresident shareholder's share of the
             966      corporate earnings from Utah sources.
             967          (b) An S corporation shall pay the commission the amount withheld under this section:
             968          (i) by the due date of the corporation's return, not including extensions; and
             969          (ii) on forms furnished by the commission.
             970          Section 11. Section 59-10-103 is amended to read:
             971           59-10-103. Definitions.
             972          (1) As used in this chapter:
             973          (a) "Adoption expenses" means:
             974          (i) any actual medical and hospital expenses of the mother of the adopted child which
             975      are incident to the child's birth;
             976          (ii) any welfare agency fees or costs;
             977          (iii) any child placement service fees or costs;
             978          (iv) any legal fees or costs; or
             979          (v) any other fees or costs relating to an adoption.
             980          (b) "Adult with a disability" means an individual who:
             981          (i) is 18 years of age or older;


             982          (ii) is eligible for services under Title 62A, Chapter 5, Services [to] for People with
             983      Disabilities; and
             984          (iii) is not enrolled in:
             985          (A) an education program for students with disabilities that is authorized under Section
             986      53A-15-301 ; or
             987          (B) a school established under Title 53A, Chapter 25, Schools for the Deaf and Blind.
             988          (c) (i) For purposes of Subsection 59-10-114 (2)[(m)] (l), "capital gain transaction"
             989      means a transaction that results in a:
             990          (A) short-term capital gain; or
             991          (B) long-term capital gain.
             992          (ii) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act,
             993      the commission may by rule define the term "transaction."
             994          (d) "Commercial domicile" means the principal place from which the trade or business
             995      of a Utah small business corporation is directed or managed.
             996          (e) "Corporation" includes:
             997          (i) associations;
             998          (ii) joint stock companies; and
             999          (iii) insurance companies.
             1000          (f) "Dependent child with a disability" means an individual 21 years of age or younger
             1001      who:
             1002          (i) (A) is diagnosed by a school district representative under rules adopted by the State
             1003      Board of Education as having a disability classified as:
             1004          (I) autism;
             1005          (II) deafness;
             1006          (III) preschool developmental delay;
             1007          (IV) dual sensory impairment;
             1008          (V) hearing impairment;
             1009          (VI) intellectual disability;


             1010          (VII) multidisability;
             1011          (VIII) orthopedic impairment;
             1012          (IX) other health impairment;
             1013          (X) traumatic brain injury; or
             1014          (XI) visual impairment;
             1015          (B) is not receiving residential services from:
             1016          (I) the Division of Services for People with Disabilities created under Section
             1017      62A-5-102 ; or
             1018          (II) a school established under Title 53A, Chapter 25, Schools for the Deaf and Blind;
             1019      and
             1020          (C) is enrolled in:
             1021          (I) an education program for students with disabilities that is authorized under Section
             1022      53A-15-301 ; or
             1023          (II) a school established under Title 53A, Chapter 25, Schools for the Deaf and Blind;
             1024      or
             1025          (ii) is identified under guidelines of the Department of Health as qualified for:
             1026          (A) Early Intervention; or
             1027          (B) Infant Development Services.
             1028          (g) "Employee" is as defined in Section 59-10-401 .
             1029          (h) "Employer" is as defined in Section 59-10-401 .
             1030          (i) "Fiduciary" means:
             1031          (i) a guardian;
             1032          (ii) a trustee;
             1033          (iii) an executor;
             1034          (iv) an administrator;
             1035          (v) a receiver;
             1036          (vi) a conservator; or
             1037          (vii) any person acting in any fiduciary capacity for any individual.


             1038          (j) "Homesteaded land diminished from the Uintah and Ouray Reservation" means the
             1039      homesteaded land that was held to have been diminished from the Uintah and Ouray
             1040      Reservation in Hagen v. Utah, 510 U.S. 399 (1994).
             1041          (k) "Individual" means a natural person and includes aliens and minors.
             1042          (l) "Irrevocable trust" means a trust in which the settlor may not revoke or terminate all
             1043      or part of the trust without the consent of a person who has a substantial beneficial interest in
             1044      the trust and the interest would be adversely affected by the exercise of the settlor's power to
             1045      revoke or terminate all or part of the trust.
             1046          (m) For purposes of Subsection 59-10-114 (2)[(m)] (l), "long-term capital gain" is as
             1047      defined in Section 1222, Internal Revenue Code.
             1048          (n) "Nonresident individual" means an individual who is not a resident of this state.
             1049          (o) "Nonresident trust" or "nonresident estate" means a trust or estate which is not a
             1050      resident estate or trust.
             1051          (p) (i) "Partnership" includes a syndicate, group, pool, joint venture, or other
             1052      unincorporated organization:
             1053          (A) through or by means of which any business, financial operation, or venture is
             1054      carried on; and
             1055          (B) which is not, within the meaning of this chapter:
             1056          (I) a trust;
             1057          (II) an estate; or
             1058          (III) a corporation.
             1059          (ii) "Partnership" does not include any organization not included under the definition of
             1060      "partnership" in Section 761, Internal Revenue Code.
             1061          (iii) "Partner" includes a member in a syndicate, group, pool, joint venture, or
             1062      organization described in Subsection (1)(p)(i).
             1063          (q) "Qualifying military service member" means a member of:
             1064          (i) The Utah Army National Guard;
             1065          (ii) The Utah Air National Guard; or


             1066          (iii) the following if the member is assigned to a unit that is located in the state:
             1067          (A) The Army Reserve;
             1068          (B) The Naval Reserve;
             1069          (C) The Air Force Reserve;
             1070          (D) The Marine Corps Reserve; or
             1071          (E) The Coast Guard Reserve.
             1072          (r) "Qualifying stock" means stock that is:
             1073          (i) (A) common; or
             1074          (B) preferred;
             1075          (ii) as defined by the commission by rule, originally issued to:
             1076          (A) a resident or nonresident individual; or
             1077          (B) a partnership if the resident or nonresident individual making a subtraction from
             1078      federal taxable income in accordance with Subsection 59-10-114 (2)[(m)] (l):
             1079          (I) was a partner when the stock was issued; and
             1080          (II) remains a partner until the last day of the taxable year for which the resident or
             1081      nonresident individual makes the subtraction from federal taxable income in accordance with
             1082      Subsection 59-10-114 (2)[(m)] (l); and
             1083          (iii) issued:
             1084          (A) by a Utah small business corporation;
             1085          (B) on or after January 1, 2003; and
             1086          (C) for:
             1087          (I) money; or
             1088          (II) other property, except for stock or securities.
             1089          (s) (i) "Resident individual" means:
             1090          (A) an individual who is domiciled in this state for any period of time during the
             1091      taxable year, but only for the duration of the period during which the individual is domiciled in
             1092      this state; or
             1093          (B) an individual who is not domiciled in this state but:


             1094          (I) maintains a permanent place of abode in this state; and
             1095          (II) spends in the aggregate 183 or more days of the taxable year in this state.
             1096          (ii) For purposes of Subsection (1)(s)(i)(B), a fraction of a calendar day shall be
             1097      counted as a whole day.
             1098          (t) "Resident estate" or "resident trust" is as defined in Section 75-7-103 .
             1099          (u) For purposes of Subsection 59-10-114 (2)[(m)] (l), "short-term capital gain" is as
             1100      defined in Section 1222, Internal Revenue Code.
             1101          (v) "Taxable income" and "state taxable income" are defined as provided in Sections
             1102      59-10-111 , 59-10-112 , [ 59-10-116 ,] 59-10-201.1 , and 59-10-204 .
             1103          (w) "Taxpayer" means any individual, estate, or trust or beneficiary of an estate or
             1104      trust, whose income is subject in whole or part to the tax imposed by this chapter.
             1105          (x) "Uintah and Ouray Reservation" means the lands recognized as being included
             1106      within the Uintah and Ouray Reservation in:
             1107          (i) Hagen v. Utah, 510 U.S. 399 (1994); and
             1108          (ii) Ute Indian Tribe v. Utah, 114 F.3d 1513 (10th Cir. 1997).
             1109          (y) (i) "Utah small business corporation" means a corporation that:
             1110          (A) is a small business corporation as defined in Section 1244(c)(3), Internal Revenue
             1111      Code;
             1112          (B) except as provided in Subsection (1)(y)(ii), meets the requirements of Section
             1113      1244(c)(1)(C), Internal Revenue Code; and
             1114          (C) has its commercial domicile in this state.
             1115          (ii) Notwithstanding Subsection (1)(y)(i)(B), the time period described in Section
             1116      1244(c)(1)(C) and Section 1244(c)(2), Internal Revenue Code, for determining the source of a
             1117      corporation's aggregate gross receipts shall end on the last day of the taxable year for which the
             1118      resident or nonresident individual makes a subtraction from federal taxable income in
             1119      accordance with Subsection 59-10-114 (2)[(m)] (l).
             1120          (z) "Ute tribal member" means a person who is enrolled as a member of the Ute Indian
             1121      Tribe of the Uintah and Ouray Reservation.


             1122          (aa) "Ute tribe" means the Ute Indian Tribe of the Uintah and Ouray Reservation.
             1123          (bb) "Wages" is as defined in Section 59-10-401 .
             1124          (2) (a) Any term used in this chapter has the same meaning as when used in
             1125      comparable context in the laws of the United States relating to federal income taxes unless a
             1126      different meaning is clearly required.
             1127          (b) Any reference to the Internal Revenue Code or to the laws of the United States shall
             1128      mean the Internal Revenue Code or other provisions of the laws of the United States relating to
             1129      federal income taxes that are in effect for the taxable year.
             1130          (c) Any reference to a specific section of the Internal Revenue Code or other provision
             1131      of the laws of the United States relating to federal income taxes shall include any
             1132      corresponding or comparable provisions of the Internal Revenue Code as hereafter amended,
             1133      redesignated, or reenacted.
             1134          Section 12. Section 59-10-112 is amended to read:
             1135           59-10-112. State taxable income of a resident individual.
             1136          "State taxable income" in the case of a resident individual means [his] the resident
             1137      individual's federal taxable income [(], as defined by Section 59-10-111 [)], with the
             1138      [modifications,] additions and subtractions[, and adjustments provided in] required by Section
             1139      59-10-114 . [The state taxable income of a resident individual who is the beneficiary of an
             1140      estate or trust shall be modified by the adjustments provided in Section 59-10-209 .]
             1141          Section 13. Section 59-10-114 is amended to read:
             1142           59-10-114. Additions to and subtractions from federal taxable income of an
             1143      individual.
             1144          (1) There shall be added to federal taxable income of a resident or nonresident
             1145      individual:
             1146          (a) the amount of any income tax imposed by this or any predecessor Utah individual
             1147      income tax law and the amount of any income tax imposed by the laws of another state, the
             1148      District of Columbia, or a possession of the United States, to the extent deducted from federal
             1149      adjusted gross income, as defined by Section 62, Internal Revenue Code, in determining federal


             1150      taxable income;
             1151          (b) a lump sum distribution that the taxpayer does not include in adjusted gross income
             1152      on the taxpayer's federal individual income tax return for the taxable year;
             1153          (c) for taxable years beginning on or after January 1, 2002, the amount of a child's
             1154      income calculated under Subsection (5) that:
             1155          (i) a parent elects to report on the parent's federal individual income tax return for the
             1156      taxable year; and
             1157          (ii) the parent does not include in adjusted gross income on the parent's federal
             1158      individual income tax return for the taxable year;
             1159          (d) 25% of the personal exemptions, as defined and calculated in the Internal Revenue
             1160      Code;
             1161          (e) a withdrawal from a medical care savings account and any penalty imposed in the
             1162      taxable year if:
             1163          (i) the taxpayer did not deduct or include the amounts on the taxpayer's federal
             1164      individual income tax return pursuant to Section 220, Internal Revenue Code; and
             1165          (ii) the withdrawal is subject to Subsections 31A-32a-105 (1) and (2);
             1166          (f) the amount disbursed to an account owner under Title 53B, Chapter 8a, Higher
             1167      Education Savings Incentive Program, in the year in which the amount is disbursed;
             1168          (g) except as provided in Subsection (6), for taxable years beginning on or after
             1169      January 1, 2003, for bonds, notes, and other evidences of indebtedness acquired on or after
             1170      January 1, 2003, the interest from bonds, notes, and other evidences of indebtedness issued by
             1171      one or more of the following entities:
             1172          (i) a state other than this state;
             1173          (ii) the District of Columbia;
             1174          (iii) a political subdivision of a state other than this state; or
             1175          (iv) an agency or instrumentality of an entity described in Subsections (1)(g)(i) through
             1176      (iii);
             1177          (h) subject to Subsection (2)(n), any distribution received by a resident beneficiary of a


             1178      resident trust of income that was taxed at the trust level for federal tax purposes, but was
             1179      subtracted from state taxable income of the trust pursuant to Subsection 59-10-202 (2)(c); [and]
             1180          (i) any distribution received by a resident beneficiary of a nonresident trust of income
             1181      that was taxed at the trust level for federal tax purposes, but was not taxed at the trust level by
             1182      any state[.]; and
             1183          (j) any adoption expense:
             1184          (i) for which a resident or nonresident individual receives reimbursement from another
             1185      person; and
             1186          (ii) to the extent to which the resident or nonresident individual deducts that adoption
             1187      expense from federal taxable income on a state or federal individual income tax return.
             1188          (2) There shall be subtracted from federal taxable income of a resident or nonresident
             1189      individual:
             1190          (a) the interest or [dividends] a dividend on obligations or securities of the United
             1191      States and its possessions or of any authority, commission, or instrumentality of the United
             1192      States, to the extent [includable] that interest or dividend is included in gross income for
             1193      federal income tax purposes for the taxable year but exempt from state income taxes under the
             1194      laws of the United States, but the amount subtracted under this Subsection (2)(a) shall be
             1195      reduced by any interest on indebtedness incurred or continued to purchase or carry the
             1196      obligations or securities described in this Subsection (2)(a), and by any expenses incurred in
             1197      the production of interest or dividend income described in this Subsection (2)(a) to the extent
             1198      that such expenses, including amortizable bond premiums, are deductible in determining
             1199      federal taxable income;
             1200          (b) [(i) except as provided in Subsection (2)(b)(ii),] 1/2 of the net amount of any
             1201      income tax paid or payable to the United States after all allowable credits, as reported on the
             1202      United States individual income tax return of the taxpayer for the same taxable year; [and]
             1203          [(ii) notwithstanding Subsection (2)(b)(i), for taxable years beginning on or after
             1204      January 1, 2001, the amount of a credit or an advance refund amount reported on a resident or
             1205      nonresident individual's United States individual income tax return allowed as a result of the


             1206      acceleration of the income tax rate bracket benefit for 2001 in accordance with Section 101,
             1207      Economic Growth and Tax Relief Reconciliation Act of 2001, Pub. L. No. 107-16, may not be
             1208      used in calculating the amount described in Subsection (2)(b)(i);]
             1209          (c) the amount of adoption expenses for one of the following taxable years as elected
             1210      by the resident or nonresident individual:
             1211          (i) regardless of whether a court issues an order granting the adoption, the taxable year
             1212      in which the adoption expenses are:
             1213          (A) paid; or
             1214          (B) incurred;
             1215          (ii) the taxable year in which a court issues an order granting the adoption; or
             1216          (iii) any year in which the resident or nonresident individual may claim the federal
             1217      adoption expenses credit under Section 23, Internal Revenue Code;
             1218          (d) amounts received by taxpayers under age 65 as retirement income which, for
             1219      purposes of this section, means pensions and annuities, paid from an annuity contract
             1220      purchased by an employer under a plan which meets the requirements of Section 404(a)(2),
             1221      Internal Revenue Code, or purchased by an employee under a plan which meets the
             1222      requirements of Section 408, Internal Revenue Code, or paid by the United States, a state, or
             1223      political subdivision thereof, or the District of Columbia, to the employee involved or the
             1224      surviving spouse;
             1225          (e) for each taxpayer age 65 or over before the close of the taxable year, a $7,500
             1226      personal retirement exemption;
             1227          (f) 75% of the amount of the personal exemption, as defined and calculated in the
             1228      Internal Revenue Code, for each dependent child with a disability and adult with a disability
             1229      who is claimed as a dependent on a taxpayer's return;
             1230          [(g) any amount included in federal taxable income that was received pursuant to any
             1231      federal law enacted in 1988 to provide reparation payments, as damages for human suffering,
             1232      to United States citizens and resident aliens of Japanese ancestry who were interned during
             1233      World War II;]


             1234          [(h)] (g) subject to the limitations of Subsection (3)(e), amounts a taxpayer pays during
             1235      the taxable year for health care insurance, as defined in Title 31A, Chapter 1, General
             1236      Provisions:
             1237          (i) for:
             1238          (A) the taxpayer;
             1239          (B) the taxpayer's spouse; and
             1240          (C) the taxpayer's dependents; and
             1241          (ii) to the extent the taxpayer does not deduct the amounts under Section 125, 162, or
             1242      213, Internal Revenue Code, in determining federal taxable income for the taxable year;
             1243          [(i)] (h) (i) except as [otherwise] provided in this Subsection (2)[(i)](h), the amount of
             1244      a contribution made during the taxable year on behalf of the taxpayer to a medical care savings
             1245      account and interest earned on a contribution to a medical care savings account established
             1246      pursuant to Title 31A, Chapter 32a, Medical Care Savings Account Act, to the extent the
             1247      contribution is accepted by the account administrator as provided in the Medical Care Savings
             1248      Account Act, and if the taxpayer did not deduct or include amounts on the taxpayer's federal
             1249      individual income tax return pursuant to Section 220, Internal Revenue Code; and
             1250          (ii) a contribution deductible under this Subsection (2)[(i)](h) may not exceed either of
             1251      the following:
             1252          (A) the maximum contribution allowed under the Medical Care Savings Account Act
             1253      for the tax year multiplied by two for taxpayers who file a joint return, if neither spouse is
             1254      covered by health care insurance as defined in Section 31A-1-301 or self-funded plan that
             1255      covers the other spouse, and each spouse has a medical care savings account; or
             1256          (B) the maximum contribution allowed under the Medical Care Savings Account Act
             1257      for the tax year for taxpayers:
             1258          (I) who do not file a joint return; or
             1259          (II) who file a joint return, but do not qualify under Subsection (2)[(i)](h)(ii)(A);
             1260          [(j)] (i) the amount included in federal taxable income that was derived from money
             1261      paid by an account owner to the program fund under Title 53B, Chapter 8a, Higher Education


             1262      Savings Incentive Program, not to exceed amounts determined under Subsection
             1263      53B-8a-106 (1)(d), and investment income earned on account agreements entered into under
             1264      Section 53B-8a-106 that is included in federal taxable income, but only when the funds are
             1265      used for qualified higher education costs of the beneficiary;
             1266          [(k)] (j) for taxable years beginning on or after January 1, 2000, any amounts paid for
             1267      premiums for long-term care insurance as defined in Section 31A-1-301 to the extent the
             1268      amounts paid for long-term care insurance were not deducted under Section 213, Internal
             1269      Revenue Code, in determining federal taxable income;
             1270          [(l)] (k) for taxable years beginning on or after January 1, 2000, if the conditions of
             1271      Subsection (4)(a) are met, the amount of income derived by a Ute tribal member:
             1272          (i) during a time period that the Ute tribal member resides on homesteaded land
             1273      diminished from the Uintah and Ouray Reservation; and
             1274          (ii) from a source within the Uintah and Ouray Reservation;
             1275          [(m)] (l) (i) for taxable years beginning on or after January 1, 2003, the total amount of
             1276      a resident or nonresident individual's short-term capital gain or long-term capital gain on a
             1277      capital gain transaction:
             1278          (A) that occurs on or after January 1, 2003;
             1279          (B) if 70% or more of the gross proceeds of the capital gain transaction are expended:
             1280          (I) to purchase qualifying stock in a Utah small business corporation; and
             1281          (II) within a 12-month period after the day on which the capital gain transaction occurs;
             1282      and
             1283          (C) if, prior to the purchase of the qualifying stock described in Subsection
             1284      (2)[(m)](l)(i)(B)(I), the resident or nonresident individual did not have an ownership interest in
             1285      the Utah small business corporation that issued the qualifying stock; and
             1286          (ii) in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
             1287      commission may make rules:
             1288          (A) defining the term "gross proceeds"; and
             1289          (B) for purposes of Subsection (2)[(m)](l)(i)(C), prescribing the circumstances under


             1290      which a resident or nonresident individual has an ownership interest in a Utah small business
             1291      corporation; [and]
             1292          [(n)] (m) for the taxable year beginning on or after January 1, 2005, but beginning on
             1293      or before December 31, 2005, the first $2,200 of income a qualifying military service member
             1294      receives:
             1295          (i) for service:
             1296          (A) as a qualifying military service member; or
             1297          (B) under an order into active service in accordance with Section 39-1-5 ; and
             1298          (ii) to the extent that income is included in adjusted gross income on that resident or
             1299      nonresident individual's federal individual income tax return for that taxable year[.];
             1300          (n) an amount received by a resident or nonresident individual or distribution received
             1301      by a resident or nonresident beneficiary of a resident trust:
             1302          (i) if that amount or distribution constitutes a refund of taxes imposed by:
             1303          (A) a state; or
             1304          (B) the District of Columbia; and
             1305          (ii) to the extent that amount or distribution is included in adjusted gross income for
             1306      that taxable year on the federal individual income tax return of the resident or nonresident
             1307      individual or resident or nonresident beneficiary of a resident trust;
             1308          (o) the amount of a railroad retirement benefit:
             1309          (i) paid:
             1310          (A) in accordance with The Railroad Retirement Act of 1974, 45 U.S.C. Sec. 231 et
             1311      seq.;
             1312          (B) to a resident or nonresident individual; and
             1313          (C) for the taxable year; and
             1314          (ii) to the extent that railroad retirement benefit is included in adjusted gross income on
             1315      that resident or nonresident individual's federal individual income tax return for that taxable
             1316      year; and
             1317          (p) an amount:


             1318          (i) received by an enrolled member of an American Indian tribe; and
             1319          (ii) to the extent that the state is not authorized or permitted to impose a tax under this
             1320      part on that amount in accordance with:
             1321          (A) federal law;
             1322          (B) a treaty; or
             1323          (C) a final decision issued by a court of competent jurisdiction.
             1324          (3) (a) For purposes of Subsection (2)(d), the amount of retirement income subtracted
             1325      for taxpayers under 65 shall be the lesser of the amount included in federal taxable income, or
             1326      $4,800, except that:
             1327          (i) for married taxpayers filing joint returns, for each $1 of adjusted gross income
             1328      earned over $32,000, the amount of the retirement income exemption that may be subtracted
             1329      shall be reduced by 50 cents;
             1330          (ii) for married taxpayers filing separate returns, for each $1 of adjusted gross income
             1331      earned over $16,000, the amount of the retirement income exemption that may be subtracted
             1332      shall be reduced by 50 cents; and
             1333          (iii) for individual taxpayers, for each $1 of adjusted gross income earned over
             1334      $25,000, the amount of the retirement income exemption that may be subtracted shall be
             1335      reduced by 50 cents.
             1336          (b) For purposes of Subsection (2)(e), the amount of the personal retirement exemption
             1337      shall be further reduced according to the following schedule:
             1338          (i) for married taxpayers filing joint returns, for each $1 of adjusted gross income
             1339      earned over $32,000, the amount of the personal retirement exemption shall be reduced by 50
             1340      cents;
             1341          (ii) for married taxpayers filing separate returns, for each $1 of adjusted gross income
             1342      earned over $16,000, the amount of the personal retirement exemption shall be reduced by 50
             1343      cents; and
             1344          (iii) for individual taxpayers, for each $1 of adjusted gross income earned over
             1345      $25,000, the amount of the personal retirement exemption shall be reduced by 50 cents.


             1346          (c) For purposes of Subsections (3)(a) and (b), adjusted gross income shall be
             1347      calculated by adding to federal adjusted gross income any interest income not otherwise
             1348      included in federal adjusted gross income.
             1349          (d) For purposes of determining ownership of items of retirement income common law
             1350      doctrine will be applied in all cases even though some items may have originated from service
             1351      or investments in a community property state. Amounts received by the spouse of a living
             1352      retiree because of the retiree's having been employed in a community property state are not
             1353      deductible as retirement income of such spouse.
             1354          (e) For purposes of Subsection (2)[(h)](g), a subtraction for an amount paid for health
             1355      care insurance as defined in Title 31A, Chapter 1, General Provisions, is not allowed:
             1356          (i) for an amount that is reimbursed or funded in whole or in part by the federal
             1357      government, the state, or an agency or instrumentality of the federal government or the state;
             1358      and
             1359          (ii) for a taxpayer who is eligible to participate in a health plan maintained and funded
             1360      in whole or in part by the taxpayer's employer or the taxpayer's spouse's employer.
             1361          (4) (a) A subtraction for an amount described in Subsection (2)[(l)](k) is allowed only
             1362      if:
             1363          (i) the taxpayer is a Ute tribal member; and
             1364          (ii) the governor and the Ute tribe execute and maintain an agreement meeting the
             1365      requirements of this Subsection (4).
             1366          (b) The agreement described in Subsection (4)(a):
             1367          (i) may not:
             1368          (A) authorize the state to impose a tax in addition to a tax imposed under this chapter;
             1369          (B) provide a subtraction under this section greater than or different from the
             1370      subtraction described in Subsection (2)[(l)](k); or
             1371          (C) affect the power of the state to establish rates of taxation; and
             1372          (ii) shall:
             1373          (A) provide for the implementation of the subtraction described in Subsection


             1374      (2)[(l)](k);
             1375          (B) be in writing;
             1376          (C) be signed by:
             1377          (I) the governor; and
             1378          (II) the chair of the Business Committee of the Ute tribe;
             1379          (D) be conditioned on obtaining any approval required by federal law; and
             1380          (E) state the effective date of the agreement.
             1381          (c) (i) The governor shall report to the commission by no later than February 1 of each
             1382      year regarding whether or not an agreement meeting the requirements of this Subsection (4) is
             1383      in effect.
             1384          (ii) If an agreement meeting the requirements of this Subsection (4) is terminated, the
             1385      subtraction permitted under Subsection (2)[(l)](k) is not allowed for taxable years beginning on
             1386      or after the January 1 following the termination of the agreement.
             1387          (d) For purposes of Subsection (2)[(l)](k) and in accordance with Title 63, Chapter 46a,
             1388      Utah Administrative Rulemaking Act, the commission may make rules:
             1389          (i) for determining whether income is derived from a source within the Uintah and
             1390      Ouray Reservation; and
             1391          (ii) that are substantially similar to how federal adjusted gross income derived from
             1392      Utah sources is determined under Section 59-10-117 .
             1393          (5) (a) For purposes of this Subsection (5), "Form 8814" means:
             1394          (i) the federal individual income tax Form 8814, Parents' Election To Report Child's
             1395      Interest and Dividends; or
             1396          (ii) (A) for taxable years beginning on or after January 1, 2002, a form designated by
             1397      the commission in accordance with Subsection (5)(a)(ii)(B) as being substantially similar to
             1398      2000 Form 8814 if for purposes of federal individual income taxes the information contained
             1399      on 2000 Form 8814 is reported on a form other than Form 8814; and
             1400          (B) for purposes of Subsection (5)(a)(ii)(A) and in accordance with Title 63, Chapter
             1401      46a, Utah Administrative Rulemaking Act, the commission may make rules designating a form


             1402      as being substantially similar to 2000 Form 8814 if for purposes of federal individual income
             1403      taxes the information contained on 2000 Form 8814 is reported on a form other than Form
             1404      8814.
             1405          (b) The amount of a child's income added to adjusted gross income under Subsection
             1406      (1)(c) is equal to the difference between:
             1407          (i) the lesser of:
             1408          (A) the base amount specified on Form 8814; and
             1409          (B) the sum of the following reported on Form 8814:
             1410          (I) the child's taxable interest;
             1411          (II) the child's ordinary dividends; and
             1412          (III) the child's capital gain distributions; and
             1413          (ii) the amount not taxed that is specified on Form 8814.
             1414          (6) Notwithstanding Subsection (1)(g), interest from bonds, notes, and other evidences
             1415      of indebtedness issued by an entity described in Subsections (1)(g)(i) through (iv) may not be
             1416      added to federal taxable income of a resident or nonresident individual if, as annually
             1417      determined by the commission:
             1418          (a) for an entity described in Subsection (1)(g)(i) or (ii), the entity and all of the
             1419      political subdivisions, agencies, or instrumentalities of the entity do not impose a tax based on
             1420      income on any part of the bonds, notes, and other evidences of indebtedness of this state; or
             1421          (b) for an entity described in Subsection (1)(g)(iii) or (iv), the following do not impose
             1422      a tax based on income on any part of the bonds, notes, and other evidences of indebtedness of
             1423      this state:
             1424          (i) the entity; or
             1425          (ii) (A) the state in which the entity is located; or
             1426          (B) the District of Columbia, if the entity is located within the District of Columbia.
             1427          Section 14. Section 59-10-115 is amended to read:
             1428           59-10-115. Adjustments to state taxable income.
             1429          [(1) If any provision of the Internal Revenue Code requires the inclusion of an item of


             1430      gross income or the allowance of an item of deduction from gross income in the computation
             1431      of federal taxable income of the taxpayer for any taxable year beginning on or after the
             1432      effective date of this chapter, and if such item has been taken into account in computing the
             1433      taxable income of the taxpayer for state income tax purposes for any prior taxable year, the
             1434      commission shall make or allow such adjustments to the taxpayer's state taxable income as are
             1435      necessary to prevent the inclusion for a second time or the deduction for a second time of such
             1436      item for state income tax purposes.]
             1437          [(2) If in a return filed for any taxable year beginning on or after the effective date of
             1438      this chapter, the taxpayer reports gain or loss from the disposition of property or claims a
             1439      deduction for depreciation of property, and if his basis for gain or loss on the disposition of
             1440      such property or for allowance of the depreciation deduction for the exhaustion, wear, and tear
             1441      thereof (including a reasonable allowance for obsolescence) is different for federal income tax
             1442      purposes than it would be for state income tax purposes if the provisions of former Title 59,
             1443      Chapter 14, were applicable to such taxable year, the commission shall (anything in this
             1444      chapter to the contrary notwithstanding) allow or make such adjustment to state taxable income
             1445      of the taxpayer for such taxable year as will result in the use by the taxpayer of the same basis,
             1446      for such purpose, that he would be allowed or required to use in reporting such gain or loss or
             1447      claiming such depreciation deduction if the provisions of former Title 59, Chapter 14, were
             1448      applicable to the taxable year.]
             1449          [(3) If the taxpayer receives, in any taxable year beginning on or after the effective date
             1450      of this chapter, a distribution from an electing small business corporation, as defined by
             1451      Section 1371(b) of the Internal Revenue Code, of a net share of the corporation's undistributed
             1452      taxable income for a taxable year or years prior to the taxable year in which such distribution is
             1453      made, the commission shall make such adjustment to state taxable income as will prevent
             1454      escape from taxation by this state of such undistributed taxable income previously taxed to the
             1455      taxpayer for federal income tax purposes but not for state income tax purposes.]
             1456          [(4)] (1) The commission shall [by rule prescribe for adjustments] allow an adjustment
             1457      to state taxable income of [the] a taxpayer [in circumstances other than those specified by


             1458      Subsections (1), (2), and (3) of this section where, solely by reason of the enactment of this
             1459      chapter,] if the taxpayer would otherwise:
             1460          (a) receive [or have received] a double tax benefit under this part; or
             1461          (b) suffer [or have suffered] a double tax detriment under this part. [Anything in this
             1462      section or this chapter to the contrary notwithstanding, the commission may not make any
             1463      adjustment pursuant to this section which will result in an increase or decrease of tax liability
             1464      the amount of which is less than $25.]
             1465          (2) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
             1466      commission may make rules to allow for the adjustment to state taxable income required by
             1467      Subsection (1).
             1468          Section 15. Section 59-10-201 is amended to read:
             1469           59-10-201. Taxation of resident trusts and estates.
             1470          (1) A tax determined in accordance with the rates prescribed by Section 59-10-104 for
             1471      individuals filing separately is imposed for each taxable year on the state taxable income of
             1472      each resident estate or trust, except for trusts taxed as corporations.
             1473          (2) A resident estate or trust shall be allowed the credit provided in Section
             1474      [ 59-10-106 ] 59-10-1003 , relating to an income tax imposed by another state, except that the
             1475      limitation shall be computed by reference to the taxable income of the estate or trust.
             1476          (3) The property of the trust established in Title 53B, Chapter 8a, Higher Education
             1477      Savings Incentive Program, and its income from operations and investments are exempt from
             1478      all taxation by the state under this chapter.
             1479          Section 16. Section 59-10-201.1 is amended to read:
             1480           59-10-201.1. State taxable income of a resident estate or trust defined.
             1481          The state taxable income of a resident estate or trust means its federal taxable income as
             1482      [defined] calculated in [Subsections (a) and (b),] Section 641 (a) and (b), Internal Revenue
             1483      Code, as adjusted by Sections 59-10-202 , 59-10-209.1 , and [ 59-10-209 ] 59-10-210 .
             1484          Section 17. Section 59-10-202 is amended to read:
             1485           59-10-202. Additions to and subtractions from state taxable income of a resident


             1486      or nonresident estate or trust.
             1487          (1) There shall be added to federal taxable income of a resident or nonresident estate or
             1488      trust:
             1489          (a) the amount of any income tax imposed by this or any predecessor Utah individual
             1490      income tax law and the amount of any income tax imposed by the laws of another state, the
             1491      District of Columbia, or a possession of the United States, to the extent deducted from federal
             1492      adjusted total income as defined in Section 62, Internal Revenue Code, in determining federal
             1493      taxable income;
             1494          (b) a lump sum distribution allowable as a deduction under Section 402(d)(3) of the
             1495      Internal Revenue Code, to the extent deductible under Section 62(a)(8) of the Internal Revenue
             1496      Code in determining federal adjusted gross income; [and]
             1497          [(c) the amount of any gain as defined in Section 644(b) of the Internal Revenue Code,
             1498      to the extent deductible under Section 641(c) of the Internal Revenue Code in determining the
             1499      federal taxable income of a trust.]
             1500          (c) except as provided in Subsection (3), for taxable years beginning on or after
             1501      January 1, 2003, for bonds, notes, and other evidences of indebtedness acquired on or after
             1502      January 1, 2003, the interest from bonds, notes, and other evidences of indebtedness issued by
             1503      one or more of the following entities:
             1504          (i) a state other than this state;
             1505          (ii) the District of Columbia;
             1506          (iii) a political subdivision of a state other than this state; or
             1507          (iv) an agency or instrumentality of an entity described in Subsections (1)(c)(i) through
             1508      (iii);
             1509          (d) any portion of federal taxable income for a taxable year if that federal taxable
             1510      income is derived from stock:
             1511          (i) in an S corporation; and
             1512          (ii) that is held by an electing small business trust; and
             1513          (e) any fiduciary adjustments required by Section 59-10-210 .


             1514          (2) There shall be subtracted from federal taxable income of a resident or nonresident
             1515      estate or trust:
             1516          (a) the interest or [dividends] a dividend on obligations or securities of the United
             1517      States and its possessions or of any authority, commission, or instrumentality of the United
             1518      States, to the extent [includable] that interest or dividend is included in gross income for
             1519      federal income tax purposes for the taxable year but exempt from state income taxes under the
             1520      laws of the United States, but the amount subtracted under this Subsection (2) shall be reduced
             1521      by any interest on indebtedness incurred or continued to purchase or carry the obligations or
             1522      securities described in this Subsection (2), and by any expenses incurred in the production of
             1523      interest or dividend income described in this Subsection (2) to the extent that such expenses,
             1524      including amortizable bond premiums, are deductible in determining federal taxable income;
             1525          (b) 1/2 of the net amount of any income tax paid or payable to the United States after
             1526      all allowable credits, as per the United States fiduciary income tax return of the taxpayer for the
             1527      same taxable year; [and]
             1528          (c) income of an irrevocable resident trust if:
             1529          (i) the income would not be treated as state taxable income derived from Utah sources
             1530      under Section 59-10-204 if received by a nonresident trust;
             1531          (ii) the trust first became a resident trust on or after January 1, 2004;
             1532          (iii) no assets of the trust were held, at any time after January 1, 2003, in another
             1533      resident irrevocable trust created by the same settlor or the spouse of the same settlor;
             1534          (iv) the trustee of the trust is a trust company as defined in Subsection 7-5-1 (1)(d);
             1535          (v) the amount subtracted under this Subsection (2) is reduced to the extent the settlor
             1536      or any other person is treated as an owner of any portion of the trust under Subtitle A,
             1537      Subchapter J, Subpart E of the Internal Revenue Code; and
             1538          (vi) the amount subtracted under this Subsection (2) is reduced by any interest on
             1539      indebtedness incurred or continued to purchase or carry the assets generating the income
             1540      described in this Subsection (2), and by any expenses incurred in the production of income
             1541      described in this Subsection (2), to the extent that those expenses, including amortizable bond


             1542      premiums, are deductible in determining federal taxable income[.];
             1543          (d) if the conditions of Subsection (4)(a) are met, the amount of income of a resident or
             1544      nonresident estate or trust derived from a deceased Ute tribal member:
             1545          (i) during a time period that the Ute tribal member resided on homesteaded land
             1546      diminished from the Uintah and Ouray Reservation; and
             1547          (ii) from a source within the Uintah and Ouray Reservation;
             1548          (e) (i) for taxable years beginning on or after January 1, 2003, the total amount of a
             1549      resident or nonresident estate's or trust's short-term capital gain or long-term capital gain on a
             1550      capital gain transaction:
             1551          (A) that occurs on or after January 1, 2003;
             1552          (B) if 70% or more of the gross proceeds of the capital gain transaction are expended:
             1553          (I) to purchase qualifying stock in a Utah small business corporation; and
             1554          (II) within a 12-month period after the day on which the capital gain transaction occurs;
             1555      and
             1556          (C) if, prior to the purchase of the qualifying stock described in Subsection
             1557      (2)(e)(i)(B)(I), the resident or nonresident estate or trust did not have an ownership interest in
             1558      the Utah small business corporation that issued the qualifying stock; and
             1559          (ii) in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
             1560      commission may make rules:
             1561          (A) defining the term "gross proceeds"; and
             1562          (B) for purposes of Subsection (2)(e)(i)(C), prescribing the circumstances under which
             1563      a resident or nonresident estate or trust has an ownership interest in a Utah small business
             1564      corporation;
             1565          (f) for the taxable year beginning on or after January 1, 2005, but beginning on or
             1566      before December 31, 2005, the first $2,200 of income of a resident or nonresident estate or
             1567      trust that is derived from a deceased qualifying military service member:
             1568          (i) for service:
             1569          (A) as a qualifying military service member; or


             1570          (B) under an order into active service in accordance with Section 39-1-5 ; and
             1571          (ii) to the extent that income is included in total income on that resident or nonresident
             1572      estate's or trust's federal income tax return for estates and trusts for that taxable year;
             1573          (g) any amount:
             1574          (i) received by a resident or nonresident estate or trust;
             1575          (ii) that constitutes a refund of taxes imposed by:
             1576          (A) a state; or
             1577          (B) the District of Columbia; and
             1578          (iii) to the extent that amount is included in total income on that resident or nonresident
             1579      estate's or trust's federal tax return for estates and trusts for that taxable year;
             1580          (h) the amount of a railroad retirement benefit:
             1581          (i) paid:
             1582          (A) in accordance with The Railroad Retirement Act of 1974, 45 U.S.C. Sec. 231 et
             1583      seq.;
             1584          (B) to a resident or nonresident estate or trust derived from a deceased resident or
             1585      nonresident individual; and
             1586          (C) for the taxable year; and
             1587          (ii) to the extent that railroad retirement benefit is included in total income on that
             1588      resident or nonresident estate's or trust's federal tax return for estates and trusts;
             1589          (i) an amount:
             1590          (i) received by a resident or nonresident estate or trust if that amount is derived from a
             1591      deceased enrolled member of an American Indian tribe; and
             1592          (ii) to the extent that the state is not authorized or permitted to impose a tax under this
             1593      part on that amount in accordance with:
             1594          (A) federal law;
             1595          (B) a treaty; or
             1596          (C) a final decision issued by a court of competent jurisdiction; and
             1597          (j) any fiduciary adjustments required by Section 59-10-210 .


             1598          (3) Notwithstanding Subsection (1)(c), interest from bonds, notes, and other evidences
             1599      of indebtedness issued by an entity described in Subsections (1)(c)(i) through (iv) may not be
             1600      added to federal taxable income of a resident or nonresident estate or trust if, as annually
             1601      determined by the commission:
             1602          (a) for an entity described in Subsection (1)(c)(i) or (ii), the entity and all of the
             1603      political subdivisions, agencies, or instrumentalities of the entity do not impose a tax based on
             1604      income on any part of the bonds, notes, and other evidences of indebtedness of this state; or
             1605          (b) for an entity described in Subsection (1)(c)(iii) or (iv), the following do not impose
             1606      a tax based on income on any part of the bonds, notes, and other evidences of indebtedness of
             1607      this state:
             1608          (i) the entity; or
             1609          (ii) (A) the state in which the entity is located; or
             1610          (B) the District of Columbia, if the entity is located within the District of Columbia.
             1611          (4) (a) A subtraction for an amount described in Subsection (2)(d) is allowed only if:
             1612          (i) the income is derived from a deceased Ute tribal member; and
             1613          (ii) the governor and the Ute tribe execute and maintain an agreement meeting the
             1614      requirements of this Subsection (4).
             1615          (b) The agreement described in Subsection (4)(a):
             1616          (i) may not:
             1617          (A) authorize the state to impose a tax in addition to a tax imposed under this chapter;
             1618          (B) provide a subtraction under this section greater than or different from the
             1619      subtraction described in Subsection (2)(d); or
             1620          (C) affect the power of the state to establish rates of taxation; and
             1621          (ii) shall:
             1622          (A) provide for the implementation of the subtraction described in Subsection (2)(d);
             1623          (B) be in writing;
             1624          (C) be signed by:
             1625          (I) the governor; and


             1626          (II) the chair of the Business Committee of the Ute tribe;
             1627          (D) be conditioned on obtaining any approval required by federal law; and
             1628          (E) state the effective date of the agreement.
             1629          (c) (i) The governor shall report to the commission by no later than February 1 of each
             1630      year regarding whether or not an agreement meeting the requirements of this Subsection (4) is
             1631      in effect.
             1632          (ii) If an agreement meeting the requirements of this Subsection (4) is terminated, the
             1633      subtraction permitted under Subsection (2)(d) is not allowed for taxable years beginning on or
             1634      after the January 1 following the termination of the agreement.
             1635          (d) For purposes of Subsection (2)(d) and in accordance with Title 63, Chapter 46a,
             1636      Utah Administrative Rulemaking Act, the commission may make rules:
             1637          (i) for determining whether income is derived from a source within the Uintah and
             1638      Ouray Reservation; and
             1639          (ii) that are substantially similar to how federal adjusted gross income derived from
             1640      Utah sources is determined under Section 59-10-117 .
             1641          Section 18. Section 59-10-204 is amended to read:
             1642           59-10-204. State taxable income of a nonresident estate or trust defined.
             1643          The state taxable income of a nonresident estate or trust shall be its [federal] state
             1644      taxable income as [defined] calculated in Section 59-10-201.1 , derived from Utah sources
             1645      determined in accordance with the principles of Section 59-10-117 , and adjusted as provided in
             1646      Section 59-10-207 .
             1647          Section 19. Section 59-10-205 is amended to read:
             1648           59-10-205. Tax on income derived from Utah sources.
             1649          A tax is imposed on the state taxable income, as [defined] calculated in Section
             1650      59-10-204 , of every nonresident estate or trust in accordance with the rates prescribed in
             1651      Section 59-10-104 for individuals filing separately. The tax shall only be applied to income
             1652      derived from Utah sources as adjusted by Section 59-10-207 , including such items from
             1653      another estate or trust of which the first estate or trust is a beneficiary.


             1654          Section 20. Section 59-10-207 is amended to read:
             1655           59-10-207. Share of a nonresident estate or trust and beneficiaries in state taxable
             1656      income.
             1657          (1) The share of a nonresident estate or trust and its beneficiaries in items of income,
             1658      gain, loss, and deduction entering into the definition of distributable net income and the share
             1659      for purposes of Section 59-10-116 of a nonresident beneficiary of any estate or trust in estate or
             1660      trust income, gain, loss, and deduction shall be determined as follows:
             1661          (a) To the amount of items of income, gain, loss, and deduction that enter into the
             1662      definition of distributable net income there shall be added or subtracted, as the case may be, the
             1663      modifications described in Sections 59-10-202 and [ 59-10-209 ] 59-10-210 to the extent they
             1664      relate to items of income, gain, loss, and deduction that also enter into the definition of
             1665      distributable net income. No modification shall be made under this section that has the effect
             1666      of duplicating an item already reflected in the definition of distributable net income.
             1667          (b) The amount determined under Subsection (1)(a) shall be allocated among the estate
             1668      or trust and its beneficiaries (including solely for the purpose of this allocation, resident
             1669      beneficiaries) in proportion to their respective shares of federal distributable net income. The
             1670      amounts so allocated shall have the same character as for federal income tax purposes.
             1671          (c) If the estate or trust has no federal distributable net income for the taxable year, the
             1672      share of each beneficiary in the net amount determined under Subsection (1)(a) shall be in
             1673      proportion to his share of the estate or trust income for such year, under state law or the terms
             1674      of the governing instrument, that is required to be distributed currently and any other amounts
             1675      of such income distributed in such year. Any balance of such net income shall be allocated to
             1676      the estate or trust.
             1677          (2) The commission may by rule establish such other method or methods of
             1678      determining the respective shares of the beneficiaries and of the estate or trust in its income
             1679      derived from sources in this state, and in the modifications related thereto, as may be
             1680      appropriate and equitable. The fiduciary may elect to use any other methods prescribed in this
             1681      subsection only when the allocation of such respective shares under this section would result in


             1682      an inequity in the allocation which is substantial both in amount and in relation to the total
             1683      amount of the modifications referred to in Subsection (1)(a).
             1684          Section 21. Section 59-10-209.1 is enacted to read:
             1685          59-10-209.1. Adjustments to state taxable income.
             1686          (1) The commission shall allow an adjustment to state taxable income of a resident or
             1687      nonresident estate or trust if the resident or nonresident estate or trust would otherwise:
             1688          (a) receive a double tax benefit under this chapter; or
             1689          (b) suffer a double tax detriment under this chapter.
             1690          (2) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
             1691      commission may make rules to allow for the adjustment to state taxable income required by
             1692      Subsection (1).
             1693          Section 22. Section 59-10-210 is amended to read:
             1694           59-10-210. Fiduciary adjustments.
             1695          [(1) The fiduciary adjustments are the amounts of the modifications described in
             1696      Subsections 59-10-202 (1)(a) and (2)(a), including such items from another estate or trust of
             1697      which the first estate or trust is a beneficiary.]
             1698          (1) A share of the fiduciary adjustments described in Subsection (2) shall be added to
             1699      or subtracted from federal taxable income:
             1700          (a) of:
             1701          (i) a resident or nonresident estate or trust; or
             1702          (ii) a resident or nonresident beneficiary of a resident or nonresident estate or trust; and
             1703          (b) as provided in this section.
             1704          (2) For purposes of Subsection (1), the fiduciary adjustments are the following
             1705      amounts:
             1706          (a) the additions to and subtractions from federal taxable income of a resident or
             1707      nonresident estate or trust required by Section 59-10-202 , except for Subsection
             1708      59-10-202 (2)(b); and
             1709          (b) a tax credit claimed by a resident or nonresident estate or trust as allowed by:


             1710          (i) Section 59-6-102 ;
             1711          (ii) Part 10, Nonrefundable Tax Credit Act;
             1712          (iii) Part 11, Refundable Tax Credit Act;
             1713          (iv) Section 59-13-202 ;
             1714          (v) Section 63-38f-413 ; or
             1715          (vi) Section 63-38f-503 .
             1716          [(2)] (3) (a) The respective shares of an estate or trust and its beneficiaries, [(including
             1717      solely] including for the purpose of this allocation[,] a nonresident [beneficiaries)] beneficiary,
             1718      in the state fiduciary adjustments, shall be allocated in proportion to their respective shares of
             1719      federal distributable net income of the estate or trust.
             1720          (b) If the estate or trust described in Subsection (3)(a) has no federal distributable net
             1721      income for the taxable year, the share of each beneficiary in the fiduciary adjustments shall be
             1722      allocated in proportion to [his] that beneficiary's share of the estate or trust income for [such]
             1723      the taxable year[, which] that is, under state law or the governing instrument, required to be
             1724      distributed currently plus any other amounts of [such] that income distributed in [such] that
             1725      taxable year. [Any]
             1726          (c) After making the allocations required by Subsections (3)(a) and (b), any balance of
             1727      the fiduciary adjustments shall be allocated to the estate or trust.
             1728          [(3) The] (4) (a) The commission shall allow a fiduciary to use a method for
             1729      determining the allocation of the fiduciary adjustments described in Subsection (2) other than
             1730      the method described in Subsection (3) if using the method described in Subsection (3) results
             1731      in an inequity:
             1732          (i) in allocating the fiduciary adjustments described in Subsection (2); and
             1733          (ii) if the inequity is substantial:
             1734          (A) in amount; and
             1735          (B) in relation to the total amount of the fiduciary adjustments described in Subsection
             1736      (2).
             1737          (b) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the


             1738      commission may [by rule and upon such terms and conditions as it may prescribe, authorize the
             1739      use of such other appropriate and equitable method or methods] make rules authorizing a
             1740      fiduciary to use a method for determining [attribution and] the allocation of the fiduciary
             1741      adjustments[. The fiduciary may elect to use any other methods prescribed in this subsection
             1742      only when the allocation of such respective fiduciary adjustments under this section would
             1743      result in an inequity in the allocation which is substantial both in amount and in relation to the
             1744      total amount of the modifications referred to in Subsection (1). (4) The taxable income of an
             1745      estate or trust shall be adjusted by the deduction of the income of that estate or trust to the
             1746      extent of and for so long as such income is distributed or is distributable to or otherwise
             1747      accrues to the benefit of a person who has been declared by a court of competent jurisdiction to
             1748      be mentally incompetent. The commission may promulgate rules necessary to provide for this
             1749      adjustment.] described in Subsection (2) other than the method described in Subsection (3) if
             1750      using the method described in Subsection (3) results in an inequity:
             1751          (i) in allocating the fiduciary adjustments described in Subsection (2); and
             1752          (ii) if the inequity is substantial:
             1753          (A) in amount; and
             1754          (B) in relation to the total amount of the fiduciary adjustments described in Subsection
             1755      (2).
             1756          Section 23. Section 59-10-1001 is enacted to read:
             1757     
Part 10. Nonrefundable Tax Credit Act

             1758          59-10-1001. Title.
             1759          This part is known as the "Nonrefundable Tax Credit Act."
             1760          Section 24. Section 59-10-1002 is enacted to read:
             1761          59-10-1002. Definitions.
             1762          As used in this part:
             1763          (1) (a) Except as provided in Subsection (1)(b) or Subsection 59-10-1003 (2),
             1764      "claimant" means a resident or nonresident person that has state taxable income under Part 1,
             1765      Determination and Reporting of Tax Liability and Information.


             1766          (b) "Claimant" does not include an estate or trust.
             1767          (2) Except as provided in Subsection 59-10-1003 (2), "estate" means a nonresident
             1768      estate or a resident estate that has state taxable income under Part 2, Trusts and Estates.
             1769          (3) "Nonrefundable tax credit" or "tax credit" means a tax credit that a claimant, estate,
             1770      or trust may:
             1771          (a) claim:
             1772          (i) as provided by statute; and
             1773          (ii) in an amount that does not exceed the claimant's, estate's, or trust's tax liability
             1774      under this chapter for a taxable year; and
             1775          (b) carry forward or carry back:
             1776          (i) if allowed by statute; and
             1777          (ii) to the extent that the amount of the tax credit exceeds the claimant's, estate's, or
             1778      trust's tax liability under this chapter for a taxable year.
             1779          (4) Except as provided in Subsection 59-10-1003 (2), "trust" means a nonresident trust
             1780      or a resident trust that has state taxable income under Part 2, Trusts and Estates.
             1781          Section 25. Section 59-10-1003 , which is renumbered from Section 59-10-106 is
             1782      renumbered and amended to read:
             1783           [59-10-106].     59-10-1003. Tax credit for tax paid by individual to another
             1784      state.
             1785          (1) [A resident individual shall be allowed a] Except as provided in Subsection (2), a
             1786      claimant, estate, or trust may claim a nonrefundable tax credit against the tax otherwise due
             1787      under this chapter equal to the amount of the tax imposed:
             1788          (a) on [him] that claimant, estate, or trust for the taxable year;
             1789          (b) by another state of the United States, the District of Columbia, or a possession of
             1790      the United States[,]; and
             1791          (c) on income:
             1792          (i) derived from sources [therein which] within that other state of the United States,
             1793      District of Columbia, or possession of the United States; and


             1794          (ii) if that income is also subject to tax under this chapter.
             1795          (2) A tax credit under this section may only be claimed by a:
             1796          (a) resident claimant;
             1797          (b) resident estate; or
             1798          (c) resident trust.
             1799          [(2)] (3) The application of the tax credit provided under this section [shall] may not
             1800      operate to reduce the tax payable under this chapter to an amount less than would have been
             1801      payable were the income from the other state disregarded.
             1802          [(3)] (4) The tax credit provided by this section shall be computed and claimed in
             1803      accordance with rules prescribed by the commission.
             1804          Section 26. Section 59-10-1004 , which is renumbered from Section 59-10-108 is
             1805      renumbered and amended to read:
             1806           [59-10-108].     59-10-1004. Tax credit for cash contributions to sheltered
             1807      workshops.
             1808          (1) For tax years beginning January 1, 1983, and thereafter, in computing the tax due
             1809      the state under Section 59-10-104 there shall be a nonrefundable tax credit allowed for cash
             1810      contributions made by a claimant, estate, or trust within the taxable year to nonprofit
             1811      rehabilitation sheltered workshop facilities for persons with a disability operating in Utah that
             1812      are certified by the Department of Human Services as a qualifying facility.
             1813          (2) The allowable tax credit is an amount equal to 50% of the aggregate amount of the
             1814      cash contributions to the qualifying rehabilitation facilities, but the allowed tax credit may not
             1815      exceed $200.
             1816          (3) The amount of contribution claimed as a tax credit under this section may not also
             1817      be claimed as a charitable deduction in determining net taxable income.
             1818          Section 27. Section 59-10-1005 , which is renumbered from Section 59-10-108.1 is
             1819      renumbered and amended to read:
             1820           [59-10-108.1].     59-10-1005. Tax credit for at-home parent.
             1821          (1) As used in this section:


             1822          (a) "At-home parent" means a parent:
             1823          (i) who provides full-time care at the parent's residence for one or more of the parent's
             1824      own qualifying children;
             1825          (ii) who claims the qualifying child as a dependent on the parent's individual income
             1826      tax return for the taxable year for which the parent claims the credit; and
             1827          (iii) if the sum of the following amounts are $3,000 or less for the taxable year for
             1828      which the parent claims the credit:
             1829          (A) the total wages, tips, and other compensation listed on all of the parent's federal
             1830      Forms W-2; and
             1831          (B) the gross income listed on the parent's federal Form 1040 Schedule C, Profit or
             1832      Loss From Business.
             1833          (b) "Parent" means an individual who:
             1834          (i) is the biological mother or father of a qualifying child;
             1835          (ii) is the stepfather or stepmother of a qualifying child;
             1836          (iii) (A) legally adopts a qualifying child; or
             1837          (B) has a qualifying child placed in the individual's home:
             1838          (I) by a child placing agency as defined in Section 62A-4a-601 ; and
             1839          (II) for the purpose of legally adopting the child;
             1840          (iv) is a foster parent of a qualifying child; or
             1841          (v) is a legal guardian of a qualifying child.
             1842          (c) "Qualifying child" means a child who is no more than 12 months of age on the last
             1843      day of the taxable year for which the tax credit is claimed.
             1844          (2) For taxable years beginning on or after January 1, 2000, a [taxpayer] claimant may
             1845      claim on the [taxpayer's] claimant's individual income tax return a nonrefundable tax credit of
             1846      $100 for each qualifying child if:
             1847          (a) the [taxpayer] claimant or another [taxpayer] claimant filing a joint individual
             1848      income tax return with the [taxpayer] claimant is an at-home parent; and
             1849          (b) the federal adjusted gross income of all of the [taxpayers] claimants filing the


             1850      individual income tax return is less than or equal to $50,000.
             1851          (3) A [taxpayer] claimant may not carry forward or carry back a tax credit authorized
             1852      by this section.
             1853          (4) It is the intent of the Legislature that for fiscal years beginning on or after fiscal
             1854      year 2000-01, the Legislature appropriate from the General Fund a sufficient amount to replace
             1855      Uniform School Fund revenues expended to provide for the tax credit under this section.
             1856          Section 28. Section 59-10-1006 , which is renumbered from Section 59-10-108.5 is
             1857      renumbered and amended to read:
             1858           [59-10-108.5].     59-10-1006. Historic preservation tax credit.
             1859          (1) (a) For tax years beginning January 1, 1993, and thereafter, there is allowed to
             1860      [resident individuals] a claimant, estate, or trust, as a nonrefundable tax credit against the
             1861      income tax due, an amount equal to 20% of qualified rehabilitation expenditures, costing more
             1862      than $10,000, incurred in connection with any residential certified historic building. When
             1863      qualifying expenditures of more than $10,000 are incurred, the tax credit allowed by this
             1864      section shall apply to the full amount of expenditures.
             1865          (b) All rehabilitation work to which the tax credit may be applied shall be approved by
             1866      the State Historic Preservation Office prior to completion of the rehabilitation project as
             1867      meeting the Secretary of the Interior's Standards for Rehabilitation so that the office can
             1868      provide corrective comments to the [taxpayer] claimant, estate, or trust in order to preserve the
             1869      historical qualities of the building.
             1870          (c) Any amount of tax credit remaining may be carried forward to each of the five
             1871      taxable years following the qualified expenditures.
             1872          (d) The commission, in consultation with the Division of State History, shall
             1873      promulgate rules to implement this section.
             1874          (2) As used in this section:
             1875          (a) "Certified historic building" means a building that is listed on the National Register
             1876      of Historic Places within three years of taking the credit under this section or that is located in a
             1877      National Register Historic District and the building has been designated by the Division of


             1878      State History as being of significance to the district.
             1879          (b) (i) "Qualified rehabilitation expenditures" means any amount properly chargeable
             1880      to the rehabilitation and restoration of the physical elements of the building, including the
             1881      historic decorative elements, and the upgrading of the structural, mechanical, electrical, and
             1882      plumbing systems to applicable codes.
             1883          (ii) "Qualified rehabilitation expenditures" does not include expenditures related to:
             1884          (A) [the taxpayer's] a claimant's, estate's, or trust's personal labor;
             1885          (B) cost of acquisition of the property;
             1886          (C) any expenditure attributable to the enlargement of an existing building;
             1887          (D) rehabilitation of a certified historic building without the approval required in
             1888      Subsection (1)(b); or
             1889          (E) any expenditure attributable to landscaping and other site features, outbuildings,
             1890      garages, and related features.
             1891          (c) "Residential" means a building used for residential use, either owner occupied or
             1892      income producing.
             1893          Section 29. Section 59-10-1007 , which is renumbered from Section 59-10-108.7 is
             1894      renumbered and amended to read:
             1895           [59-10-108.7].     59-10-1007. Recycling market development zones tax credit.
             1896          (1) For taxable years beginning on or after January 1, 1996, [an individual] a claimant,
             1897      estate, or trust in a recycling market development zone as defined in Section 63-38f-1102 may
             1898      claim a nonrefundable tax credit as provided in this section.
             1899          (a) (i) There shall be allowed a [nonrefundable] tax credit of 5% of the purchase price
             1900      paid for machinery and equipment used directly in:
             1901          (A) commercial composting; or
             1902          (B) manufacturing facilities or plant units that:
             1903          (I) manufacture, process, compound, or produce recycled items of tangible personal
             1904      property for sale; or
             1905          (II) reduce or reuse postconsumer waste material.


             1906          (ii) The Governor's Office of Economic Development shall certify that the machinery
             1907      and equipment described in Subsection (1)(a)(i) are integral to the composting or recycling
             1908      process:
             1909          (A) on a form provided by the commission; and
             1910          (B) before a [taxpayer] claimant, estate, or trust is allowed a tax credit under this
             1911      section.
             1912          (iii) The Governor's Office of Economic Development shall provide a [taxpayer]
             1913      claimant, estate, or trust seeking to claim a tax credit under this section with a copy of the form
             1914      described in Subsection (1)(a)(ii).
             1915          (iv) The [taxpayer] claimant, estate, or trust described in Subsection (1)(a)(iii) shall
             1916      retain a copy of the form received under Subsection (1)(a)(iii).
             1917          (b) There shall be allowed a [nonrefundable] tax credit equal to 20% of net
             1918      expenditures up to $10,000 to third parties for rent, wages, supplies, tools, test inventory, and
             1919      utilities made by the [taxpayer] claimant, estate, or trust for establishing and operating
             1920      recycling or composting technology in Utah, with an annual maximum tax credit of $2,000.
             1921          (2) The total [nonrefundable] tax credit allowed under this section may not exceed 40%
             1922      of the Utah income tax liability of the [taxpayer] claimant, estate, or trust prior to any tax
             1923      credits in the taxable year of purchase prior to claiming the tax credit authorized by this
             1924      section.
             1925          (3) (a) Any tax credit not used for the taxable year in which the purchase price on
             1926      composting or recycling machinery and equipment was paid may be carried [over for credit]
             1927      forward against the [individual's income taxes] claimant's, estate's, or trusts's tax liability under
             1928      this chapter in the three succeeding taxable years until the total tax credit amount is used.
             1929          (b) Tax credits not claimed by [an individual] a claimant, estate, or trust on the
             1930      [individual's state income tax] claimant's, estate's, or trust's tax return under this chapter within
             1931      three years are forfeited.
             1932          (4) The commission shall make rules governing what information shall be filed with
             1933      the commission to verify the entitlement to and amount of a tax credit.


             1934          (5) (a) Notwithstanding Subsection (1)(a), for taxable years beginning on or after
             1935      January 1, 2001, a [taxpayer] claimant, estate, or trust may not claim or carry forward a tax
             1936      credit described in Subsection (1)(a) in a taxable year during which the [taxpayer] claimant,
             1937      estate, or trust claims or carries forward a tax credit under Section 63-38f-413 .
             1938          (b) For a taxable year other than a taxable year during which the [taxpayer] claimant,
             1939      estate, or trust may not claim or carry forward a tax credit in accordance with Subsection (5)(a),
             1940      a [taxpayer] claimant, estate, or trust may claim or carry forward a tax credit described in
             1941      Subsection (1)(a):
             1942          (i) if the [taxpayer] claimant, estate, or trust may claim or carry forward the tax credit
             1943      in accordance with Subsections (1) and (2); and
             1944          (ii) subject to Subsections (3) and (4).
             1945          (6) Notwithstanding Subsection (1)(b), for taxable years beginning on or after January
             1946      1, 2001, a [taxpayer] claimant, estate, or trust may not claim a tax credit described in
             1947      Subsection (1)(b) in a taxable year during which the [taxpayer] claimant, estate, or trust claims
             1948      or carries forward a tax credit under Section 63-38f-413 .
             1949          (7) A [taxpayer] claimant, estate, or trust may not claim or carry forward a tax credit
             1950      available under this section for a taxable year during which the [taxpayer] claimant, estate, or
             1951      trust has claimed the targeted business income tax credit available under Section 63-38f-503 .
             1952          Section 30. Section 59-10-1008 , which is renumbered from Section 59-10-109 is
             1953      renumbered and amended to read:
             1954           [59-10-109].     59-10-1008. Targeted jobs tax credit.
             1955          (1) As used in this section, "individual with a disability" means an individual who:
             1956          (a) has been receiving services:
             1957          (i) from a day-training program that is:
             1958          (A) for persons with disabilities; and
             1959          (B) certified by the Department of Human Services as a qualifying program; and
             1960          (ii) for at least six consecutive months prior to working for the [employer] claimant,
             1961      estate, or trust claiming the tax credit under this section; or


             1962          (b) is eligible for services from the Division of Services for People with Disabilities at
             1963      the time the individual begins working for the [employer] claimant, estate, or trust claiming the
             1964      tax credit under this section.
             1965          (2) For taxable years beginning on or after January 1, 1995, there is allowed a
             1966      nonrefundable tax credit against tax otherwise due under this chapter for [an employer] a
             1967      claimant, estate, or trust that:
             1968          (a) meets the unemployment and workers' compensation requirements of Title 34A,
             1969      Utah Labor Code; and
             1970          (b) hires an individual with a disability who:
             1971          (i) works in this state for at least 180 days in a taxable year for that [employer]
             1972      claimant, estate, or trust; and
             1973          (ii) is paid at least minimum wages by that [employer] claimant, estate, or trust.
             1974          (3) The tax credit shall be in an amount equal to:
             1975          (a) 10% of the gross wages earned in the first 180 days of employment by the
             1976      individual with a disability from the [employer] claimant, estate, or trust seeking the tax credit;
             1977      and
             1978          (b) 20% of the gross wages earned in the remaining taxable year by the individual with
             1979      a disability from the [employer] claimant, estate, or trust seeking the tax credit.
             1980          (4) The tax credit [which] that may be taken by [an employer] a claimant, estate, or
             1981      trust under this section shall be:
             1982          (a) limited to $3,000 per year per individual with a disability; and
             1983          (b) allowed only for the first two years the individual with a disability is employed by
             1984      the [employer] claimant, estate, or trust.
             1985          (5) Any amount of tax credit remaining may be carried forward two taxable years
             1986      following the taxable year of the employment eligible for the tax credit provided in this section.
             1987          (6) (a) The Division of Services for People with Disabilities shall certify that [an
             1988      employer] a claimant, estate, or trust qualifies for the tax credit provided in this section on a
             1989      form provided by the commission.


             1990          (b) The form described in Subsection (6)(a) shall include the name and Social Security
             1991      number of the individual for whom the tax credit is claimed.
             1992          (c) The Division of Services for People with Disabilities shall provide the [employer]
             1993      claimant, estate, or trust described in Subsection (6)(a) with a copy of the form described in
             1994      this Subsection (6).
             1995          (d) The [employer] claimant, estate, or trust described in Subsection (6)(a) shall retain
             1996      the form described in this Subsection (6).
             1997          Section 31. Section 59-10-1009 , which is renumbered from Section 59-10-127 is
             1998      renumbered and amended to read:
             1999           [59-10-127].     59-10-1009. Definitions -- Cleaner burning fuels tax credit.
             2000          (1) As used in this section:
             2001          (a) "Board" means the Air Quality Board created in Title 19, Chapter 2, Air
             2002      Conservation Act.
             2003          (b) "Certified by the board" means that:
             2004          (i) a motor vehicle on which conversion equipment has been installed meets the
             2005      following criteria:
             2006          (A) before the installation of conversion equipment, the vehicle does not exceed the
             2007      emission cut points for a transient test driving cycle, as specified in 40 C.F.R. Part 51,
             2008      Appendix E to Subpart S, or an equivalent test for the make, model, and year of the vehicle;
             2009          (B) the motor vehicle's emissions of regulated pollutants, when operating on fuels
             2010      listed in Subsection (2)(a)(ii)(A) or (2)(a)(ii)(B), is less than the emissions were before the
             2011      installation of conversion equipment; and
             2012          (C) a reduction in emissions under Subsection (1)(b)(i)(B) is demonstrated by:
             2013          (I) certification of the conversion equipment by the federal Environmental Protection
             2014      Agency or by a state whose certification standards are recognized by the board;
             2015          (II) testing the motor vehicle, before and after installation of the conversion equipment,
             2016      in accordance with 40 C.F.R. Part 86, Control Emissions from New and In-use Highway
             2017      Vehicles and Engines, using all fuels the motor vehicle is capable of using; or


             2018          (III) any other test or standard recognized by board rule; or
             2019          (ii) special mobile equipment on which conversion equipment has been installed meets
             2020      the following criteria:
             2021          (A) the special mobile equipment's emissions of regulated pollutants, when operating
             2022      on fuels listed in Subsection (2)(a)(iii)(A) or (2)(a)(iii)(B), is less than the emissions were
             2023      before the installation of conversion equipment; and
             2024          (B) a reduction in emissions under Subsection (1)(b)(ii)(A) is demonstrated by:
             2025          (I) certification of the conversion equipment by the federal Environmental Protection
             2026      Agency or by a state whose certification standards are recognized by the board; or
             2027          (II) any other test or standard recognized by the board.
             2028          (c) "Clean fuel grant" means a grant [the taxpayer] a claimant, estate, or trust receives
             2029      under Title 19, Chapter 1, Part 4, Clean Fuels Conversion Program Act, for reimbursement of a
             2030      portion of the incremental cost of the OEM vehicle or the cost of conversion equipment.
             2031          (d) "Conversion equipment" means equipment referred to in Subsection (2)(a)(ii) or
             2032      (2)(a)(iii).
             2033          (e) "Electric-hybrid vehicle" is as defined in 42 U.S.C. Sec. 13435.
             2034          (f) "Incremental cost" has the same meaning as in Section 19-1-402 .
             2035          (g) "OEM vehicle" has the same meaning as in Section 19-1-402 .
             2036          (h) "Special mobile equipment":
             2037          (i) means any mobile equipment or vehicle not designed or used primarily for the
             2038      transportation of persons or property; and
             2039          (ii) includes construction or maintenance equipment.
             2040          (2) (a) Except as provided in Subsection (2)(b), for taxable years beginning on or after
             2041      January 1, 2001, but beginning on or before December 31, 2010, a [taxpayer] claimant, estate,
             2042      or trust may claim a nonrefundable tax credit against tax otherwise due under this chapter in an
             2043      amount equal to:
             2044          (i) 50% of the incremental cost of an OEM vehicle registered in Utah minus the
             2045      amount of any clean fuel grant received, up to a maximum tax credit of $3,000 per vehicle, if


             2046      the vehicle:
             2047          (A) is fueled by propane, natural gas, or electricity;
             2048          (B) is fueled by other fuel the board determines annually on or before July 1 to be at
             2049      least as effective in reducing air pollution as fuels under Subsection (2)(a)(i)(A); or
             2050          (C) meets the clean-fuel vehicle standards in the federal Clean Air Act Amendments of
             2051      1990, 42 U.S.C. Sec. 7521 et seq.;
             2052          (ii) 50% of the cost of equipment for conversion, if certified by the board, of a motor
             2053      vehicle registered in Utah minus the amount of any clean fuel conversion grant received, up to
             2054      a maximum tax credit of $2,500 per vehicle, if the motor vehicle:
             2055          (A) is to be fueled by propane, natural gas, or electricity;
             2056          (B) is to be fueled by other fuel the board determines annually on or before July 1 to be
             2057      at least as effective in reducing air pollution as fuels under Subsection (2)(a)(ii)(A); or
             2058          (C) will meet the federal clean fuel vehicle standards in the federal Clean Air Act
             2059      Amendments of 1990, 42 U.S.C. Sec. 7521 et seq.; and
             2060          (iii) 50% of the cost of equipment for conversion, if certified by the board, of a special
             2061      mobile equipment engine minus the amount of any clean fuel conversion grant received, up to a
             2062      maximum tax credit of $1,000 per special mobile equipment engine, if the special mobile
             2063      equipment is to be fueled by:
             2064          (A) propane, natural gas, or electricity; or
             2065          (B) other fuel the board determines annually on or before July 1 to be:
             2066          (I) at least as effective in reducing air pollution as the fuels under Subsection
             2067      (2)(a)(iii)(A); or
             2068          (II) substantially more effective in reducing air pollution than the fuel for which the
             2069      engine was originally designed.
             2070          (b) Notwithstanding Subsection (2)(a), for taxable years beginning on or after January
             2071      1, 2006, a [taxpayer] claimant, estate, or trust may not claim a tax credit under this section with
             2072      respect to an electric-hybrid vehicle.
             2073          (3) [An individual] A claimant, estate, or trust shall provide proof of the purchase of an


             2074      item for which a tax credit is allowed under this section by:
             2075          (a) providing proof to the board in the form the board requires by rule;
             2076          (b) receiving a written statement from the board acknowledging receipt of the proof;
             2077      and
             2078          (c) retaining the written statement described in Subsection (3)(b).
             2079          (4) Except as provided by Subsection (5), the tax credit under this section is allowed
             2080      only:
             2081          (a) against any Utah tax owed in the taxable year by the [taxpayer] claimant, estate, or
             2082      trust;
             2083          (b) in the taxable year in which the item is purchased for which the tax credit is
             2084      claimed; and
             2085          (c) once per vehicle.
             2086          (5) If the amount of a tax credit claimed by a [taxpayer] claimant, estate, or trust under
             2087      this section exceeds the [taxpayer's] claimant's, estate's, or trust's tax liability under this chapter
             2088      for a taxable year, the amount of the tax credit exceeding the tax liability may be carried
             2089      forward for a period that does not exceed the next five taxable years.
             2090          Section 32. Section 59-10-1010 , which is renumbered from Section 59-10-129 is
             2091      renumbered and amended to read:
             2092           [59-10-129].     59-10-1010. Utah low-income housing tax credit.
             2093          (1) As used in this section:
             2094          (a) "Allocation certificate" means:
             2095          (i) the certificate prescribed by the commission and issued by the Utah Housing
             2096      Corporation to each [taxpayer] claimant, estate, or trust that specifies the percentage of the
             2097      annual federal low-income housing [tax] credit that each [taxpayer] claimant, estate, or trust
             2098      may take as an annual tax credit against [state income] a tax imposed by this chapter; or
             2099          (ii) a copy of the allocation certificate that the housing sponsor provides to the
             2100      [taxpayer] claimant, estate, or trust.
             2101          (b) "Building" means a qualified low-income building as defined in Section 42(c),


             2102      Internal Revenue Code.
             2103          (c) "Federal low-income housing [tax] credit" means the [tax] low-income housing
             2104      credit under Section 42, Internal Revenue Code.
             2105          (d) "Housing sponsor" means a corporation in the case of a C corporation, a partnership
             2106      in the case of a partnership, a corporation in the case of an S corporation, or a limited liability
             2107      company in the case of a limited liability company.
             2108          (e) "Qualified allocation plan" means the qualified allocation plan adopted by the Utah
             2109      Housing Corporation pursuant to Section 42(m), Internal Revenue Code.
             2110          (f) "Special low-income housing tax credit certificate" means a certificate:
             2111          (i) prescribed by the commission;
             2112          (ii) that a housing sponsor issues to a [taxpayer] claimant, estate, or trust for a taxable
             2113      year; and
             2114          (iii) that specifies the amount of a tax credit a [taxpayer] claimant, estate, or trust may
             2115      claim under this section if the [taxpayer] claimant, estate, or trust meets the requirements of
             2116      this section.
             2117          [(g) "Taxpayer" means a person that is allowed a tax credit in accordance with this
             2118      section which is the corporation in the case of a C corporation, the partners in the case of a
             2119      partnership, the shareholders in the case of an S corporation, and the members in the case of a
             2120      limited liability company.]
             2121          (2) (a) For taxable years beginning on or after January 1, 1995, there is allowed a
             2122      nonrefundable tax credit against taxes otherwise due under this chapter for [taxpayers] a
             2123      claimant, estate, or trust issued an allocation certificate.
             2124          (b) The tax credit shall be in an amount equal to the greater of the amount of:
             2125          (i) federal low-income housing [tax] credit to which the [taxpayer] claimant, estate, or
             2126      trust is allowed during that year multiplied by the percentage specified in an allocation
             2127      certificate issued by the Utah Housing Corporation; or
             2128          (ii) tax credit specified in the special low-income housing tax credit certificate that the
             2129      housing sponsor issues to the [taxpayer] claimant, estate, or trust as provided in Subsection


             2130      (2)(c).
             2131          (c) For purposes of Subsection (2)(b)(ii), the tax credit is equal to the product of:
             2132          (i) the total amount of low-income housing tax credit under this section that:
             2133          (A) a housing sponsor is allowed for a building; and
             2134          (B) all of the [taxpayers] claimants, estates, and trusts may claim with respect to the
             2135      building if the [taxpayers] claimants, estates, and trusts meet the requirements of this section;
             2136      and
             2137          (ii) the percentage of tax credit a [taxpayer] claimant, estate, or trust may claim:
             2138          (A) under this section if the [taxpayer] claimant, estate, or trust meets the requirements
             2139      of this section; and
             2140          (B) as provided in the agreement between the [taxpayer] claimant, estate, or trust and
             2141      the housing sponsor.
             2142          (d) (i) For the calendar year beginning on January 1, 1995, through the calendar year
             2143      beginning on January 1, 2015, the aggregate annual tax credit that the Utah Housing
             2144      Corporation may allocate for the credit period described in Section 42(f), Internal Revenue
             2145      Code, pursuant to this section and Section 59-7-607 is an amount equal to the product of:
             2146          (A) 12.5 cents; and
             2147          (B) the population of Utah.
             2148          (ii) For purposes of this section, the population of Utah shall be determined in
             2149      accordance with Section 146(j), Internal Revenue Code.
             2150          (3) (a) By October 1, 1994, the Utah Housing Corporation shall determine criteria and
             2151      procedures for allocating the tax credit under this section and Section 59-7-607 and incorporate
             2152      the criteria and procedures into the Utah Housing Corporation's qualified allocation plan.
             2153          (b) The Utah Housing Corporation shall create the criteria under Subsection (3)(a)
             2154      based on:
             2155          (i) the number of affordable housing units to be created in Utah for low and moderate
             2156      income persons in the residential housing development of which the building is a part;
             2157          (ii) the level of area median income being served by the development;


             2158          (iii) the need for the tax credit for the economic feasibility of the development; and
             2159          (iv) the extended period for which the development commits to remain as affordable
             2160      housing.
             2161          (4) (a) The following may apply to the Utah Housing Corporation for a tax credit under
             2162      this section:
             2163          (i) any housing sponsor that is a claimant, estate, or trust if that housing sponsor has
             2164      received an allocation of the federal low-income housing [tax] credit; or
             2165          (ii) any applicant for an allocation of the federal low-income housing [tax] credit if that
             2166      applicant is a claimant, estate, or trust.
             2167          (b) The Utah Housing Corporation may not require fees for applications of the tax
             2168      credit under this section in addition to those fees required for applications for the federal
             2169      low-income housing [tax] credit.
             2170          (5) (a) The Utah Housing Corporation shall determine the amount of the tax credit to
             2171      allocate to a qualifying housing sponsor in accordance with the qualified allocation plan of the
             2172      Utah Housing Corporation.
             2173          (b) (i) The Utah Housing Corporation shall allocate the tax credit to housing sponsors
             2174      by issuing an allocation certificate to qualifying housing sponsors.
             2175          (ii) The allocation certificate under Subsection (5)(b)(i) shall specify the allowed
             2176      percentage of the federal low-income housing [tax] credit as determined by the Utah Housing
             2177      Corporation.
             2178          (c) The percentage specified in an allocation certificate may not exceed 100% of the
             2179      federal low-income housing [tax] credit.
             2180          (6) A housing sponsor shall provide a copy of the allocation certificate to each
             2181      [taxpayer] claimant, estate, or trust that is issued a special low-income housing tax credit
             2182      certificate.
             2183          (7) (a) A housing sponsor shall provide to the commission a list of:
             2184          (i) the [taxpayers] claimants, estates, and trusts issued a special low-income housing
             2185      tax credit certificate; and


             2186          (ii) for each [taxpayer] claimant, estate, or trust described in Subsection (7)(a)(i), the
             2187      amount of tax credit listed on the special low-income housing tax credit certificate.
             2188          (b) A housing sponsor shall provide the list required by Subsection (7)(a):
             2189          (i) to the commission;
             2190          (ii) on a form provided by the commission; and
             2191          (iii) with the housing sponsor's tax return for each taxable year for which the housing
             2192      sponsor issues a special low-income housing tax credit certificate described in this Subsection
             2193      (7).
             2194          (8) (a) All elections made by the [taxpayer] claimant, estate, or trust pursuant to
             2195      Section 42, Internal Revenue Code, shall apply to this section.
             2196          (b) (i) If a [taxpayer] claimant, estate, or trust is required to recapture a portion of any
             2197      federal low-income housing [tax] credit, the [taxpayer] claimant, estate, or trust shall also be
             2198      required to recapture a portion of any state tax credits authorized by this section.
             2199          (ii) The state recapture amount shall be equal to the percentage of the state tax credit
             2200      that equals the proportion the federal recapture amount bears to the original federal low-income
             2201      housing [tax] credit amount subject to recapture.
             2202          (9) (a) Any tax credits returned to the Utah Housing Corporation in any year may be
             2203      reallocated within the same time period as provided in Section 42, Internal Revenue Code.
             2204          (b) Tax credits that are unallocated by the Utah Housing Corporation in any year may
             2205      be carried over for allocation in the subsequent year.
             2206          (10) (a) Amounts otherwise qualifying for the tax credit, but not allowable because the
             2207      tax credit exceeds the tax, may be carried back three years or may be carried forward five years
             2208      as a tax credit [against the tax].
             2209          (b) Carryover tax credits under Subsection (10)(a) shall be applied against the tax:
             2210          (i) before the application of the tax credits earned in the current year; and
             2211          (ii) on a first-earned first-used basis.
             2212          (11) Any tax credit taken in this section may be subject to an annual audit by the
             2213      commission.


             2214          (12) The Utah Housing Corporation shall provide an annual report to the Revenue and
             2215      Taxation Interim Committee which shall include at least:
             2216          (a) the purpose and effectiveness of the tax credits; and
             2217          (b) the benefits of the tax credits to the state.
             2218          (13) The commission may, in consultation with the Utah Housing Corporation,
             2219      promulgate rules to implement this section.
             2220          Section 33. Section 59-10-1011 , which is renumbered from Section 59-10-130 is
             2221      renumbered and amended to read:
             2222           [59-10-130].     59-10-1011. Tutoring tax credits for disabled dependents.
             2223          (1) For purposes of this section:
             2224          (a) "Disabled dependent" means a person who:
             2225          (i) is disabled under Section 53A-15-301 ;
             2226          (ii) attends a public or private kindergarten, elementary, or secondary school; and
             2227          (iii) is eligible to receive disability program monies under Section 53A-17a-111 .
             2228          (b) (i) "Tutoring" means educational services:
             2229          (A) approved by an individual education plan team;
             2230          (B) provided to a disabled dependent; and
             2231          (C) that supplement classroom instruction the disabled dependent described in
             2232      Subsection (1)(b)(i)(B) receives at a public or private kindergarten, elementary, or secondary
             2233      school in the state.
             2234          (ii) "Tutoring" does not include:
             2235          (A) purchases of instructional books and material; or
             2236          (B) payments for attendance at extracurricular activities including sporting events,
             2237      musical or dramatic events, speech activities, or driver education.
             2238          (2) (a) Except as provided in Subsection (2)(b), for taxable years beginning on or after
             2239      January 1, 1996, but beginning on or before December 31, 2009, a [taxpayer] claimant allowed
             2240      to claim a disabled dependent as a dependent under this section may claim for each disabled
             2241      dependent a nonrefundable tutoring tax credit in an amount equal to 25% of the costs paid by


             2242      the [taxpayer] claimant for tutoring the disabled dependent.
             2243          (b) The [nonrefundable] tutoring tax credit under Subsection (2)(a) may not exceed
             2244      $100.
             2245          (3) The [nonrefundable] tutoring tax credit under Subsection (2) may be claimed by a
             2246      [taxpayer] claimant only in the taxable year in which the [taxpayer] claimant pays the tutoring
             2247      costs for which the tax credit is claimed.
             2248          Section 34. Section 59-10-1012 , which is renumbered from Section 59-10-131 is
             2249      renumbered and amended to read:
             2250           [59-10-131].     59-10-1012. Tax credits for research activities conducted in
             2251      the state -- Carry forward -- Commission to report modification or repeal of federal
             2252      credits.
             2253          (1) (a) For taxable years beginning on or after January 1, 1999, but beginning before
             2254      December 31, 2010, a [taxpayer] claimant, estate, or trust meeting the requirements of this
             2255      section shall qualify for the following nonrefundable tax credits for increasing research
             2256      activities in this state:
             2257          (i) a research tax credit of 6% of the [taxpayer's] claimant's, estate's, or trust's qualified
             2258      research expenses for the current taxable year that exceed the base amount provided for under
             2259      Subsection (4); and
             2260          (ii) a tax credit for payments to qualified organizations for basic research as provided
             2261      in Section 41(e), Internal Revenue Code of 6% for the current taxable year that exceed the base
             2262      amount provided for under Subsection (4).
             2263          (b) If a [taxpayer] claimant, estate, or trust qualifying for a tax credit under Subsection
             2264      (1)(a) seeks to claim the tax credit, the [taxpayer] claimant, estate, or trust shall:
             2265          (i) claim the tax credit or a portion of the tax credit for the taxable year immediately
             2266      following the taxable year for which the [taxpayer] claimant, estate, or trust qualifies for the tax
             2267      credit;
             2268          (ii) carry the tax credit or a portion of the tax credit forward as provided in Subsection
             2269      (4)(f); or


             2270          (iii) claim a portion of the tax credit and carry forward a portion of the tax credit as
             2271      provided in Subsections (1)(b)(i) and (ii).
             2272          (c) The tax credits provided for in this section do not include the alternative
             2273      incremental credit provided for in Section 41(c)(4), Internal Revenue Code.
             2274          (2) For purposes of claiming a tax credit under this section, a unitary group as defined
             2275      in Section 59-7-101 is considered to be one [taxpayer] claimant.
             2276          (3) Except as specifically provided for in this section:
             2277          (a) the tax credits authorized under Subsection (1) shall be calculated as provided in
             2278      Section 41, Internal Revenue Code; and
             2279          (b) the definitions provided in Section 41, Internal Revenue Code, apply in calculating
             2280      the tax credits authorized under Subsection (1).
             2281          (4) For purposes of this section:
             2282          (a) the base amount shall be calculated as provided in Sections 41(c) and 41(h),
             2283      Internal Revenue Code, except that:
             2284          (i) the base amount does not include the calculation of the alternative incremental
             2285      credit provided for in Section 41(c)(4), Internal Revenue Code;
             2286          (ii) a [taxpayer's] claimant's, estate's, or trust's gross receipts include only those gross
             2287      receipts attributable to sources within this state as provided in [Chapter 7, Part 3, Allocation
             2288      and Apportionment of Income -- Utah UDITPA Provisions] Section 59-10-118 ; and
             2289          (iii) notwithstanding Section 41(c), Internal Revenue Code, for purposes of calculating
             2290      the base amount, a [taxpayer] claimant, estate, or trust:
             2291          (A) may elect to be treated as a start-up company as provided in Section 41(c)(3)(B)
             2292      regardless of whether the [taxpayer] claimant, estate, or trust meets the requirements of Section
             2293      41(c)(3)(B)(i)(I) or (II); and
             2294          (B) may not revoke an election to be treated as a start-up company under Subsection
             2295      (4)(a)(iii)(A);
             2296          (b) "basic research" is as defined in Section 41(e)(7), Internal Revenue Code, except
             2297      that the term includes only basic research conducted in this state;


             2298          (c) "qualified research" is as defined in Section 41(d), Internal Revenue Code, except
             2299      that the term includes only qualified research conducted in this state;
             2300          (d) "qualified research expenses" is as defined and calculated in Section 41(b), Internal
             2301      Revenue Code, except that the term includes only those expenses incurred in conducting
             2302      qualified research in this state;
             2303          (e) notwithstanding the provisions of Section 41(h), Internal Revenue Code, the tax
             2304      credits provided for in this section shall not terminate if the credits terminate under Section 41,
             2305      Internal Revenue Code; and
             2306          (f) notwithstanding the provisions of Sections 39 and 41(g), Internal Revenue Code,
             2307      governing the carry forward and carry back of federal tax credits, if the amount of a tax credit
             2308      claimed by a [taxpayer] claimant, estate, or trust under this section exceeds the [taxpayer's]
             2309      claimant's, estate's, or trust's tax liability under this chapter for a taxable year, the amount of the
             2310      tax credit exceeding the liability:
             2311          (i) may be carried forward for a period that does not exceed the next 14 taxable years;
             2312      and
             2313          (ii) may not be carried back to a taxable year preceding the current taxable year.
             2314          (5) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
             2315      commission may make rules for purposes of this section prescribing a certification process for
             2316      qualified organizations to ensure that amounts paid to the qualified organizations are for basic
             2317      research conducted in this state.
             2318          (6) If a federal [tax] credit under Section 41, Internal Revenue Code, is modified or
             2319      repealed, the commission shall report the modification or repeal to the Tax Review
             2320      Commission within 60 days after the day on which the modification or repeal becomes
             2321      effective.
             2322          [(7) (a) Except as provided in Subsection (7)(b), the Tax Review Commission shall
             2323      review the credits provided for in this section on or before the earlier of:]
             2324          [(i) October 1 of the year after the year in which the commission reports under
             2325      Subsection (6) a modification or repeal of a federal tax credit under Section 41, Internal


             2326      Revenue Code; or]
             2327          [(ii) October 1, 2004.]
             2328          [(b) Notwithstanding Subsection (7)(a), the Tax Review Commission is not required to
             2329      review the credits provided for in this section if the only modification to a federal tax credit
             2330      under Section 41, Internal Revenue Code, is the extension of the termination date provided for
             2331      in Section 41(h), Internal Revenue Code.]
             2332          [(c) The Tax Review Commission shall address in a review under this section the:]
             2333          [(i) cost of the credit;]
             2334          [(ii) purpose and effectiveness of the credit;]
             2335          [(iii) whether the credit benefits the state; and]
             2336          [(iv) whether the credit should be:]
             2337          [(A) continued;]
             2338          [(B) modified; or]
             2339          [(C) repealed.]
             2340          [(d) If the Tax Review Commission reviews the credits provided for in this section, the
             2341      Tax Review Commission shall report its findings to the Revenue and Taxation Interim
             2342      Committee on or before the November interim meeting of the year in which the Tax Review
             2343      Commission reviews the credits.]
             2344          Section 35. Section 59-10-1013 , which is renumbered from Section 59-10-132 is
             2345      renumbered and amended to read:
             2346           [59-10-132].     59-10-1013. Credits for machinery, equipment, or both
             2347      primarily used for conducting qualified research or basic research -- Carry forward --
             2348      Commission to report modification or repeal of federal credits.
             2349          (1) As used in this section:
             2350          (a) "Basic research" is as defined in Section 41(e)(7), Internal Revenue Code, except
             2351      that the term includes only basic research conducted in this state.
             2352          (b) "Equipment" includes:
             2353          (i) computers;


             2354          (ii) computer equipment; and
             2355          (iii) computer software.
             2356          (c) "Purchase price":
             2357          (i) includes the cost of installing an item of machinery or equipment; and
             2358          (ii) does not include sales or use taxes imposed on an item of machinery or equipment.
             2359          (d) "Qualified organization" is as defined in Section 41(e)(6), Internal Revenue Code.
             2360          (e) "Qualified research" is as defined in Section 41(d), Internal Revenue Code, except
             2361      that the term includes only qualified research conducted in this state.
             2362          (2) (a) Except as provided in Subsection (2)(c), for taxable years beginning on or after
             2363      January 1, 1999, but beginning before December 31, 2010, a [taxpayer] claimant, estate, or
             2364      trust shall qualify for the following nonrefundable tax credits for the taxable year in which the
             2365      machinery, equipment, or both, meets the requirements of either Subsection (2)(a)(i) or
             2366      (2)(a)(ii):
             2367          (i) a tax credit of 6% of the purchase price of either machinery, equipment, or both:
             2368          (A) purchased by the [taxpayer] claimant, estate, or trust during the taxable year;
             2369          (B) that is not exempt from sales or use taxes; and
             2370          (C) that is primarily used to conduct qualified research in this state; and
             2371          (ii) a tax credit of 6% of the purchase price paid by the [taxpayer] claimant, estate, or
             2372      trust for either machinery, equipment, or both:
             2373          (A) purchased by the [taxpayer] claimant, estate, or trust during the taxable year;
             2374          (B) that is not exempt from sales or use taxes;
             2375          (C) that is donated to a qualified organization; and
             2376          (D) that is primarily used to conduct basic research in this state.
             2377          (b) If a [taxpayer] claimant, estate, or trust qualifying for a tax credit under Subsection
             2378      (2)(a) seeks to claim the tax credit, the [taxpayer] claimant, estate, or trust shall:
             2379          (i) claim the tax credit or a portion of the tax credit for the taxable year immediately
             2380      following the taxable year for which the [taxpayer] claimant, estate, or trust qualifies for the tax
             2381      credit;


             2382          (ii) carry the tax credit or a portion of the tax credit forward as provided in Subsection
             2383      (5); or
             2384          (iii) claim a portion of the tax credit and carry forward a portion of the tax credit as
             2385      provided in Subsections (2)(b)(i) and (ii).
             2386          (c) Notwithstanding Subsection (2)(a), if a [taxpayer] claimant, estate, or trust qualifies
             2387      for a tax credit under Subsection (2)(a) for a purchase of machinery, equipment, or both, the
             2388      [taxpayer] claimant, estate, or trust may not claim the tax credit or carry the tax credit forward
             2389      if the machinery, equipment, or both, is primarily used to conduct qualified research in the state
             2390      for a time period that is less than 12 consecutive months.
             2391          (3) For purposes of claiming a tax credit under this section, a unitary group as defined
             2392      in Section 59-7-101 is considered to be one [taxpayer] claimant.
             2393          (4) Notwithstanding the provisions of Section 41(h), Internal Revenue Code, the tax
             2394      credits provided for in this section shall not terminate if the credits terminate under Section 41,
             2395      Internal Revenue Code.
             2396          (5) Notwithstanding the provisions of Sections 39 and 41(g), Internal Revenue Code,
             2397      governing the carry forward and carry back of federal tax credits, if the amount of a tax credit
             2398      claimed by a [taxpayer] claimant, estate, or trust under this section exceeds a [taxpayer's]
             2399      claimant's, estate's, or trust's tax liability under this chapter for a taxable year, the amount of the
             2400      tax credit exceeding the liability:
             2401          (a) may be carried forward for a period that does not exceed the next 14 taxable years;
             2402      and
             2403          (b) may not be carried back to a taxable year preceding the current taxable year.
             2404          (6) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
             2405      commission may make rules for purposes of this section prescribing a certification process for
             2406      qualified organizations to ensure that either machinery, equipment, or both provided to the
             2407      qualified organization is to be primarily used to conduct basic research in this state.
             2408          (7) If a federal [tax] credit under Section 41, Internal Revenue Code, is modified or
             2409      repealed, the commission shall report the modification or repeal to the Tax Review


             2410      Commission within 60 days after the day on which the modification or repeal becomes
             2411      effective.
             2412          [(8) (a) Except as provided in Subsection (8)(b), the Tax Review Commission shall
             2413      review the credits provided for in this section on or before the earlier of:]
             2414          [(i) October 1 of the year after the year in which the commission reports under
             2415      Subsection (7) a modification or repeal of a federal tax credit under Section 41, Internal
             2416      Revenue Code; or]
             2417          [(ii) October 1, 2004.]
             2418          [(b) Notwithstanding Subsection (8)(a), the Tax Review Commission is not required to
             2419      review the credits provided for in this section if the only modification to a federal tax credit
             2420      under Section 41, Internal Revenue Code, is the extension of the termination date provided for
             2421      in Section 41(h), Internal Revenue Code.]
             2422          [(c) The Tax Review Commission shall address in a review under this section the:]
             2423          [(i) cost of the credit;]
             2424          [(ii) purpose and effectiveness of the credit;]
             2425          [(iii) whether the credit benefits the state; and]
             2426          [(iv) whether the credit should be:]
             2427          [(A) continued;]
             2428          [(B) modified; or]
             2429          [(C) repealed.]
             2430          [(d) If the Tax Review Commission reviews the credits provided for in this section, the
             2431      Tax Review Commission shall report its findings to the Revenue and Taxation Interim
             2432      Committee on or before the November interim meeting of the year in which the Tax Review
             2433      Commission reviews the credits.]
             2434          Section 36. Section 59-10-1014 , which is renumbered from Section 59-10-134 is
             2435      renumbered and amended to read:
             2436           [59-10-134].     59-10-1014. Renewable energy systems tax credit --
             2437      Definitions -- Limitations -- State tax credit in addition to allowable federal credits --


             2438      Certification -- Rulemaking authority -- Reimbursement of Uniform School Fund.
             2439          (1) As used in this part:
             2440          (a) "Active solar system":
             2441          (i) means a system of equipment capable of collecting and converting incident solar
             2442      radiation into thermal, mechanical, or electrical energy, and transferring these forms of energy
             2443      by a separate apparatus to storage or to the point of use; and
             2444          (ii) includes water heating, space heating or cooling, and electrical or mechanical
             2445      energy generation.
             2446          (b) "Biomass system" means any system of apparatus and equipment capable of
             2447      converting organic plant, wood, or waste products into electrical and thermal energy and
             2448      transferring these forms of energy by a separate apparatus to the point of use or storage.
             2449          (c) "Business entity" means any [sole proprietorship, estate, trust, partnership,
             2450      association, corporation, cooperative, or other] entity under which business is conducted or
             2451      transacted.
             2452          (d) "Commercial energy system" means any active solar, passive solar, wind,
             2453      hydroenergy, or biomass system used to supply energy to a commercial unit or as a commercial
             2454      enterprise.
             2455          (e) "Commercial enterprise" means a business entity whose purpose is to produce
             2456      electrical, mechanical, or thermal energy for sale from a commercial energy system.
             2457          (f) (i) "Commercial unit" means any building or structure which a business entity uses
             2458      to transact its business, except as provided in Subsection (1)(f)(ii); and
             2459          (ii) (A) in the case of an active solar system used for agricultural water pumping or a
             2460      wind system, each individual energy generating device shall be a commercial unit; and
             2461          (B) if an energy system is the building or structure which a business entity uses to
             2462      transact its business, a commercial unit is the complete energy system itself.
             2463          (g) "Hydroenergy system" means a system of apparatus and equipment capable of
             2464      intercepting and converting kinetic water energy into electrical or mechanical energy and
             2465      transferring this form of energy by separate apparatus to the point of use or storage.


             2466          [(h) "Individual taxpayer" means any person who is a taxpayer as defined in Section
             2467      59-10-103 and an individual as defined in Section 59-10-103 .]
             2468          [(i)] (h) "Passive solar system":
             2469          (i) means a direct thermal system which utilizes the structure of a building and its
             2470      operable components to provide for collection, storage, and distribution of heating or cooling
             2471      during the appropriate times of the year by utilizing the climate resources available at the site;
             2472      and
             2473          (ii) includes those portions and components of a building that are expressly designed
             2474      and required for the collection, storage, and distribution of solar energy.
             2475          [(j)] (i) "Residential energy system" means any active solar, passive solar, wind, or
             2476      hydroenergy system used to supply energy to or for any residential unit.
             2477          [(k)] (j) "Residential unit" means any house, condominium, apartment, or similar
             2478      dwelling unit which serves as a dwelling for a person, group of persons, or a family but does
             2479      not include property subject to a fee under:
             2480          (i) Section 59-2-404 ;
             2481          (ii) Section 59-2-405 ;
             2482          (iii) Section 59-2-405.1 ;
             2483          (iv) Section 59-2-405.2 ; or
             2484          (v) Section 59-2-405.3 .
             2485          [(l)] (k) "Utah Geological Survey" means the Utah Geological Survey established in
             2486      Section 63-73-5 .
             2487          [(m)] (l) "Wind system" means a system of apparatus and equipment capable of
             2488      intercepting and converting wind energy into mechanical or electrical energy and transferring
             2489      these forms of energy by a separate apparatus to the point of use or storage.
             2490          (2) For taxable years beginning on or after January 1, 2001, but beginning on or before
             2491      December 31, 2006, [any individual taxpayer] a claimant, estate, or trust may claim a
             2492      nonrefundable tax credit as provided in this section if:
             2493          (a) [the individual taxpayer] a claimant, estate, or trust that is not a business entity


             2494      purchases and completes or participates in the financing of a residential energy system to
             2495      supply all or part of the energy for the [individual taxpayer's] claimant's, estate's, or trust's
             2496      residential unit in the state; or
             2497          (b) (i) a claimant, estate, or trust that is a business entity sells a residential unit to [an
             2498      individual taxpayer] another claimant, estate, or trust that is not a business entity prior to
             2499      making a claim for a tax credit under Subsection (6) or Section 59-7-614 ; and
             2500          (ii) the claimant, estate, or trust that is a business entity assigns its right to the tax credit
             2501      to the [individual taxpayer] claimant, estate, or trust that is not a business entity as provided in
             2502      Subsection (6)(c) or Subsection 59-7-614 (2)(a)(iii).
             2503          (3) (a) [An individual taxpayer meeting the requirements of] The tax credit described
             2504      in Subsection (2) is [entitled to a tax credit] equal to 25% of the costs of the energy system,
             2505      including installation costs, against any income tax liability of the [individual taxpayer]
             2506      claimant, estate, or trust under this chapter for the taxable year in which the residential energy
             2507      system is completed and placed in service.
             2508          (b) The total amount of the tax credit under this section may not exceed $2,000 per
             2509      residential unit.
             2510          (c) The tax credit under this section is allowed for any residential energy system
             2511      completed and placed in service on or after January 1, 2001, but on or before December 31,
             2512      2006.
             2513          (4) (a) The tax credit provided for in this section shall be claimed in the return for the
             2514      taxable year in which the energy system is completed and placed in service.
             2515          (b) Additional residential energy systems or parts of residential energy systems may be
             2516      similarly claimed in returns for subsequent taxable years as long as the total amount claimed
             2517      does not exceed $2,000 per residential unit.
             2518          (c) If the amount of the tax credit under this section exceeds the income tax liability of
             2519      the [individual taxpayer] claimant, estate, or trust claiming the tax credit under this section for
             2520      that taxable year, then the amount not used may be carried over for a period which does not
             2521      exceed the next four taxable years.


             2522          (5) (a) [Individual taxpayers who lease] A claimant, estate, or trust that is not a
             2523      business entity that leases a residential energy system installed on a residential unit [are] is
             2524      eligible for the residential energy tax credits if [the lessee can confirm] that claimant, estate, or
             2525      trust confirms that the lessor irrevocably elects not to claim the [state] tax credit.
             2526          (b) Only the principal recovery portion of the lease payments, which is the cost
             2527      incurred by the [taxpayer] claimant, estate, or trust in acquiring the residential energy system
             2528      excluding interest charges and maintenance expenses, is eligible for the tax credits.
             2529          (c) [Individual taxpayers who lease residential energy systems are eligible to] A
             2530      claimant, estate, or trust described in this Subsection (5) may use the tax credits for a period
             2531      [no greater than] that does not exceed seven years from the initiation of the lease.
             2532          (6) (a) A claimant, estate, or trust that is a business entity that purchases and completes
             2533      or participates in the financing of a residential energy system to supply all or part of the energy
             2534      required for a residential unit owned or used by the claimant, estate, or trust that is a business
             2535      entity and situated in Utah is entitled to a nonrefundable tax credit as provided in this
             2536      Subsection (6).
             2537          (b) (i) For taxable years beginning on or after January 1, 2001, but beginning on or
             2538      before December 31, 2006, a claimant, estate, or trust that is a business entity is entitled to a
             2539      tax credit equal to 25% of the costs of a residential energy system installed with respect to each
             2540      residential unit it owns or uses, including installation costs, against any tax due under this
             2541      chapter for the taxable year in which the energy system is completed and placed in service.
             2542          (ii) The total amount of the tax credit under this Subsection (6) may not exceed $2,000
             2543      per residential unit.
             2544          (iii) The tax credit under this Subsection (6) is allowed for any residential energy
             2545      system completed and placed in service on or after January 1, 2001, but on or before December
             2546      31, 2006.
             2547          (c) If a claimant, estate, or trust that is a business entity sells a residential unit to [an
             2548      individual taxpayer] a claimant, estate, or trust that is not a business entity prior to making a
             2549      claim for the tax credit under this Subsection (6), the claimant, estate, or trust that is a business


             2550      entity may:
             2551          (i) assign its right to this tax credit to the [individual taxpayer] claimant, estate, or trust
             2552      that is not a business entity; and
             2553          (ii) if the claimant, estate, or trust that is a business entity assigns its right to the tax
             2554      credit to [an individual taxpayer] a claimant, estate, or trust that is not a business entity under
             2555      Subsection (6)(c)(i), the [individual taxpayer] claimant, estate, or trust that is not a business
             2556      entity may claim the tax credit as if [the individual taxpayer] that claimant, estate, or trust that
             2557      is not a business entity had completed or participated in the costs of the residential energy
             2558      system under this section.
             2559          (7) (a) A claimant, estate, or trust that is a business entity that purchases or participates
             2560      in the financing of a commercial energy system is entitled to a nonrefundable tax credit as
             2561      provided in this Subsection (7) if:
             2562          (i) the commercial energy system supplies all or part of the energy required by
             2563      commercial units owned or used by the claimant, estate, or trust that is a business entity; or
             2564          (ii) the claimant, estate, or trust that is a business entity sells all or part of the energy
             2565      produced by the commercial energy system as a commercial enterprise.
             2566          (b) (i) A claimant, estate, or trust that is a business entity is entitled to a tax credit equal
             2567      to 10% of the costs of any commercial energy system installed, including installation costs,
             2568      against any tax due under this chapter for the taxable year in which the commercial energy
             2569      system is completed and placed in service.
             2570          (ii) The total amount of the tax credit under this Subsection (7) may not exceed
             2571      $50,000 per commercial unit.
             2572          (iii) The tax credit under this Subsection (7) is allowed for any commercial energy
             2573      system completed and placed in service on or after January 1, 2001, but on or before December
             2574      31, 2006.
             2575          (c) A claimant, estate, or trust that is a business entity that leases a commercial energy
             2576      system installed on a commercial unit is eligible for the tax credit under this Subsection (7) if
             2577      the [lessee can confirm] claimant, estate, or trust confirms that the lessor irrevocably elects not


             2578      to claim the tax credit.
             2579          (d) Only the principal recovery portion of the lease payments, which is the cost
             2580      incurred by a claimant, estate, or trust that is not a business entity in acquiring a commercial
             2581      energy system, excluding interest charges and maintenance expenses, is eligible for the tax
             2582      credit under this Subsection (7).
             2583          (e) A claimant, estate, or trust that is a business entity that leases a commercial energy
             2584      system is eligible to use the tax credit under this Subsection (7) for a period [no greater than]
             2585      that does not exceed seven years from the initiation of the lease.
             2586          (8) (a) A tax credit under this section may be claimed for the taxable year in which the
             2587      energy system is completed and placed in service.
             2588          (b) Additional energy systems or parts of energy systems may be claimed for
             2589      subsequent years.
             2590          (c) If the amount of a tax credit under this section exceeds [a business entity's] the tax
             2591      liability of the claimant, estate, or trust claiming the tax credit under this [chapter] section for a
             2592      taxable year, the amount of the tax credit exceeding the tax liability may be carried over for a
             2593      period which does not exceed the next four taxable years.
             2594          (9) The tax credits provided for under this section are in addition to any tax credits
             2595      provided under the laws or rules and regulations of the United States.
             2596          (10) (a) The Utah Geological Survey may set standards for residential and commercial
             2597      energy systems that cover the safety, reliability, efficiency, leasing, and technical feasibility of
             2598      the systems to ensure that the systems eligible for the tax credit use the state's renewable and
             2599      nonrenewable energy resources in an appropriate and economic manner.
             2600          (b) A tax credit may not be taken under this section until the Utah Geological Survey
             2601      has certified that the energy system has been completely installed and is a viable system for
             2602      saving or production of energy from renewable resources.
             2603          (11) The Utah Geological Survey and the commission are authorized to promulgate
             2604      rules in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, which
             2605      are necessary to implement this section.


             2606          (12) The Uniform School Fund shall be reimbursed by transfers from the General Fund
             2607      for any tax credits taken under this section.
             2608          Section 37. Section 59-10-1015 , which is renumbered from Section 59-10-134.2 is
             2609      renumbered and amended to read:
             2610           [59-10-134.2].     59-10-1015. Definitions -- Tax credit for live organ donation
             2611      expenses -- Rulemaking authority.
             2612          (1) As used in this section:
             2613          (a) "human organ" means:
             2614          (i) human bone marrow; or
             2615          (ii) any part of a human:
             2616          (A) intestine;
             2617          (B) kidney;
             2618          (C) liver;
             2619          (D) lung; or
             2620          (E) pancreas;
             2621          (b) "live organ donation" means that an individual who is living donates one or more of
             2622      that individual's human organs:
             2623          (i) to another human; and
             2624          (ii) to be transplanted:
             2625          (A) using a medical procedure; and
             2626          (B) to the body of the other human; and
             2627          (c) (i) "live organ donation expenses" means the total amount of expenses:
             2628          (A) incurred by a [taxpayer] claimant; and
             2629          (B) that:
             2630          (I) are not reimbursed to that [taxpayer] claimant by any person;
             2631          (II) are directly related to a live organ donation by:
             2632          (Aa) the [taxpayer] claimant; or
             2633          (Bb) another individual that the [taxpayer] claimant is allowed to claim as a dependent


             2634      in accordance with Section 151, Internal Revenue Code; and
             2635          (III) are for:
             2636          (Aa) travel;
             2637          (Bb) lodging; or
             2638          (Cc) a lost wage; and
             2639          (ii) in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
             2640      commission may by rule define "lost wage."
             2641          (2) For taxable years beginning on or after January 1, 2005, a [taxpayer] claimant may
             2642      claim a nonrefundable tax credit:
             2643          (a) as provided in this section;
             2644          (b) against taxes otherwise due under this chapter;
             2645          (c) for live organ donation expenses incurred during the taxable year for which the live
             2646      organ donation occurs; and
             2647          (d) in an amount equal to the lesser of:
             2648          (i) the actual amount of the live organ donation expenses; or
             2649          (ii) $10,000.
             2650          (3) If the amount of a tax credit under this section exceeds a [taxpayer's] claimant's tax
             2651      liability under this chapter for a taxable year, the amount of the tax credit that exceeds the
             2652      [taxpayer's] claimant's tax liability may be carried forward for a period that does not exceed the
             2653      next five taxable years.
             2654          Section 38. Section 59-10-1016 , which is renumbered from Section 59-10-135 is
             2655      renumbered and amended to read:
             2656           [59-10-135].     59-10-1016. Removal of tax credit from tax return and
             2657      prohibition on claiming or carrying forward a tax credit -- Conditions for removal and
             2658      prohibition on claiming or carrying forward a tax credit -- Commission reporting
             2659      requirements.
             2660          (1) As used in this section[: (a) "Tax credit" means a nonrefundable tax credit listed on
             2661      a tax return. (b) "Tax], "tax return" means [an individual income] a tax return filed in


             2662      accordance with this chapter.
             2663          (2) Beginning two taxable years after the requirements of Subsection (3) are met:
             2664          (a) the commission shall remove a tax credit from each tax return on which the tax
             2665      credit appears; and
             2666          (b) a [person] claimant, estate, or trust filing a tax return may not claim or carry
             2667      forward the tax credit.
             2668          (3) The commission shall remove a tax credit from a tax return and a [person]
             2669      claimant, estate, or trust filing a tax return may not claim or carry forward a tax credit as
             2670      provided in Subsection (2) if:
             2671          (a) the total amount of the tax credit claimed or carried forward by all [persons]
             2672      claimants, estates, or trusts filing tax returns is less than $10,000 per year for three consecutive
             2673      taxable years beginning on or after January 1, 2002; and
             2674          (b) less than ten [persons] claimants, estates, and trusts per year for the three
             2675      consecutive taxable years described in Subsection (3)(a), file a tax return claiming or carrying
             2676      forward the tax credit.
             2677          (4) The commission shall, on or before the November interim meeting of the year after
             2678      the taxable year in which the requirements of Subsection (3) are met:
             2679          (a) report to the Revenue and Taxation Interim Committee that in accordance with this
             2680      section:
             2681          (i) the commission is required to remove a tax credit from each tax return on which the
             2682      tax credit appears; and
             2683          (ii) a [person] claimant, estate, or trust filing a tax return may not claim or carry
             2684      forward the tax credit; and
             2685          (b) notify each state agency required by statute to assist in the administration of the tax
             2686      credit that in accordance with this section:
             2687          (i) the commission is required to remove a tax credit from each tax return on which the
             2688      tax credit appears; and
             2689          (ii) a [person] claimant, estate, or trust filing a tax return may not claim or carry


             2690      forward the tax credit.
             2691          Section 39. Section 59-10-1101 is enacted to read:
             2692     
Part 11. Refundable Tax Credit Act

             2693          59-10-1101. Title.
             2694          This part is known as the "Refundable Tax Credit Act."
             2695          Section 40. Section 59-10-1102 is enacted to read:
             2696          59-10-1102. Definitions.
             2697          As used in this part:
             2698          (1) (a) Except as provided in Subsection (1)(b) or Subsection 59-10-1103 (1)(a),
             2699      "claimant" means a resident or nonresident person.
             2700          (b) "Claimant" does not include an estate or trust.
             2701          (2) Except as provided in Subsection 59-10-1103 (1)(a), "estate" means a nonresident
             2702      estate or a resident estate.
             2703          (3) "Refundable tax credit" or "tax credit" means a tax credit that a claimant, estate, or
             2704      trust may claim:
             2705          (a) as provided by statute; and
             2706          (b) regardless of whether the claimant, estate, or trust has a tax liability under this
             2707      chapter for a taxable year.
             2708          (4) Except as provided in Subsection 59-10-1103 (1)(a), "trust" means a nonresident
             2709      trust or a resident trust.
             2710          Section 41. Section 59-10-1103 , which is renumbered from Section 59-10-108.2 is
             2711      renumbered and amended to read:
             2712           [59-10-108.2].     59-10-1103. Tax credit for nonresident shareholders of S
             2713      corporations.
             2714          (1) (a) A nonresident shareholder of an S corporation [who is an individual] may claim
             2715      a refundable tax credit against the tax otherwise due under this chapter[.] if that nonresident
             2716      shareholder is a:
             2717          (i) nonresident claimant;


             2718          (ii) nonresident estate; or
             2719          (iii) nonresident trust.
             2720          (b) The tax credit described in Subsection (1)(a) is equal to the amount paid or
             2721      withheld by the S corporation on behalf of the [individual] nonresident shareholder described
             2722      in Subsection (1)(a) in accordance with Section 59-7-703 .
             2723          (2) A nonresident shareholder [of an S corporation who is an individual and who]
             2724      described in Subsection (1)(a) that has no other Utah source income may elect:
             2725          (a) not to claim the tax credit provided in Subsection (1); and
             2726          (b) not to file a [Utah individual income] tax return under this chapter for the taxable
             2727      year.
             2728          (3) If a nonresident shareholder described in Subsection (1)(a) may claim [credits] a
             2729      nonrefundable tax credit as defined in Section 59-10-1002 or a refundable tax credit other than
             2730      the tax credit described in Subsection (1), the nonresident shareholder described in Subsection
             2731      (1)(a) shall file [an individual income] a tax return under this chapter to claim those
             2732      nonrefundable tax credits or refundable tax credits.
             2733          Section 42. Section 59-10-1104 , which is renumbered from Section 59-10-133 is
             2734      renumbered and amended to read:
             2735           [59-10-133].     59-10-1104. Tax credit for adoption of a child who has a
             2736      special need.
             2737          (1) As used in this section, a "child who has a special need" means a child who meets
             2738      at least one of the following conditions:
             2739          (a) the child is five years of age or older;
             2740          (b) the child:
             2741          (i) is under the age of 18; and
             2742          (ii) has a physical, emotional, or mental disability; or
             2743          (c) the child is a member of a sibling group placed together for adoption.
             2744          (2) For taxable years beginning on or after January 1, 2005, a [taxpayer] claimant who
             2745      adopts in this state a child who has a special need may claim on the [taxpayer's] claimant's


             2746      individual income tax return for the taxable year a refundable tax credit of $1,000 against taxes
             2747      otherwise due under this chapter for:
             2748          (a) adoptions for which a court issues an order granting the adoption on or after
             2749      January 1, 2005;
             2750          (b) the taxable year during which a court issues an order granting the adoption; and
             2751          (c) each child who has a special need whom the [taxpayer] claimant adopts.
             2752          (3) The credit provided for in this section may not be carried forward or carried back.
             2753          (4) Nothing in this section shall affect the ability of any [taxpayer] claimant who
             2754      adopts a child who has a special need to receive adoption assistance under Section 62A-4a-907 .
             2755          Section 43. Section 59-10-1105 , which is renumbered from Section 59-10-134.1 is
             2756      renumbered and amended to read:
             2757           [59-10-134.1].     59-10-1105. Tax credit for hand tools used in farming
             2758      operations -- Procedures for refund -- Transfers from General Fund to Uniform School
             2759      Fund -- Rulemaking authority.
             2760          (1) For taxable years beginning on or after January 1, 2004, a [resident or nonresident
             2761      individual] claimant, estate, or trust may claim a refundable tax credit:
             2762          (a) as provided in this section;
             2763          (b) against taxes otherwise due under this chapter; and
             2764          (c) in an amount equal to the amount of tax the [resident or nonresident individual]
             2765      claimant, estate, or trust pays:
             2766          (i) on a purchase of a hand tool:
             2767          (A) if the purchase is made on or after July 1, 2004;
             2768          (B) if the hand tool is used or consumed primarily and directly in a farming operation
             2769      in the state; and
             2770          (C) if the unit purchase price of the hand tool is more than $250; and
             2771          (ii) under Chapter 12, Sales and Use Tax Act, on the purchase described in Subsection
             2772      (1)(c)(i).
             2773          (2) A [resident or nonresident individual] claimant, estate, or trust:


             2774          (a) shall retain the following to establish the amount of tax the [resident or nonresident
             2775      individual] claimant, estate, or trust paid under Chapter 12, Sales and Use Tax Act, on the
             2776      purchase described in Subsection (1)(c)(i):
             2777          (i) a receipt;
             2778          (ii) an invoice; or
             2779          (iii) a document similar to a document described in Subsection (2)(a)(i) or (ii); and
             2780          (b) may not carry forward or carry back a tax credit under this section.
             2781          (3) (a) In accordance with any rules prescribed by the commission under Subsection
             2782      (3)(b), the commission shall:
             2783          (i) make a refund to a [resident or nonresident individual who] claimant, estate, or trust
             2784      that claims a tax credit under this section if the amount of the tax credit exceeds the [resident or
             2785      nonresident individual's] claimant's, estate's, or trust's tax liability under this chapter; and
             2786          (ii) transfer at least annually from the General Fund into the Uniform School Fund an
             2787      amount equal to the amount of tax credit claimed under this section.
             2788          (b) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
             2789      commission may make rules providing procedures for making:
             2790          (i) a refund to a [resident or nonresident individual] claimant, estate, or trust as
             2791      required by Subsection (3)(a)(i); or
             2792          (ii) transfers from the General Fund into the Uniform School Fund as required by
             2793      Subsection (3)(a)(ii).
             2794          Section 44. Section 59-13-202 is amended to read:
             2795           59-13-202. Refund of tax for agricultural uses on individual income and
             2796      corporate franchise and income tax returns -- Application for permit for refund --
             2797      Division of Finance to pay claims -- Rules permitted to enforce part -- Penalties.
             2798          (1) As used in this section:
             2799          (a) (i) Except at provided in Subsection (1)(a)(ii), "claimant" means a resident or
             2800      nonresident person.
             2801          (ii) "Claimant" does not include an estate or trust.


             2802          (b) "Estate" means a nonresident estate or a resident estate.
             2803          (c) "Refundable tax credit" or "tax credit" means a tax credit that a claimant, estate, or
             2804      trust may claim:
             2805          (i) as provided by statute; and
             2806          (ii) regardless of whether, for the taxable year for which the claimant, estate, or trust
             2807      claims the tax credit, the claimant, estate, or trust has a tax liability under:
             2808          (A) Chapter 7, Corporate Franchise and Income Taxes; or
             2809          (B) Chapter 10, Individual Income Tax Act.
             2810          (d) "Trust" means a nonresident trust or a resident trust.
             2811          [(1)] (2) Any [person who] claimant, estate, or trust that purchases and uses any motor
             2812      fuel within the state for the purpose of operating or propelling stationary farm engines and
             2813      self-propelled farm machinery used for nonhighway agricultural uses, and [who] that has paid
             2814      the tax on the motor fuel as provided by this part, is entitled to a refund of the tax subject to the
             2815      conditions and limitations provided under this part.
             2816          [(2)] (3) (a) [Every person] A claimant, estate, or trust desiring a nonhighway
             2817      agricultural use refund under this part shall claim the refund as a refundable tax credit on the
             2818      [state income] tax return [or corporate franchise tax return] the claimant, estate, or trust files
             2819      under:
             2820          (i) Chapter 7, Corporate Franchise and Income Taxes; or
             2821          (ii) Chapter 10, Individual Income Tax Act.
             2822          (b) A [person] claimant, estate, or trust not subject to filing a [Utah income tax return
             2823      or corporate franchise] tax return described in Subsection (3)(a) shall obtain a permit and file
             2824      claims on a calendar year basis.
             2825          (c) Any [person] claimant, estate, or trust claiming a refundable [motor fuel] tax credit
             2826      under this section is required to furnish any or all of the information outlined in this section
             2827      upon request of the commission. [Credit]
             2828          (d) A refundable tax credit under this section is allowed only on purchases on which
             2829      tax is paid during the taxable year covered by the tax return.


             2830          [(3)] (4) In order to obtain a permit for a refund of motor fuel tax paid, an application
             2831      shall be filed containing:
             2832          (a) the name of [applicant] the claimant, estate, or trust;
             2833          (b) the [applicant's] claimant's, estate's, or trust's address;
             2834          (c) location and number of acres owned and operated, location and number of acres
             2835      rented and operated, the latter of which shall be verified by a signed statement from the legal
             2836      owner;
             2837          (d) number of acres planted to each crop, type of soil, and whether irrigated or dry; and
             2838          (e) make, size, type of fuel used, and power rating of each piece of equipment using
             2839      fuel. If the [applicant] claimant, estate, or trust is an operator of self-propelled or tractor-pulled
             2840      farm machinery with which the [applicant] claimant, estate, or trust works for hire doing
             2841      custom jobs for other farmers, the application shall include information the commission
             2842      requires and shall all be contained in, and be considered part of, the original application. The
             2843      [applicant] claimant, estate, or trust shall also file with the application a certificate from the
             2844      county assessor showing each piece of equipment using fuel. This original application and all
             2845      information contained in it constitutes a permanent file with the commission in the name of the
             2846      [applicant] claimant, estate, or trust.
             2847          [(4)] (5) Any [person] claimant, estate, or trust claiming the right to a refund of motor
             2848      fuel tax paid shall file a claim with the commission by April 15 of each year for the refund for
             2849      the previous calendar year. The claim shall state the name and address of the claimant, estate,
             2850      or trust, the number of gallons of motor fuel purchased for nonhighway agricultural uses, and
             2851      the amount paid for the motor fuel. The [applicant] claimant, estate, or trust shall retain the
             2852      original invoice to support the claim. No more than one claim for a tax refund may be filed
             2853      annually by each user of motor fuel purchased for nonhighway agricultural uses.
             2854          [(5)] (6) Upon commission approval of the claim for a refund, the Division of Finance
             2855      shall pay the amount found due to the claimant, estate, or trust. The total amount of claims for
             2856      refunds shall be paid from motor fuel taxes.
             2857          [(6)] (7) The commission may promulgate rules to enforce this part, and may refuse to


             2858      accept as evidence of purchase or payment any instruments which show alteration or which fail
             2859      to indicate the quantity of the purchase, the price of the motor fuel, a statement that it is
             2860      purchased for purposes other than transportation, and the date of purchase and delivery. If the
             2861      commission is not satisfied with the evidence submitted in connection with the claim, it may
             2862      reject the claim or require additional evidence.
             2863          [(7)] (8) Any [person] claimant, estate, or trust aggrieved by the decision of the
             2864      commission with respect to a refundable tax credit or refund may file a request for agency
             2865      action, requesting a hearing before the commission.
             2866          [(8)] (9) Any [person who] claimant, estate, or trust that makes any false claim, report,
             2867      or statement, [either] as claimant, estate, trust, agent, or creditor, with intent to defraud or
             2868      secure a refund to which the claimant, estate, or trust is not entitled, is subject to the criminal
             2869      penalties provided under Section 59-1-401 , and the commission shall initiate the filing of a
             2870      complaint for alleged violations of this part. In addition to these penalties, the [person]
             2871      claimant, estate, or trust may not receive any refund as a claimant, estate, or trust or as a
             2872      creditor of a claimant, estate, or trust for refund for a period of five years.
             2873          [(9)] (10) Refunds to which [taxpayers are] a claimant, estate, or trust is entitled under
             2874      this part shall be paid from the Transportation Fund.
             2875          Section 45. Section 62A-4a-607 is amended to read:
             2876           62A-4a-607. Promotion of adoption -- Agency notice to potential adoptive
             2877      parents.
             2878          (1) (a) The division and all child placing agencies licensed under this part shall
             2879      promote adoption when that is a possible and appropriate alternative for a child. Specifically,
             2880      in accordance with Section 62A-4a-205.6 , the division shall actively promote the adoption of
             2881      all children in its custody who have a final plan for termination of parental rights pursuant to
             2882      Section 78-3a-312 or a primary permanency goal of adoption.
             2883          (b) Beginning May 1, 2000, the division may not place a child for adoption, either
             2884      temporarily or permanently, with any individual or individuals who do not qualify for adoptive
             2885      placement pursuant to the requirements of Sections 78-30-1 , 78-30-1.5 , and 78-30-9 .


             2886          (2) The division shall obtain or conduct research of prior adoptive families to
             2887      determine what families may do to be successful with their adoptive children and shall make
             2888      this research available to potential adoptive parents.
             2889          (3) (a) A child placing agency licensed under this part shall inform each potential
             2890      adoptive parent with whom it is working that:
             2891          (i) children in the custody of the state are available for adoption;
             2892          (ii) Medicaid coverage for medical, dental, and mental health services may be available
             2893      for these children;
             2894          (iii) tax benefits, including the tax credit provided for in Section [ 59-10-133 ]
             2895      59-10-1104 , and financial assistance may be available to defray the costs of adopting these
             2896      children;
             2897          (iv) training and ongoing support may be available to the adoptive parents of these
             2898      children; and
             2899          (v) information about individual children may be obtained by contacting the division's
             2900      offices or its Internet site as explained by the child placing agency.
             2901          (b) A child placing agency shall:
             2902          (i) provide the notice required by Subsection (3)(a) at the earliest possible opportunity;
             2903      and
             2904          (ii) simultaneously distribute a copy of the pamphlet prepared by the division in
             2905      accordance with Subsection (3)(d).
             2906          (c) As a condition of licensure, the child placing agency shall certify to the Office of
             2907      Licensing at the time of license renewal that it has complied with the provisions of this section.
             2908          (d) Before July 1, 2000, the division shall:
             2909          (i) prepare a pamphlet that explains the information that is required by Subsection
             2910      (3)(a); and
             2911          (ii) regularly distribute copies of the pamphlet described in Subsection (3)(d)(i) to child
             2912      placing agencies.
             2913          (e) The division shall respond to any inquiry made as a result of the notice provided in


             2914      Subsection (3)(a).
             2915          Section 46. Section 63-38f-402 is amended to read:
             2916           63-38f-402. Definitions.
             2917          As used in this part:
             2918          (1) "Business entity" means an entity:
             2919          (a) including a claimant, estate, or trust; and
             2920          (b) under which business is conducted or transacted.
             2921          (2) (a) "Claimant" means a resident or nonresident person that has:
             2922          (i) Utah taxable income as defined in Section 59-7-101 ; or
             2923          (ii) state taxable income under Title 59, Chapter 10, Part 1, Determination and
             2924      Reporting of Tax Liability or Information.
             2925          (b) "Claimant" does not include an estate or trust.
             2926          [(1)] (3) "County applicant" means the governing authority of a county that meets the
             2927      requirements for designation as an enterprise zone under Section 63-38f-404 .
             2928          (4) "Estate" means a nonresident estate or a resident estate that has state taxable
             2929      income under Title 59, Chapter 10, Part 2, Trusts and Estates.
             2930          [(2)] (5) "Municipal applicant" means the governing authority of a city or town that
             2931      meets the requirements for designation as an enterprise zone under Section 63-38f-404 .
             2932          (6) "Nonrefundable tax credit" or "tax credit" means a tax credit that a claimant, estate,
             2933      or trust may:
             2934          (a) claim:
             2935          (i) as provided by statute; and
             2936          (ii) in an amount that does not exceed the claimant's, estate's, or trust's tax liability for a
             2937      taxable year under:
             2938          (A) Title 59, Chapter 7, Corporate Franchise and Income Taxes; or
             2939          (B) Title 59, Chapter 10, Individual Income Tax Act; and
             2940          (b) carry forward or carry back:
             2941          (i) if allowed by statute; and


             2942          (ii) to the extent that the amount of the tax credit exceeds the claimant's, estate's, or
             2943      trust's tax liability for a taxable year under:
             2944          (A) Title 59, Chapter 7, Corporate Franchise and Income Taxes; or
             2945          (B) Title 59, Chapter 10, Individual Income Tax Act.
             2946          [(3)] (7) "Tax incentives" or "tax benefits" means the nonrefundable tax credits
             2947      [available under] described in Section 63-38f-413 .
             2948          (8) "Trust" means a nonresident trust or a resident trust that has state taxable income
             2949      under Title 59, Chapter 10, Part 2, Trusts and Estates.
             2950          Section 47. Section 63-38f-412 is amended to read:
             2951           63-38f-412. Business entities qualifying for tax incentives.
             2952          The tax incentives described in this part are available only to a business [firm] entity for
             2953      which at least 51% of the employees employed at facilities of the [firm] business entity located
             2954      in the enterprise zone are individuals who, at the time of employment, reside in the county in
             2955      which the enterprise zone is located.
             2956          Section 48. Section 63-38f-413 is amended to read:
             2957           63-38f-413. State tax credits.
             2958          (1) Subject to the limitations of Subsections (2) through (4), the following [state]
             2959      nonrefundable tax credits against [individual income taxes or corporate franchise and income
             2960      taxes] a tax under Title 59, Chapter 7, Corporate Franchise and Income Taxes, or Title 59,
             2961      Chapter 10, Individual Income Tax Act, are applicable in an enterprise zone:
             2962          (a) a tax credit of $750 may be claimed by a business entity for each new full-time
             2963      position filled for not less than six months during a given tax year;
             2964          (b) an additional $500 tax credit may be claimed if the new position pays at least 125%
             2965      of:
             2966          (i) the county average monthly nonagricultural payroll wage for the respective industry
             2967      as determined by the Department of Workforce Services; or
             2968          (ii) if the county average monthly nonagricultural payroll wage is not available for the
             2969      respective industry, the total average monthly nonagricultural payroll wage in the respective


             2970      county where the enterprise zone is located;
             2971          (c) an additional tax credit of $750 may be claimed if the new position is in a business
             2972      entity that adds value to agricultural commodities through manufacturing or processing;
             2973          (d) an additional tax credit of $200 may be claimed for two consecutive years for each
             2974      new employee who is insured under an employer-sponsored health insurance program if the
             2975      employer pays at least 50% of the premium cost for two consecutive years;
             2976          (e) a tax credit of 50% of the value of a cash contribution to a private nonprofit
             2977      corporation, except that the credit claimed may not exceed $100,000:
             2978          (i) that is exempt from federal income taxation under Section 501(c)(3), Internal
             2979      Revenue Code;
             2980          (ii) whose primary purpose is community and economic development; and
             2981          (iii) that has been accredited by the board of directors of the Utah Rural Development
             2982      Council;
             2983          (f) a tax credit of 25% of the first $200,000 spent on rehabilitating a building in the
             2984      enterprise zone that has been vacant for two years or more; and
             2985          (g) an annual investment tax credit of 10% of the first $250,000 in investment, and 5%
             2986      of the next $1,000,000 qualifying investment in plant, equipment, or other depreciable
             2987      property.
             2988          (2) (a) Subject to the limitations of Subsection (2)(b), a business entity claiming a tax
             2989      credit under Subsections (1)(a) through (d) may claim [a] the tax credit for 30 full-time
             2990      employee positions or less in each of its taxable years.
             2991          (b) A business entity that received a tax credit for its full-time employee positions
             2992      under Subsections (1)(a) through (d) may claim an additional tax credit for a full-time
             2993      employee position under Subsections (1)(a) through (d) if:
             2994          (i) the business entity creates a new full-time employee position;
             2995          (ii) the total number of full-time employee positions at the business entity is greater
             2996      than the number of full-time employee positions previously claimed by the business entity
             2997      under Subsections (1)(a) through (d); and


             2998          (iii) the total number of tax credits the business entity has claimed for its current
             2999      taxable year, including the new full-time employee position for which the claimant, estate, or
             3000      trust that is a business entity is claiming a tax credit, is less than or equal to 30.
             3001          (c) A business entity existing in an enterprise zone on the date of its designation shall
             3002      calculate the number of full-time positions based on the average number of employees reported
             3003      to the Department of Workforce Services.
             3004          (d) Construction jobs are not eligible for the tax [credit] credits under Subsections
             3005      (1)(a) through (d).
             3006          (3) If the amount of a tax credit under this section exceeds a business entity's tax
             3007      liability under this chapter for a taxable year, the amount of the tax credit exceeding the
             3008      liability may be carried forward for a period that does not exceed the next three taxable years.
             3009          (4) (a) If a business entity is located in a county that met the requirements of
             3010      Subsections 63-38f-404 (1)(b) and (c) but did not qualify as an enterprise zone prior to January
             3011      1, 1998, because the county was located in a metropolitan statistical area in more than one
             3012      state, the business entity:
             3013          (i) shall qualify for tax credits for a taxable year beginning on or after January 1, 1997,
             3014      but beginning before December 31, 1997;
             3015          (ii) may claim a tax credit as described in Subsection (4)(a) in a taxable year beginning
             3016      on or after January 1, 1997, but beginn