Third Substitute H.B. 359

Senator Wayne L. Niederhauser proposes the following substitute bill:

1 TAX CHANGES
2 2008 GENERAL SESSION
3 STATE OF UTAH
4 Chief Sponsor: John Dougall
5 Senate Sponsor: Wayne L. Niederhauser
6
7 LONG TITLE
8 General Description:
9 This bill amends the Corporate Franchise and Income Taxes chapter, the Individual
10 Income Tax Act, the Sales and Use Tax Act, the Transportation Code, and related
11 provisions to address the income taxation of individuals, estates, and trusts, including
12 real estate investment trusts, a change in a state sales and use tax rate, a sales tax refund
13 for qualified emergency food agencies, a sales and use tax exemption, and the
14 expenditure of certain state sales and use tax revenues.
15 Highlighted Provisions:
16 This bill:
17 . defines terms;
18 . addresses the income taxation of a real estate investment trust or income from a real
19 estate investment trust;
20 . repeals provisions imposing an individual income tax on the basis of graduated
21 brackets and rates;
22 . provides that an individual income tax is imposed on the basis of a single tax rate,
23 including:
24 . modifying and repealing definitions;
25 . modifying additions to and subtractions from adjusted gross income;

26 . addressing the taxation of a nonresident individual or part-year resident
27 individual; and
28 . addressing provisions relating to the determination and reporting of income tax
29 liability and information;
30 . addresses the apportionment of business income for purposes of the individual
31 income tax;
32 . modifies the income taxation of estates and trusts, including:
33 . providing definitions;
34 . providing that the tax is calculated on the basis of unadjusted income;
35 . modifying additions to and subtractions from unadjusted income; and
36 . addressing provisions relating to the determination and reporting of income tax
37 liability and information;
38 . addresses the taxation of pass-through entities, including:
39 . providing definitions; and
40 . renumbering and amending provisions relating to pass-through entities;
41 . renumbers and amends provisions relating to tax credits, including tax credits for:
42 . a taxpayer;
43 . an investment in the Utah Educational Savings Plan Trust; or
44 . retirement income;
45 . provides nonrefundable tax credits for:
46 . a trust or estate;
47 . a contribution to a medical care savings account;
48 . capital gain transactions;
49 . certain amounts paid for insurance under a health benefit plan; or
50 . certain solar projects;
51 . requires the Utah Tax Review Commission to study the solar projects tax credits;
52 . provides that a person may not claim a nonrefundable renewable energy systems tax
53 credit for certain purchases for which the person claims a tax credit for certain solar
54 projects;
55 . modifies the refundable renewable energy tax credit to clarify that an estate or trust
56 may claim the tax credit;

57 . addresses the apportionment of tax credits;
58 . addresses the following relating to a medical care savings account:
59 . taxation;
60 . penalties; and
61 . interest;
62 . amends provisions relating to the taxation of an investment in the Utah Educational
63 Savings Plan Trust;
64 . renumbers and amends the individual income tax contribution provisions;
65 . addresses the administration of income tax contributions;
66 . grants rulemaking authority to:
67 . the State Tax Commission; and
68 . the Insurance Department;
69 . increases a state sales and use tax rate from 4.65% to 4.70%;
70 . provides that a .025% tax rate on certain sales and use transactions shall be
71 deposited into the Critical Highway Needs Fund and the Transportation Investment
72 Fund of 2005;
73 . provides that a .025% tax rate on certain sales and use transactions shall be
74 deposited into the Transportation Fund to be expended to address chokepoints in
75 construction management;
76 . extends the expiration date for certain sales and use tax exemptions;
77 . provides a sales and use tax exemption for sales of fuel to a common carrier that is a
78 railroad for use in a locomotive engine;
79 . provides that state sales and use tax revenues deposited into the Transportation
80 Fund are not appropriated into the class B and class C roads account;
81 . modifies the statutes creating the Transportation Investment Fund of 2005 and the
82 Critical Highway Needs Fund to address the sources of revenue that may be
83 deposited into the funds; and
84 . makes technical changes.
85 Monies Appropriated in this Bill:
86 None
87 Other Special Clauses:

88 This bill provides effective dates.
89 This bill coordinates with the following to provide for apportionment of tax credits:
90 (1) H.B. 158, Tax Credit for Military Retired Pay;
91 (2) H.B. 199, Tax Credits for Energy Efficient Residences;
92 (3) H.B. 279, Tax Incentives for Military Members;
93 (4) H.B. 351, Individual Income Tax - Health Insurance; and
94 (5) H.B. 360, Individual Income Tax - Long-Term Care Insurance Premiums.
95 Utah Code Sections Affected:
96 AMENDS:
97 9-4-802, as last amended by Laws of Utah 2003, Chapter 132
98 9-4-803, as last amended by Laws of Utah 2003, Chapter 132
99 23-14-13, as last amended by Laws of Utah 1995, Chapter 211
100 23-14-14.1, as enacted by Laws of Utah 2003, Chapter 162
101 26-18a-3, as last amended by Laws of Utah 1997, Chapter 1
102 26-18a-4, as last amended by Laws of Utah 1997, Chapter 1
103 26-48-102, as enacted by Laws of Utah 2006, Chapter 280
104 31A-32a-101, as enacted by Laws of Utah 1999, Chapter 131
105 31A-32a-103, as enacted by Laws of Utah 1999, Chapter 131
106 31A-32a-104, as enacted by Laws of Utah 1999, Chapter 131
107 31A-32a-105, as enacted by Laws of Utah 1999, Chapter 131
108 31A-32a-106, as last amended by Laws of Utah 2001, Chapter 53
109 31A-32a-107, as enacted by Laws of Utah 1999, Chapter 131
110 48-2c-117, as enacted by Laws of Utah 2001, Chapter 260
111 53B-8a-106, as last amended by Laws of Utah 2007, Chapter 100
112 59-7-101, as last amended by Laws of Utah 2004, Chapter 54
113 59-7-105, as last amended by Laws of Utah 2007, Chapter 100
114 59-7-106, as last amended by Laws of Utah 2007, Chapter 100
115 59-7-116.5, as enacted by Laws of Utah 1995, Chapter 311
116 59-7-402, as last amended by Laws of Utah 2004, Chapter 54
117 59-7-614, as repealed and reenacted by Laws of Utah 2007, Chapter 288
118 59-10-103, as last amended by Laws of Utah 2006, Fourth Special Session, Chapter 2

119 59-10-104, as last amended by Laws of Utah 2007, Chapter 288
120 59-10-104.1, as last amended by Laws of Utah 2006, Fourth Special Session, Chapter 2
121 59-10-110, as renumbered and amended by Laws of Utah 1987, Chapter 2
122 59-10-114, as last amended by Laws of Utah 2007, Chapter 100
123 59-10-115, as last amended by Laws of Utah 2006, Fourth Special Session, Chapter 2
124 59-10-116, as last amended by Laws of Utah 2006, Fourth Special Session, Chapter 2
125 59-10-117, as last amended by Laws of Utah 2006, Fourth Special Session, Chapter 2
126 59-10-118, as last amended by Laws of Utah 1995, Chapter 311
127 59-10-119, as renumbered and amended by Laws of Utah 1987, Chapter 2
128 59-10-120, as renumbered and amended by Laws of Utah 1987, Chapter 2
129 59-10-121, as renumbered and amended by Laws of Utah 1987, Chapter 2
130 59-10-122, as renumbered and amended by Laws of Utah 1987, Chapter 2
131 59-10-123, as renumbered and amended by Laws of Utah 1987, Chapter 2
132 59-10-124, as renumbered and amended by Laws of Utah 1987, Chapter 2
133 59-10-125, as renumbered and amended by Laws of Utah 1987, Chapter 2
134 59-10-126, as last amended by Laws of Utah 1995, Chapter 311
135 59-10-201, as last amended by Laws of Utah 2007, Chapter 100
136 59-10-201.1, as last amended by Laws of Utah 2006, Chapter 223
137 59-10-202, as last amended by Laws of Utah 2007, Chapter 100
138 59-10-204, as last amended by Laws of Utah 2006, Chapter 223
139 59-10-205, as last amended by Laws of Utah 2006, Chapter 223
140 59-10-207, as last amended by Laws of Utah 2006, Chapter 223
141 59-10-209.1, as enacted by Laws of Utah 2006, Chapter 223
142 59-10-210, as last amended by Laws of Utah 2006, Chapter 223
143 59-10-507, as last amended by Laws of Utah 2003, Chapter 198
144 59-10-1014, as last amended by Laws of Utah 2007, Chapters 122 and 288
145 59-10-1106, as enacted by Laws of Utah 2007, Chapter 288
146 59-12-103, as last amended by Laws of Utah 2007, Chapters 9, 101, 126, 206, and 288
147 59-12-104, as last amended by Laws of Utah 2007, Chapters 76, 195, 214, 224, 288,
148 295, and 329
149 72-2-107, as last amended by Laws of Utah 2007, Chapter 126

150 72-2-124, as last amended by Laws of Utah 2006, Chapters 11 and 135
151 72-2-125, as enacted by Laws of Utah 2007, Chapter 206
152 ENACTS:
153 59-7-614.2, Utah Code Annotated 1953
154 59-10-1020, Utah Code Annotated 1953
155 59-10-1021, Utah Code Annotated 1953
156 59-10-1022, Utah Code Annotated 1953
157 59-10-1023, Utah Code Annotated 1953
158 59-10-1024, Utah Code Annotated 1953
159 59-10-1301, Utah Code Annotated 1953
160 59-10-1302, Utah Code Annotated 1953
161 59-10-1303, Utah Code Annotated 1953
162 59-10-1401, Utah Code Annotated 1953
163 59-10-1402, Utah Code Annotated 1953
164 RENUMBERS AND AMENDS:
165 59-10-1002.1, (Renumbered from 59-10-1016, as renumbered and amended by Laws of
166 Utah 2006, Chapter 223)
167 59-10-1002.2, (Renumbered from 59-10-1206.9, as enacted by Laws of Utah 2007,
168 Chapter 288)
169 59-10-1017, (Renumbered from 59-10-1206.1, as enacted by Laws of Utah 2007,
170 Chapter 100)
171 59-10-1018, (Renumbered from 59-10-1206.2, as enacted by Laws of Utah 2007,
172 Chapter 288)
173 59-10-1019, (Renumbered from 59-10-1206.3, as enacted by Laws of Utah 2007,
174 Chapter 288)
175 59-10-1304, (Renumbered from 59-10-551, as last amended by Laws of Utah 2006,
176 Chapter 280)
177 59-10-1305, (Renumbered from 59-10-530, as last amended by Laws of Utah 1997,
178 Chapter 12)
179 59-10-1306, (Renumbered from 59-10-530.5, as last amended by Laws of Utah 2003,
180 Chapter 132)

181 59-10-1307, (Renumbered from 59-10-549, as last amended by Laws of Utah 2005,
182 Chapter 208)
183 59-10-1308, (Renumbered from 59-10-550, as last amended by Laws of Utah 1997,
184 Chapters 1 and 12)
185 59-10-1309, (Renumbered from 59-10-550.1, as enacted by Laws of Utah 2003,
186 Chapter 162)
187 59-10-1310, (Renumbered from 59-10-550.2, as enacted by Laws of Utah 2006,
188 Chapter 280)
189 59-10-1311, (Renumbered from 59-10-547, as last amended by Laws of Utah 1998,
190 Chapter 269)
191 59-10-1312, (Renumbered from 59-10-548, as last amended by Laws of Utah 2002,
192 Chapters 107 and 256)
193 59-10-1403, (Renumbered from 59-10-301, as renumbered and amended by Laws of
194 Utah 1987, Chapter 2)
195 59-10-1404, (Renumbered from 59-10-302, as renumbered and amended by Laws of
196 Utah 1987, Chapter 2)
197 59-10-1405, (Renumbered from 59-10-303, as last amended by Laws of Utah 2006,
198 Fourth Special Session, Chapter 2)
199 REPEALS:
200 59-10-206, as last amended by Laws of Utah 1995, Chapter 345
201 59-10-801, as last amended by Laws of Utah 1997, Chapter 159
202 59-10-1201, as enacted by Laws of Utah 2006, Fourth Special Session, Chapter 2
203 59-10-1202, as last amended by Laws of Utah 2007, Chapters 100 and 288
204 59-10-1203, as last amended by Laws of Utah 2007, Chapters 100 and 288
205 59-10-1204, as enacted by Laws of Utah 2006, Fourth Special Session, Chapter 2
206 59-10-1205, as enacted by Laws of Utah 2006, Fourth Special Session, Chapter 2
207 59-10-1206, as enacted by Laws of Utah 2006, Fourth Special Session, Chapter 2
208 59-10-1207, as enacted by Laws of Utah 2006, Fourth Special Session, Chapter 2
209
210 Be it enacted by the Legislature of the state of Utah:
211 Section 1. Section 9-4-802 is amended to read:

212 9-4-802. Purposes of Homeless Coordinating Committee -- Uses of Pamela
213 Atkinson Homeless Trust Account.
214 (1) (a) The Homeless Coordinating Committee shall work to ensure that services
215 provided to the homeless by state agencies, local governments, and private organizations are
216 provided in a cost-effective manner.
217 (b) Programs funded by the committee shall emphasize emergency housing and
218 self-sufficiency, including placement in meaningful employment or occupational training
219 activities and, where needed, special services to meet the unique needs of the homeless who
220 have families with children, or who are mentally ill, disabled, or suffer from other serious
221 challenges to employment and self-sufficiency.
222 (c) The committee may also fund treatment programs to ameliorate the effects of
223 substance abuse or a disability.
224 (2) The committee members designated in Subsection 9-4-801 (2) shall:
225 (a) award contracts funded by the Pamela Atkinson Homeless Trust Account with the
226 advice and input of those designated in Subsection 9-4-801 (3);
227 (b) consider need, diversity of geographic location, coordination with or enhancement
228 of existing services, and the extensive use of volunteers; and
229 (c) give priority for funding to programs that serve the homeless who are mentally ill
230 and who are in families with children.
231 (3) (a) In any fiscal year, no more than 80% of the funds in the Pamela Atkinson
232 Homeless Trust Account may be allocated to organizations that provide services only in Salt
233 Lake, Davis, Weber, and Utah Counties.
234 (b) The committee may:
235 (i) expend up to 3% of its annual appropriation for administrative costs associated with
236 the allocation of funds from the Pamela Atkinson Homeless Trust Account, and up to 2% of its
237 annual appropriation for marketing the account and soliciting donations to the account; and
238 (ii) pay for the initial costs of the State Tax Commission in implementing Section
239 [ 59-10-530.5 ] 59-10-1306 from the account.
240 (4) (a) The committee may not expend, except as provided in Subsection (4)(b), an
241 amount equal to the greater of $50,000 or 20% of the amount donated to the Pamela Atkinson
242 Homeless Trust Account during fiscal year 1988-89.

243 (b) If there are decreases in contributions to the account, the committee may expend
244 funds held in reserve to provide program stability, but the committee shall reimburse the
245 amounts of those expenditures to the reserve fund.
246 (5) The committee shall make an annual report to the Economic Development and
247 Human Resources Appropriations Subcommittee regarding the programs and services funded
248 by contributions to the Pamela Atkinson Homeless Trust Account.
249 (6) The moneys in the Pamela Atkinson Homeless Trust Account shall be invested by
250 the state treasurer according to the procedures and requirements of Title 51, Chapter 7, State
251 Money Management Act, except that all interest or other earnings derived from the fund
252 moneys shall be deposited in the fund.
253 Section 2. Section 9-4-803 is amended to read:
254 9-4-803. Creation of Pamela Atkinson Homeless Trust Account.
255 (1) There is created a restricted account within the General Fund to be known as the
256 Pamela Atkinson Homeless Trust Account.
257 (2) Private contributions received under this section and Section [ 59-10-530.5 ]
258 59-10-1306 shall be deposited into the account to be used only for programs described in
259 Section 9-4-802 .
260 (3) Money shall be appropriated from the account to the State Homeless Coordinating
261 Committee in accordance with the Utah Budgetary Procedures Act.
262 (4) The State Homeless Coordinating Committee may accept transfers, grants, gifts,
263 bequests, or any money made available from any source to implement this part.
264 Section 3. Section 23-14-13 is amended to read:
265 23-14-13. Wildlife Resources Account.
266 (1) The Wildlife Resources Account [within the General Fund] is established within
267 the General Fund.
268 (2) The following monies shall be deposited into the Wildlife Resources Account:
269 (a) revenue from the sale of licenses, permits, tags, and certificates of registration
270 issued under this title or a rule or proclamation of the Wildlife Board, except as otherwise
271 provided by this title;
272 (b) revenue from the sale, lease, rental, or other granting of rights of real or personal
273 property acquired with revenue specified in Subsection (2)(a);

274 (c) revenue from fines and forfeitures for violations of this title or any rule,
275 proclamation, or order of the Wildlife Board, minus court costs not to exceed the schedule
276 adopted by the Judicial Council;
277 (d) funds appropriated from the General Fund by the Legislature pursuant to Section
278 23-19-39 ;
279 (e) other monies received by the division under any provision of this title, except as
280 otherwise provided by this title; [and]
281 (f) contributions made in accordance with Section 59-10-1305 ; and
282 [(f)] (g) interest, dividends, or other income earned on account monies.
283 (3) Monies in the Wildlife Resources Account shall be used for the administration of
284 this title.
285 Section 4. Section 23-14-14.1 is amended to read:
286 23-14-14.1. Wolf Depredation and Management Restricted Account -- Interest --
287 Use of contributions and interest.
288 (1) There is created within the General Fund the Wolf Depredation and Management
289 Restricted Account.
290 (2) The account shall be funded by contributions deposited into the Wolf Depredation
291 and Management Restricted Account in accordance with Section [ 59-10-550.1 ] 59-10-1309 .
292 (3) (a) The Wolf Depredation and Management Restricted Account shall earn interest.
293 (b) Interest earned on the Wolf Depredation and Management Restricted Account shall
294 be deposited into the Wolf Depredation and Management Restricted Account.
295 (4) (a) Subject to Subsection (4)(b), contributions and interest deposited into the Wolf
296 Depredation and Management Restricted Account shall be used by the Division of Wildlife
297 Resources for:
298 (i) payments for livestock depredation by wolves; or
299 (ii) wolf management.
300 (b) Contributions and interest deposited into the Wolf Depredation and Management
301 Restricted Account may be used for the purposes described in Subsection (4)(a) only to the
302 extent permitted by federal law.
303 Section 5. Section 26-18a-3 is amended to read:
304 26-18a-3. Purpose of committee.

305 (1) The committee shall work to:
306 (a) provide financial assistance for initial medical expenses of children who need organ
307 transplants;
308 (b) obtain the assistance of volunteer and public service organizations; and
309 (c) fund activities as the committee designates for the purpose of educating the public
310 about the need for organ donors.
311 (2) (a) The committee is responsible for awarding financial assistance funded by the
312 trust account.
313 (b) The financial assistance awarded by the committee under Subsection (1)(a) shall be
314 in the form of interest free loans. The committee may establish terms for repayment of the
315 loans, including a waiver of the requirement to repay any awards if, in the committee's
316 judgment, repayment of the loan would impose an undue financial burden on the recipient.
317 (c) In making financial awards under Subsection (1)(a), the committee shall consider:
318 (i) need;
319 (ii) coordination with or enhancement of existing services or financial assistance,
320 including availability of insurance or other state aid;
321 (iii) the success rate of the particular organ transplant procedure needed by the child;
322 and
323 (iv) the extent of the threat to the child's life without the organ transplant.
324 (3) The committee may only provide the assistance described in this section to children
325 who have resided in Utah, or whose legal guardians have resided in Utah for at least six months
326 prior to the date of assistance under this section.
327 (4) (a) The committee may expend up to 5% of its annual appropriation for
328 administrative costs associated with the allocation of funds from the trust account.
329 (b) The administrative costs shall be used for the costs associated with staffing the
330 committee and for State Tax Commission costs in implementing Section [ 59-10-550 ]
331 59-10-1308 .
332 (5) The committee shall make an annual report to the Health and Human Services
333 Appropriations Subcommittee regarding the programs and services funded by contributions to
334 the trust account.
335 Section 6. Section 26-18a-4 is amended to read:

336 26-18a-4. Creation of Kurt Oscarson Children's Organ Transplant Trust
337 Account.
338 (1) There is created a restricted account within the General Fund pursuant to Section
339 51-5-4 known as the Kurt Oscarson Children's Organ Transplant Trust Account. Private
340 contributions received under this section and Section [ 59-10-550 ] 59-10-1308 shall be
341 deposited into the trust account to be used only for the programs and purposes described in
342 Section 26-18a-3 .
343 (2) Money shall be appropriated from the trust account to the committee in accordance
344 with Title 63, Chapter 38, Budgetary Procedures Act.
345 (3) In addition to funds received under Section [ 59-10-550 ] 59-10-1308 , the committee
346 may accept transfers, grants, gifts, bequests, or any money made available from any source to
347 implement this chapter.
348 Section 7. Section 26-48-102 is amended to read:
349 26-48-102. Cat and Dog Community Spay and Neuter Program Restricted
350 Account -- Interest -- Use of contributions and interest.
351 (1) There is created within the General Fund the Cat and Dog Community Spay and
352 Neuter Program Restricted Account.
353 (2) The account shall be funded by contributions deposited into the Cat and Dog
354 Community Spay and Neuter Program Restricted Account in accordance with Section
355 [ 59-10-550.2 ] 59-10-1310 .
356 (3) (a) The Cat and Dog Community Spay and Neuter Program Restricted Account
357 shall earn interest.
358 (b) Interest earned on the Cat and Dog Community Spay and Neuter Program
359 Restricted Account shall be deposited into the Cat and Dog Community Spay and Neuter
360 Program Restricted Account.
361 (4) The department shall distribute contributions and interest deposited into the Cat and
362 Dog Community Spay and Neuter Program Restricted Account to one or more organizations
363 that:
364 (a) are exempt from federal income taxation under Section 501(c)(3), Internal Revenue
365 Code;
366 (b) operate a mobile spay and neuter clinic for cats and dogs;

367 (c) provide annual spay and neuter services at the mobile spay and neuter clinic
368 described in Subsection (4)(b):
369 (i) to one or more communities in at least 20 counties in the state; and
370 (ii) by veterinarians who are licensed by Title 58, Chapter 28, Veterinary Practice Act;
371 and
372 (d) (i) spay and neuter cats and dogs owned by persons having low incomes; and
373 (ii) have established written guidelines for determining what constitutes a person
374 having a low income in accordance with any rules made by the department as authorized by
375 Subsection (5)(c).
376 (5) (a) An organization described in Subsection (4) may apply to the department to
377 receive a distribution in accordance with Subsection (4).
378 (b) An organization that receives a distribution from the department in accordance with
379 Subsection (4):
380 (i) shall expend the distribution only to spay or neuter dogs and cats:
381 (A) owned by persons having low incomes;
382 (B) by veterinarians who are licensed by Title 58, Chapter 28, Veterinary Practice Act;
383 (C) through a statewide voucher program; and
384 (D) at a location that:
385 (I) is not a mobile spay and neuter clinic; and
386 (II) does not receive any funding from a governmental entity; and
387 (ii) may not expend the distribution for any administrative cost relating to an
388 expenditure authorized by Subsection (5)(b)(i).
389 (c) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
390 department may make rules:
391 (i) providing procedures and requirements for an organization to apply to the
392 department to receive a distribution in accordance with Subsection (4); and
393 (ii) to define what constitutes a person having a low income.
394 Section 8. Section 31A-32a-101 is amended to read:
395 31A-32a-101. Title and scope.
396 (1) This chapter is known as the "Medical Care Savings Account Act."
397 (2) (a) This chapter applies only to a medical care savings [accounts] account

398 established for the purpose of seeking a tax [deduction] credit under Section [ 59-10-114 ]
399 59-10-1021 .
400 (b) This chapter does not apply to a medical care savings [accounts that will not be
401 subject to tax deductions under Section 59-10-114 ] account with respect to which a tax credit is
402 not claimed under Section 59-10-1021 .
403 Section 9. Section 31A-32a-103 is amended to read:
404 31A-32a-103. Establishing medical care savings accounts.
405 [(1) For tax years beginning 1995, both of the following apply:]
406 (1) For a taxable year beginning on or after January 1, 1995:
407 (a) an employer, except as otherwise provided by contract or a collective bargaining
408 agreement, may offer a medical care savings account program to the employer's employees;
409 [and] or
410 (b) a resident individual may establish a medical care savings account program for the
411 individual or for the individual's dependents.
412 (2) (a) A contribution into an account made by an employer on behalf of an employee,
413 or made by an individual account holder may not exceed the greater of:
414 [(a)] (i) $2,000 in any [tax] taxable year; or
415 (ii) an amount of money equal to the sum of all eligible medical expenses paid by the
416 employee or account holder [in] for that [tax] taxable year on behalf of the employee, account
417 holder, or the employee's or account holder's spouse or dependents.
418 (b) For purposes of Subsection (2)(a)(ii), eligible medical expenses [as defined in
419 Subsection 31A-32a-102 (5),] are limited to expenses in [that tax year which] the taxable year
420 that an insurance carrier has applied to the employee's or account holder's deductible.
421 (3) An employer that offers a medical care savings account program shall, before
422 making any contributions:
423 (a) inform all employees in writing of the fact that these contributions may not be
424 deductible under the federal tax laws; and
425 (b) obtain from the employee a written election to participate in the medical care
426 savings account program.
427 (4) Except as provided in Sections 31A-32a-105 and 59-10-114 , principal contributed
428 to and interest earned on a medical care savings account and money reimbursed to an employee

429 or account holder for eligible medical expenses are exempt from taxation.
430 (5) (a) An employer may select a single account administrator for all of the employer's
431 employee's medical care savings accounts.
432 (b) If a single account administrator is not selected, an employer may contribute
433 directly to the account holder's individual medical care savings account.
434 Section 10. Section 31A-32a-104 is amended to read:
435 31A-32a-104. Administration of medical care savings account.
436 (1) An account administrator shall administer the medical care savings account from
437 which the payment of claims is made and has a fiduciary duty to the person for whose benefit
438 the account administrator administers an account.
439 (2) (a) Except as provided in Subsection 31A-32a-105 (1), the account administrator
440 shall use the funds held in a medical care savings account solely for the purpose of paying or
441 reimbursing the employee or account holder for eligible medical expenses of the employee or
442 account holder or of the employee's or account holder's dependents.
443 (b) The commissioner shall adopt rules concerning the coordination of benefits
444 between a medical care savings account and medical expenses payable from automobile
445 insurance policies, workers' compensation insurance policies, or other health care insurance
446 policies or contracts.
447 (3) The employee or account holder may submit documentation of eligible medical
448 expenses paid by the employee or account holder in the [tax] taxable year to the account
449 administrator, and the account administrator shall reimburse the employee or account holder
450 from the employee's or account holder's account for eligible medical expenses.
451 (4) If an employer makes contributions to a medical care savings account program on a
452 periodic installment basis, the employer may advance to an employee an amount necessary to
453 cover eligible medical expenses incurred that exceed the amount in the employee's medical
454 care savings account at the time the expense is incurred if the employee agrees to repay the
455 advance.
456 Section 11. Section 31A-32a-105 is amended to read:
457 31A-32a-105. Withdrawals -- Termination -- Transfers.
458 (1) Subject to Subsection (3), if the employee or account holder withdraws money for
459 any purpose other than a medical expense at any time in which the balance in the account is

460 below $4,000 [all of the following apply]:
461 (a) the amount of the withdrawal [is income for the purposes of Title 59, Chapter 10,
462 Individual Income Tax Act] shall be added to adjusted gross income in accordance with
463 Section 59-10-114 ; and
464 (b) the administrator shall withhold from the amount of the withdrawal, and on behalf
465 of the employee or account holder shall pay a penalty to the State Tax Commission equal to
466 10% of the amount of the withdrawal.
467 (2) If an employee or account holder withdraws money from the employee's or account
468 holder's medical care savings account for any purpose other than a medical expense, but the
469 withdrawal occurs when the balance in the medical care savings account is over $4,000, and
470 the withdrawal will not result in the account balance dropping below $4,000, the amount of the
471 withdrawal:
472 (a) is not subject to the penalties described in Subsection (1)(b); and
473 [(b) is subject to taxation as provided in Subsection (1)(a).]
474 (b) shall be added to adjusted gross income in accordance with Section 59-10-114 .
475 (3) The amount of a disbursement of any assets of a medical care savings account
476 pursuant to a filing for protection under [Title 11 of the United States Code,] 11 U.S.C. Sec.
477 101 to 1330, by an employee, account holder, or person for whose benefit the account was
478 established:
479 (a) is not considered a withdrawal for purposes of this section; and
480 [(b) is subject to taxation under Title 59, Chapter 10, Individual Income Tax Act.]
481 (b) shall be added to adjusted gross income in accordance with Section 59-10-114 .
482 (4) (a) Upon the death of the employee or account holder, the account administrator
483 shall distribute the principal and accumulated interest of the medical care savings account to
484 the estate of the employee or account holder.
485 (b) A distribution under this Subsection (4) is not subject to the penalties described in
486 Subsection (1)(b).
487 (5) (a) If an employee is no longer employed by an employer that participates in a
488 medical care savings account program, and if the employee's account is administered by the
489 employer's account administrator, the money in the medical care savings account may be used
490 for the benefit of the employee or the employee's dependents in accordance with this chapter,

491 and [remains exempt from taxation] may not be added to adjusted gross income under Section
492 59-10-114 if the employee, not more than 60 days after the employee's final day of
493 employment:
494 (i) transfers the account to a new account administrator; or
495 (ii) (A) requests in writing to the former employer's account administrator that the
496 account remain with that administrator; and
497 (B) the account administrator agrees to retain the account.
498 (b) Not more than 30 days after the expiration of the 60 days described in Subsection
499 (5)(a), if an account administrator has not accepted the former employee's account, the
500 employer shall mail a check to the former employee at the employee's last-known address equal
501 to the amount in the account on that day.
502 (c) The amount mailed to the employee [is subject to taxation pursuant to Subsection
503 (1)(a)] under Subsection (5)(b) shall be added to adjusted gross income in accordance with
504 Section 59-10-114 , but is not subject to the penalties under Subsection (1)(b).
505 (d) If an employee becomes employed with a different employer that participates in a
506 medical care savings account program, the employee may transfer the employee's medical care
507 savings account to that new employer's account administrator.
508 (e) If an account holder becomes an employee of an employer that participates in a
509 medical care savings account program, the account holder may transfer the account holder's
510 account to the employer's account administrator.
511 Section 12. Section 31A-32a-106 is amended to read:
512 31A-32a-106. Regulation of account administrators -- Administration of addition
513 to adjusted gross income and tax credit -- Rulemaking authority.
514 (1) The department shall regulate account administrators and may adopt rules
515 necessary to administer this chapter.
516 (2) The State Tax Commission may adopt rules necessary to monitor and implement
517 the [tax deductions established by this chapter and Section 59-10-114 .]:
518 (a) amounts required to be added to adjusted gross income in accordance with Sections
519 31A-32a-105 and 59-10-114 ; or
520 (b) amount claimed as a tax credit in accordance with Section 59-10-1021 .
521 Section 13. Section 31A-32a-107 is amended to read:

522 31A-32a-107. Penalties for noncompliance with tax provisions.
523 (1) An account administrator who fails to comply with [the statutes and rules
524 governing the tax deduction established by this chapter and Section 59-10-114 ] a provision
525 described in Subsection (2) is subject to:
526 [(1)] (a) the civil penalties provided in Section 59-1-401 ; and
527 [(2)] (b) interest at the rate and in the manner provided in Section 59-1-402 .
528 (2) The following provisions apply to Subsection (1):
529 (a) a provision of this chapter relating to:
530 (i) an addition to income made in accordance with Section 59-10-114 ; or
531 (ii) a tax credit allowed by Section 59-10-1021 ; or
532 (b) a provision of Title 59, Chapter 10, Individual Income Tax Act, relating to:
533 (i) an addition to income made in accordance with Section 59-10-114 ; or
534 (ii) a tax credit allowed by Section 59-10-1021 .
535 Section 14. Section 48-2c-117 is amended to read:
536 48-2c-117. Taxation of limited liability companies.
537 A company established under this chapter or a foreign company transacting business in
538 this state shall be taxed as provided in [Section 59-10-801 ] Subsection 59-10-1403 (4).
539 Section 15. Section 53B-8a-106 is amended to read:
540 53B-8a-106. Account agreements.
541 The Utah Educational Savings Plan Trust may enter into account agreements with
542 account owners on behalf of beneficiaries under the following terms and agreements:
543 (1) (a) An account agreement may require an account owner to agree to invest a
544 specific amount of money in the Utah Educational Savings Plan Trust for a specific period of
545 time for the benefit of a specific beneficiary, not to exceed an amount determined by the
546 program administrator.
547 (b) Account agreements may be amended to provide for adjusted levels of payments
548 based upon changed circumstances or changes in educational plans.
549 (c) An account owner may make additional optional payments as long as the total
550 payments for a specific beneficiary do not exceed the total estimated higher education costs as
551 determined by the program administrator.
552 (d) Subject to Subsection (1)(f), the maximum amount of a qualified investment that a

553 corporation that is an account owner may subtract from unadjusted income for a taxable year in
554 accordance with Title 59, Chapter 7, Corporate Franchise and Income Taxes, is [$1,560]
555 $1,650 for each individual beneficiary for the taxable year beginning on or after January 1,
556 [2006] 2008, but beginning on or before December 31, [2006] 2008.
557 (e) Subject to Subsection (1)(f), the maximum amount of a qualified investment that
558 may be [subtracted from federal taxable income of a resident or nonresident individual for a
559 taxable year in accordance with Section 59-10-114 , a resident or nonresident estate or trust for
560 a taxable year in accordance with Section 59-10-202 , or] used as the basis for claiming a tax
561 credit [for a taxable year by a resident or nonresident individual] in accordance with Section
562 [ 59-10-1206.1 ] 59-10-1017 , is:
563 (i) for a resident or nonresident estate or trust that is an account owner, [$1,560] $1,650
564 for each individual beneficiary for the taxable year beginning on or after January 1, [2006]
565 2008, but beginning on or before December 31, [2006] 2008;
566 (ii) for a resident or nonresident individual that is an account owner, other than a
567 husband and wife who are account owners and file a single return jointly under Title 59,
568 Chapter 10, Individual Income Tax Act, [$1,560] $1,650 for each individual beneficiary for the
569 taxable year beginning on or after January 1, [2006] 2008, but beginning on or before
570 December 31, [2006] 2008; or
571 (iii) for a husband and wife who are account owners and file a single return jointly
572 under Title 59, Chapter 10, Individual Income Tax Act, [$3,120] $3,300 for each individual
573 beneficiary:
574 (A) for the taxable year beginning on or after January 1, [2006] 2008, but beginning on
575 or before December 31, [2006] 2008; and
576 (B) regardless of whether the Utah Educational Savings Plan Trust has entered into:
577 (I) a separate account agreement with each spouse; or
578 (II) a single account agreement with both spouses jointly.
579 (f) (i) For taxable years beginning on or after January 1, [2007] 2009, the program
580 administrator shall increase or decrease the maximum amount of a qualified investment
581 described in Subsections (1)(d) and (1)(e)(i) and (ii), by a percentage equal to the percentage
582 difference between the consumer price index for the preceding calendar year and the consumer
583 price index for the calendar year [2005] 2007.

584 (ii) After making an increase or decrease required by Subsection (1)(f)(i), the program
585 administrator shall:
586 (A) round the maximum amount of the qualified investments described in Subsections
587 (1)(d) and (1)(e)(i) and (ii) increased or decreased under Subsection (1)(f)(i) to the nearest ten
588 dollar increment; and
589 (B) increase or decrease the maximum amount of the qualified investment described in
590 Subsection (1)(e)(iii) so that the maximum amount of the qualified investment described in
591 Subsection (1)(e)(iii) is equal to the product of:
592 (I) the maximum amount of the qualified investment described in Subsection (1)(e)(ii)
593 as rounded under Subsection (1)(f)(ii)(A); and
594 (II) two.
595 (iii) For purposes of Subsections (1)(f)(i) and (ii), the program administrator shall
596 calculate the consumer price index as provided in Sections 1(f)(4) and 1(f)(5), Internal Revenue
597 Code.
598 (2) (a) (i) Beneficiaries designated in account agreements must be designated after
599 birth and before age 19 for an account owner to:
600 (A) subtract a qualified investment from income under[:(I)] Title 59, Chapter 7,
601 Corporate Franchise and Income Taxes; or
602 [(II) Section 59-10-114 ; or]
603 [(III) Section 59-10-202 ; or]
604 (B) use a qualified investment as the basis for claiming a tax credit in accordance with
605 Section [ 59-10-1206.1 ] 59-10-1017 .
606 (ii) If the beneficiary is designated after birth and before age 19, the payment of
607 benefits provided under the account agreement must begin not later than the beneficiary's 27th
608 birthday.
609 (b) (i) Account owners may designate [beneficiaries] a beneficiary age 19 or older, but
610 investments for [those beneficiaries] that beneficiary are not eligible [for subtraction from
611 federal taxable income.] to be:
612 (A) subtracted from income under Title 59, Chapter 7, Corporate Franchise and Income
613 Taxes; or
614 (B) used as the basis for claiming a tax credit in accordance with Section 59-10-1017 .

615 (ii) If a beneficiary age 19 or older is designated, the payment of benefits provided
616 under the account agreement must begin not later than ten years from the account agreement
617 date.
618 (3) Each account agreement shall state clearly that there are no guarantees regarding
619 moneys in the Utah Educational Savings Plan Trust as to the return of principal and that losses
620 could occur.
621 (4) Each account agreement shall provide that:
622 (a) [no] a contributor to, or designated beneficiary under, an account agreement may
623 not direct the investment of any contributions or earnings on contributions;
624 (b) [no] any part of the money in any account may not be used as security for a loan;
625 and
626 (c) [no] an account owner may not borrow from the Utah Educational Savings Plan
627 Trust.
628 (5) The execution of an account agreement by the trust may not guarantee in any way
629 that higher education costs will be equal to projections and estimates provided by the Utah
630 Educational Savings Plan Trust or that the beneficiary named in any participation agreement
631 will:
632 (a) be admitted to an institution of higher education;
633 (b) if admitted, be determined a resident for tuition purposes by the institution of
634 higher education, unless the account agreement is vested;
635 (c) be allowed to continue attendance at the institution of higher education following
636 admission; or
637 (d) graduate from the institution of higher education.
638 (6) [Beneficiaries] A beneficiary may be changed as permitted by the rules and
639 regulations of the board upon written request of the account owner prior to the date of
640 admission of any beneficiary under an account agreement by an institution of higher education
641 so long as the substitute beneficiary is eligible for participation.
642 (7) [Account agreements] An account agreement may be freely amended throughout
643 [their terms] the term of the account agreement in order to enable [account owners] an account
644 owner to increase or decrease the level of participation, change the designation of beneficiaries,
645 and carry out similar matters as authorized by rule.

646 (8) Each account agreement shall provide that:
647 (a) the account agreement may be canceled upon the terms and conditions, and upon
648 payment of the fees and costs set forth and contained in the board's rules and regulations; and
649 (b) the program administrator may amend the agreement unilaterally and retroactively,
650 if necessary, to maintain the Utah Educational Savings Plan Trust as a qualified tuition
651 program under Section 529, Internal Revenue Code.
652 Section 16. Section 59-7-101 is amended to read:
653 59-7-101. Definitions.
654 As used in this chapter:
655 (1) "Adjusted income" means unadjusted income as modified by Sections 59-7-105
656 and 59-7-106 .
657 (2) (a) "Affiliated group" means one or more chains of corporations that are connected
658 through stock ownership with a common parent corporation that meet the following
659 requirements:
660 (i) at least 80% of the stock of each of the corporations in the group, excluding the
661 common parent corporation, is owned by one or more of the other corporations in the group;
662 and
663 (ii) the common parent directly owns at least 80% of the stock of at least one of the
664 corporations in the group.
665 (b) "Affiliated group" does not include corporations that are qualified to do business
666 but are not otherwise doing business in this state.
667 (c) For purposes of this Subsection (2), "stock" does not include nonvoting stock which
668 is limited and preferred as to dividends.
669 (3) "Apportionable income" means adjusted income less nonbusiness income net of
670 related expenses, to the extent included in adjusted income.
671 (4) "Apportioned income" means apportionable income multiplied by the
672 apportionment fraction as determined in Section 59-7-311 .
673 (5) "Business income" is as defined in Section 59-7-302 .
674 (6) (a) "Captive real estate investment trust" means a real estate investment trust if:
675 (i) the shares or beneficial interests of the real estate investment trust are not regularly
676 traded on an established securities market; and

677 (ii) more than 50% of the voting power or value of the shares or beneficial interests of
678 the real estate investment trust are directly, indirectly, or constructively:
679 (A) owned by a controlling entity of the real estate investment trust; or
680 (B) controlled by a controlling entity of the real estate investment trust.
681 (b) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
682 commission may make rules defining "established securities market."
683 (7) (a) "Controlling entity of a captive real estate investment trust" means an entity
684 that:
685 (i) is treated as an association taxable as a corporation under the Internal Revenue
686 Code;
687 (ii) is not exempt from federal income taxation under Section 501(a), Internal Revenue
688 Code; and
689 (iii) directly, indirectly, or constructively holds more than 50% of:
690 (A) the voting power of a captive real estate investment trust; or
691 (B) the value of the shares or beneficial interests of a captive real estate investment
692 trust.
693 (b) "Controlling entity of a captive real estate investment trust" does not include:
694 (i) a real estate investment trust, except for a captive real estate investment trust;
695 (ii) a qualified real estate investment subsidiary described in Section 856(i), Internal
696 Revenue Code, except for a qualified real estate investment trust subsidiary of a captive real
697 estate investment trust; or
698 (iii) a foreign real estate investment trust.
699 (c) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
700 commission may make rules defining "established securities market."
701 [(7)] (8) (a) "Common ownership" means the direct or indirect control or ownership of
702 more than 50% of the outstanding voting stock of:
703 (i) a parent-subsidiary controlled group as defined in Section 1563, Internal Revenue
704 Code, except that 50% shall be substituted for 80%;
705 (ii) a brother-sister controlled group as defined in Section 1563, Internal Revenue
706 Code, except that 50% shall be substituted for 80%; or
707 (iii) three or more corporations each of which is a member of a group of corporations

708 described in Subsection (2)(a)(i) or (2)(a)(ii), and one of which is:
709 (A) a common parent corporation included in a group of corporations described in
710 Subsection (2)(a)(i); and
711 (B) included in a group of corporations described in Subsection (2)(a)(ii).
712 (b) Ownership of outstanding voting stock shall be determined by Section 1563,
713 Internal Revenue Code.
714 [(6)] (9) "Corporate return" or "return" includes a combined report.
715 [(8)] (10) "Corporation" includes:
716 (a) entities defined as corporations under Sections 7701(a) and 7704, Internal Revenue
717 Code; and
718 (b) other organizations that are taxed as corporations for federal income tax purposes
719 under the Internal Revenue Code.
720 [(9)] (11) "Dividend" means any distribution, including money or other type of
721 property, made by a corporation to its shareholders out of its earnings or profits accumulated
722 after December 31, 1930.
723 [(10)] (12) (a) "Doing business" includes any transaction in the course of its business
724 by a domestic corporation, or by a foreign corporation qualified to do or doing intrastate
725 business in this state.
726 (b) Except as provided in Subsection 59-7-102 (2), "doing business" includes:
727 (i) the right to do business through incorporation or qualification;
728 (ii) the owning, renting, or leasing of real or personal property within this state; and
729 (iii) the participation in joint ventures, working and operating agreements, the
730 performance of which takes place in this state.
731 [(11)] (13) "Domestic corporation" means a corporation that is incorporated or
732 organized under the laws of this state.
733 [(12)] (14) (a) "Farmers' cooperative" means an association, corporation, or other
734 organization that is:
735 (i) (A) an association, corporation, or other organization of:
736 (I) farmers; or
737 (II) fruit growers; or
738 (B) an association, corporation, or other organization that is similar to an association,

739 corporation, or organization described in Subsection [(12)] (14)(a)(i)(A); and
740 (ii) organized and operated on a cooperative basis to:
741 (A) (I) market the products of members of the cooperative or the products of other
742 producers; and
743 (II) return to the members of the cooperative or other producers the proceeds of sales
744 less necessary marketing expenses on the basis of the quantity of the products of a member or
745 producer or the value of the products of a member or producer; or
746 (B) (I) purchase supplies and equipment for the use of members of the cooperative or
747 other persons; and
748 (II) turn over the supplies and equipment described in Subsection [(12)]
749 (14)(a)(ii)(B)(I) at actual costs plus necessary expenses to the members of the cooperative or
750 other persons.
751 (b) (i) Subject to Subsection [(12)] (14)(b)(ii), for purposes of this Subsection [(12)]
752 (14), the commission by rule, made in accordance with Title 63, Chapter 46a, Utah
753 Administrative Rulemaking Act, shall define:
754 (A) the terms:
755 (I) "member"; and
756 (II) "producer"; and
757 (B) what constitutes an association, corporation, or other organization that is similar to
758 an association, corporation, or organization described in Subsection [(12)] (14)(a)(i)(A).
759 (ii) The rules made under this Subsection [(12)] (14)(b) shall be consistent with the
760 filing requirements under federal law for a farmers' cooperative.
761 [(13)] (15) "Foreign corporation" means a corporation that is not incorporated or
762 organized under the laws of this state.
763 [(14)] (16) (a) "Foreign operating company" means a corporation that:
764 (i) is incorporated in the United States; and
765 (ii) 80% or more of whose business activity, as determined under Section 59-7-401 , is
766 conducted outside the United States.
767 (b) "Foreign operating company" does not include a corporation that qualifies for the
768 Puerto Rico and Possession Tax Credit as provided in Section 936, Internal Revenue Code.
769 (17) (a) "Foreign real estate investment trust" means:

770 (i) a business entity organized outside the laws of the United States if:
771 (A) at least 75% of the business entity's total asset value at the close of the business
772 entity's taxable year is represented by:
773 (I) real estate assets, as defined in Section 856(c)(5)(B), Internal Revenue Code;
774 (II) cash or cash equivalents; or
775 (III) one or more securities issued or guaranteed by the United States;
776 (B) the business entity is:
777 (I) not subject to income taxation:
778 (Aa) on amounts distributed to the business entity's beneficial owners; and
779 (Bb) in the jurisdiction in which the business entity is organized; or
780 (II) exempt from income taxation on an entity level in the jurisdiction in which the
781 business entity is organized;
782 (C) the business entity distributes at least 85% of the business entity's taxable income,
783 as computed in the jurisdiction in which the business entity is organized, to the holders of the
784 business entity's:
785 (I) shares or beneficial interests; and
786 (II) on an annual basis;
787 (D) (I) not more than 10% of the following is held directly, indirectly, or constructively
788 by a single person:
789 (Aa) the voting power of the business entity; or
790 (Bb) the value of the shares or beneficial interests of the business entity; or
791 (II) the shares of the business entity are regularly traded on an established securities
792 market; and
793 (E) the business entity is organized in a country that has a tax treaty with the United
794 States; or
795 (ii) a listed Australian property trust.
796 (b) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
797 commission may make rules defining:
798 (i) "cash or cash equivalents";
799 (ii) "established securities market"; or
800 (iii) "listed Australian property trust."

801 [(15)] (18) "Income" includes losses.
802 [(16)] (19) "Internal Revenue Code" means Title 26 of the United States Code as
803 effective during the year in which Utah taxable income is determined.
804 [(17)] (20) "Nonbusiness income" is as defined in Section 59-7-302 .
805 [(18)] (21) "Nonresident shareholder" means any shareholder of an S corporation who
806 on the last day of the taxable year of the S corporation, is:
807 (a) an individual not domiciled in Utah; or
808 (b) a nonresident trust or nonresident estate, as defined in Section 59-10-103 .
809 (22) "Real estate investment trust" is as defined in Section 856, Internal Revenue Code.
810 [(19)] (23) "Related expenses" means:
811 (a) expenses directly attributable to nonbusiness income; and
812 (b) the portion of interest or other expense indirectly attributable to both nonbusiness
813 and business income which bears the same ratio to the aggregate amount of such interest or
814 other expense, determined without regard to this Subsection [(19)] (23), as the average amount
815 of the asset producing the nonbusiness income bears to the average amount of all assets of the
816 taxpayer within the taxable year.
817 [(20)] (24) "Resident shareholder" means any shareholder of an S corporation who is
818 not a nonresident shareholder.
819 [(22)] (25) "Safe harbor lease" means a lease that qualified as a safe harbor lease under
820 Section 168, Internal Revenue Code.
821 [(21)] (26) "S corporation" means an S corporation as defined in Section 1361, Internal
822 Revenue Code.
823 [(23)] (27) "State of the United States" includes any of the 50 states or the District of
824 Columbia [and "United States" includes the 50 states and the District of Columbia].
825 [(24)] (28) (a) "Taxable year" means the calendar year or the fiscal year ending during
826 such calendar year upon the basis of which the adjusted income is computed.
827 (b) In the case of a return made for a fractional part of a year under this chapter or
828 under rules prescribed by the commission, "taxable year" includes the period for which such
829 return is made.
830 [(25)] (29) "Taxpayer" means any corporation subject to the tax imposed by this
831 chapter.

832 [(26)] (30) "Threshold level of business activity" means business activity in the United
833 States equal to or greater than 20% of the corporation's total business activity as determined
834 under Section 59-7-401 .
835 [(27)] (31) "Unadjusted income" means federal taxable income as determined on a
836 separate return basis before intercompany eliminations as determined by the Internal Revenue
837 Code, before the net operating loss deduction and special deductions for dividends received.
838 [(28)] (32) (a) "Unitary group" means a group of corporations that:
839 (i) are related through common ownership; and
840 (ii) by a preponderance of the evidence as determined by a court of competent
841 jurisdiction or the commission, are economically interdependent with one another as
842 demonstrated by the following factors:
843 (A) centralized management;
844 (B) functional integration; and
845 (C) economies of scale.
846 (b) "Unitary group" includes a captive real estate investment trust.
847 [(b)] (c) "Unitary group" does not include an S [corporations] corporation.
848 (33) "United States" includes the 50 states and the District of Columbia.
849 [(29)] (34) "Utah net loss" means the current year Utah taxable income before Utah net
850 loss deduction, if determined to be less than zero.
851 [(30)] (35) "Utah net loss deduction" means the amount of Utah net losses from other
852 taxable years that may be carried back or carried forward to the current taxable year in
853 accordance with Section 59-7-110 .
854 [(31)] (36) (a) "Utah taxable income" means Utah taxable income before net loss
855 deduction less Utah net loss deduction.
856 (b) "Utah taxable income" includes income from tangible or intangible property located
857 or having situs in this state, regardless of whether carried on in intrastate, interstate, or foreign
858 commerce.
859 [(32)] (37) "Utah taxable income before net loss deduction" means apportioned income
860 plus nonbusiness income allocable to Utah net of related expenses.
861 [(33)] (38) (a) "Water's edge combined report" means a report combining the income
862 and activities of:

863 (i) all members of a unitary group that are:
864 (A) corporations organized or incorporated in the United States, including those
865 corporations qualifying for the Puerto Rico and Possession Tax Credit as provided in Section
866 936, Internal Revenue Code, in accordance with Subsection [(33)] (38)(b); and
867 (B) corporations organized or incorporated outside of the United States meeting the
868 threshold level of business activity; and
869 (ii) an affiliated group electing to file a water's edge combined report under Subsection
870 59-7-402 (2).
871 (b) There is a rebuttable presumption that a corporation which qualifies for the Puerto
872 Rico and Possession Tax Credit provided in Section 936, Internal Revenue Code, is part of a
873 unitary group.
874 [(34)] (39) "Worldwide combined report" means the combination of the income and
875 activities of all members of a unitary group irrespective of the country in which the
876 corporations are incorporated or conduct business activity.
877 Section 17. Section 59-7-105 is amended to read:
878 59-7-105. Additions to unadjusted income.
879 In computing adjusted income the following amounts shall be added to unadjusted
880 income:
881 (1) interest from bonds, notes, and other evidences of indebtedness issued by any state
882 of the United States, including any agency and instrumentality of a state of the United States;
883 (2) the amount of any deduction taken on a corporation's federal return for taxes paid
884 by a corporation:
885 (a) to Utah for taxes imposed by this chapter; and
886 (b) to another state of the United States, a foreign country, a United States possession,
887 or the Commonwealth of Puerto Rico for taxes imposed for the privilege of doing business, or
888 exercising its corporate franchise, including income, franchise, corporate stock and business
889 and occupation taxes;
890 (3) the safe harbor lease adjustment required under Subsections 59-7-111 (1)(a) and
891 (2)(a);
892 (4) capital losses that have been deducted on a Utah corporate return in previous years;
893 (5) any deduction on the federal return that has been previously deducted on the Utah

894 return;
895 (6) the amount of contributions claimed as a tax credit pursuant to Section 59-7-602 ;
896 (7) the amount of the deduction taken pursuant to Section 59-7-603 for sophisticated
897 technological equipment;
898 (8) charitable contributions, to the extent deducted on the federal return when
899 determining federal taxable income;
900 (9) the amount of gain or loss determined under Section 59-7-114 relating to a target
901 corporation under Section 338, Internal Revenue Code, unless such gain or loss has already
902 been included in the unadjusted income of the target corporation;
903 (10) the amount of gain or loss determined under Section 59-7-115 relating to
904 corporations treated for federal purposes as having disposed of its assets under Section 336(e),
905 Internal Revenue Code, unless such gain or loss has already been included in the unadjusted
906 income of the target corporation;
907 (11) adjustments to gains, losses, depreciation expense, amortization expense, and
908 similar items due to a difference between basis for federal purposes and basis as computed
909 under Section 59-7-107 ; [and]
910 (12) the amount withdrawn under Title 53B, Chapter 8a, Higher Education Savings
911 Incentive Program, from the account of a corporation that is an account owner as defined in
912 Section 53B-8a-102 , for the taxable year for which the amount is withdrawn, if that amount
913 withdrawn from the account of the corporation that is the account owner:
914 (a) is not expended for higher education costs as defined in Section 53B-8a-102 ; and
915 (b) is subtracted by the corporation:
916 (i) that is the account owner; and
917 (ii) in accordance with Subsection 59-7-106 (18)[.]; and
918 (13) the amount of the deduction for dividends paid, as defined in Section 561, Internal
919 Revenue Code, that is allowed under Section 857(b)(2)(B), Internal Revenue Code, in
920 computing the taxable income of a captive real estate investment trust, if that captive real estate
921 investment trust is subject to federal income taxation.
922 Section 18. Section 59-7-106 is amended to read:
923 59-7-106. Subtractions from unadjusted income.
924 In computing adjusted income the following amounts shall be subtracted from

925 unadjusted income:
926 (1) the foreign dividend gross-up included in gross income for federal income tax
927 purposes under Section 78, Internal Revenue Code;
928 (2) the net capital loss, as defined for federal purposes, if the taxpayer elects to deduct
929 the loss on the current Utah return. The deduction shall be made by claiming the deduction on
930 the current Utah return which shall be filed by the due date of the return, including extensions.
931 For the purposes of this Subsection (2) all capital losses in a given year must be:
932 (a) deducted in the year incurred; or
933 (b) carried forward as provided in Sections 1212(a)(1)(B) and (C), Internal Revenue
934 Code;
935 (3) the decrease in salary expense deduction for federal income tax purposes due to
936 claiming the federal jobs credit under Section 51, Internal Revenue Code;
937 (4) the decrease in qualified research and basic research expense deduction for federal
938 income tax purposes due to claiming the federal research and development credit under Section
939 41, Internal Revenue Code;
940 (5) the decrease in qualified clinical testing expense deduction for federal income tax
941 purposes due to claiming the federal orphan drug credit under Section 28, Internal Revenue
942 Code;
943 (6) any decrease in any expense deduction for federal income tax purposes due to
944 claiming any other federal credit;
945 (7) the safe harbor lease adjustment required under Subsections 59-7-111 (1)(b) and
946 (2)(b);
947 (8) any income on the federal corporate return that has been previously taxed by Utah;
948 (9) amounts included in federal taxable income that are due to refunds of taxes
949 imposed for the privilege of doing business, or exercising a corporate franchise, including
950 income, franchise, corporate stock and business and occupation taxes paid by the corporation to
951 Utah, another state of the United States, a foreign country, a United States possession, or the
952 Commonwealth of Puerto Rico to the extent that the taxes were added to unadjusted income
953 under Section 59-7-105 ;
954 (10) charitable contributions, to the extent allowed as a subtraction under Section
955 59-7-109 ;

956 (11) (a) 50% of the dividends deemed received or received from subsidiaries which are
957 members of the unitary group and are organized or incorporated outside of the United States
958 unless such subsidiaries are included in a combined report under Section 59-7-402 or 59-7-403 .
959 In arriving at the amount of the dividend exclusion, the taxpayer shall first deduct from the
960 dividends deemed received or received, the expense directly attributable to those dividends.
961 Interest expense attributable to excluded dividends shall be determined by multiplying interest
962 expense by a fraction, the numerator of which is the taxpayer's average investment in such
963 dividend paying subsidiaries, and the denominator of which is the taxpayer's average total
964 investment in assets;
965 (b) in determining income apportionable to this state, a portion of the factors of a
966 foreign subsidiary whose dividends are partially excluded under Subsection (11)(a) shall be
967 included in the combined report factors. The portion to be included shall be determined by
968 multiplying each factor of the foreign subsidiary by a fraction, but not to exceed 100%, the
969 numerator of which is the amount of the dividend paid by the foreign subsidiary which is
970 included in adjusted income, and the denominator of which is the current year earnings and
971 profits of the foreign subsidiary as determined under the Internal Revenue Code;
972 (12) (a) 50% of the adjusted income of a foreign operating company unless the
973 taxpayer has elected to file a worldwide combined report as provided in Section 59-7-403 . For
974 purposes of this Subsection (12), when calculating the adjusted income of a foreign operating
975 company, a foreign operating company may not deduct the subtractions allowable under this
976 Subsection (12) and Subsection (11);
977 (b) in determining income apportionable to this state, the factors for a foreign operating
978 company shall be included in the combined report factors in the same percentage its adjusted
979 income is included in the combined adjusted income;
980 (13) the amount of gain or loss which is included in unadjusted income but not
981 recognized for federal purposes on stock sold or exchanged by a member of a selling
982 consolidated group as defined in Section 338, Internal Revenue Code, if an election has been
983 made pursuant to Section 338(h)(10), Internal Revenue Code;
984 (14) the amount of gain or loss which is included in unadjusted income but not
985 recognized for federal purposes on stock sold, exchanged, or distributed by a corporation
986 pursuant to Section 336(e), Internal Revenue Code, if an election under Section 336(e), Internal

987 Revenue Code, has been made for federal purposes;
988 (15) (a) adjustments to gains, losses, depreciation expense, amortization expense, and
989 similar items due to a difference between basis for federal purposes and basis as computed
990 under Section 59-7-107 ; and
991 (b) if there has been a reduction in federal basis for a federal tax credit where there is
992 no corresponding Utah tax credit, the amount of the reduction in basis shall be allowed as an
993 expense in the year of the federal credit;
994 (16) any interest expense not deducted on the federal corporate return under Section
995 265(b) or 291(e), Internal Revenue Code;
996 (17) 100% of the dividends received from subsidiaries which are insurance companies
997 exempt from this chapter under Subsection 59-7-102 (1)(c) and are under "common ownership"
998 as defined by Subsection 59-7-101 [(7)](8); [and]
999 (18) subject to Subsection 59-7-105 (12), the amount of a qualified investment as
1000 defined in Section 53B-8a-102 that:
1001 (a) a corporation that is an account owner as defined in Section 53B-8a-102 makes
1002 during the taxable year;
1003 (b) the corporation described in Subsection (18)(a) does not deduct on a federal
1004 corporation income tax return; and
1005 (c) does not exceed the maximum amount of the qualified investment that may be
1006 subtracted from unadjusted income for a taxable year in accordance with Subsections
1007 53B-8a-106 (1)(d) and (f)[.]; and
1008 (19) for purposes of income included in a combined report under Part 4, Combined
1009 Reporting, the entire amount of the dividends a member of a unitary group receives or is
1010 considered to receive from a captive real estate investment trust.
1011 Section 19. Section 59-7-116.5 is amended to read:
1012 59-7-116.5. Real estate investment trusts.
1013 (1) A real estate investment trust[, as defined in Section 856, Internal Revenue Code,]
1014 that is not a captive real estate investment trust shall be taxed on the same income taxed for
1015 federal purposes under the Internal Revenue Code.
1016 (2) Any income taxable under this section shall be taxed at the same rate and in the
1017 same manner provided for in this chapter.

1018 Section 20. Section 59-7-402 is amended to read:
1019 59-7-402. Water's edge combined report.
1020 (1) Except as provided in Section 59-7-403 , if any corporation listed in Subsection
1021 59-7-101 [(33)](38)(a) is doing business in Utah, the unitary group shall file a water's edge
1022 combined report.
1023 (2) (a) A group of corporations that are not otherwise a unitary group may elect to file a
1024 water's edge combined report if each member of the group is:
1025 (i) doing business in Utah;
1026 (ii) part of the same affiliated group; and
1027 (iii) qualified, under Section 1501, Internal Revenue Code, to file a federal
1028 consolidated return.
1029 (b) Each corporation within the affiliated group that is doing business in Utah must
1030 consent to filing a combined report. If an affiliated group elects to file a combined report, each
1031 corporation within the affiliated group that is doing business in Utah must file a combined
1032 report.
1033 (c) Corporations that elect to file a water's edge combined report under this section may
1034 not thereafter elect to file a separate return without the consent of the commission.
1035 Section 21. Section 59-7-614 is amended to read:
1036 59-7-614. Renewable energy systems tax credit -- Definitions -- Limitations --
1037 State tax credit in addition to allowable federal credits -- Certification -- Rulemaking
1038 authority.
1039 (1) As used in this section:
1040 (a) "Active solar system":
1041 (i) means a system of equipment capable of collecting and converting incident solar
1042 radiation into thermal, mechanical, or electrical energy, and transferring these forms of energy
1043 by a separate apparatus to storage or to the point of use; and
1044 (ii) includes water heating, space heating or cooling, and electrical or mechanical
1045 energy generation.
1046 (b) "Biomass system" means any system of apparatus and equipment for use in
1047 converting material into biomass energy, as defined in Section 59-12-102 , and transporting that
1048 energy by separate apparatus to the point of use or storage.

1049 (c) "Business entity" means any sole proprietorship, estate, trust, partnership,
1050 association, corporation, cooperative, or other entity under which business is conducted or
1051 transacted.
1052 (d) "Commercial energy system" means any active solar, passive solar, geothermal
1053 electricity, direct-use geothermal, geothermal heat-pump system, wind, hydroenergy, or
1054 biomass system used to supply energy to a commercial unit or as a commercial enterprise.
1055 (e) "Commercial enterprise" means a business entity whose purpose is to produce
1056 electrical, mechanical, or thermal energy for sale from a commercial energy system.
1057 (f) (i) "Commercial unit" means any building or structure that a business entity uses to
1058 transact its business.
1059 (ii) Notwithstanding Subsection (1)(f)(i):
1060 (A) in the case of an active solar system used for agricultural water pumping or a wind
1061 system, each individual energy generating device shall be a commercial unit; and
1062 (B) if an energy system is the building or structure that a business entity uses to
1063 transact its business, a commercial unit is the complete energy system itself.
1064 (g) "Direct-use geothermal system" means a system of apparatus and equipment
1065 enabling the direct use of thermal energy, generally between 100 and 300 degrees Fahrenheit,
1066 that is contained in the earth to meet energy needs, including heating a building, an industrial
1067 process, and aquaculture.
1068 (h) "Geothermal electricity" means energy contained in heat that continuously flows
1069 outward from the earth that is used as a sole source of energy to produce electricity.
1070 (i) "Geothermal heat-pump system" means a system of apparatus and equipment
1071 enabling the use of thermal properties contained in the earth at temperatures well below 100
1072 degrees Fahrenheit to help meet heating and cooling needs of a structure.
1073 (j) "Hydroenergy system" means a system of apparatus and equipment capable of
1074 intercepting and converting kinetic water energy into electrical or mechanical energy and
1075 transferring this form of energy by separate apparatus to the point of use or storage.
1076 (k) "Individual taxpayer" means any person who is a taxpayer as defined in Section
1077 59-10-103 and an individual as defined in Section 59-10-103 .
1078 (l) "Passive solar system":
1079 (i) means a direct thermal system that utilizes the structure of a building and its

1080 operable components to provide for collection, storage, and distribution of heating or cooling
1081 during the appropriate times of the year by utilizing the climate resources available at the site;
1082 and
1083 (ii) includes those portions and components of a building that are expressly designed
1084 and required for the collection, storage, and distribution of solar energy.
1085 (m) "Residential energy system" means any active solar, passive solar, biomass,
1086 direct-use geothermal, geothermal heat-pump system, wind, or hydroenergy system used to
1087 supply energy to or for any residential unit.
1088 (n) "Residential unit" means any house, condominium, apartment, or similar dwelling
1089 unit that serves as a dwelling for a person, group of persons, or a family but does not include
1090 property subject to a fee under:
1091 (i) Section 59-2-404 ;
1092 (ii) Section 59-2-405 ;
1093 (iii) Section 59-2-405.1 ;
1094 (iv) Section 59-2-405.2 ; or
1095 (v) Section 59-2-405.3 .
1096 (o) "Utah Geological Survey" means the Utah Geological Survey established in Section
1097 63-73-5 .
1098 (p) "Wind system" means a system of apparatus and equipment capable of intercepting
1099 and converting wind energy into mechanical or electrical energy and transferring these forms of
1100 energy by a separate apparatus to the point of use, sale, or storage.
1101 (2) (a) (i) For taxable years beginning on or after January 1, 2007, a business entity that
1102 purchases and completes or participates in the financing of a residential energy system to
1103 supply all or part of the energy required for a residential unit owned or used by the business
1104 entity and situated in Utah is entitled to a nonrefundable tax credit as provided in this
1105 Subsection (2)(a).
1106 (ii) (A) A business entity is entitled to a tax credit equal to 25% of the reasonable costs
1107 of each residential energy system installed with respect to each residential unit it owns or uses,
1108 including installation costs, against any tax due under this chapter for the taxable year in which
1109 the energy system is completed and placed in service.
1110 (B) The total amount of each credit under this Subsection (2)(a) may not exceed $2,000

1111 per residential unit.
1112 (C) The credit under this Subsection (2)(a) is allowed for any residential energy system
1113 completed and placed in service on or after January 1, 2007.
1114 (iii) If a business entity sells a residential unit to an individual taxpayer before making
1115 a claim for the tax credit under this Subsection (2)(a), the business entity may:
1116 (A) assign its right to this tax credit to the individual taxpayer; and
1117 (B) if the business entity assigns its right to the tax credit to an individual taxpayer
1118 under Subsection (2)(a)(iii)(A), the individual taxpayer may claim the tax credit as if the
1119 individual taxpayer had completed or participated in the costs of the residential energy system
1120 under Section 59-10-1014 .
1121 (b) (i) For taxable years beginning on or after January 1, 2007, a business entity that
1122 purchases or participates in the financing of a commercial energy system situated in Utah is
1123 entitled to a refundable tax credit as provided in this Subsection (2)(b) if the commercial
1124 energy system does not use wind, geothermal electricity, or biomass equipment capable of
1125 producing a total of 660 or more kilowatts of electricity, and:
1126 (A) the commercial energy system supplies all or part of the energy required by
1127 commercial units owned or used by the business entity; or
1128 (B) the business entity sells all or part of the energy produced by the commercial
1129 energy system as a commercial enterprise.
1130 (ii) (A) A business entity is entitled to a tax credit of up to 10% of the reasonable costs
1131 of any commercial energy system installed, including installation costs, against any tax due
1132 under this chapter for the taxable year in which the commercial energy system is completed and
1133 placed in service.
1134 (B) Notwithstanding Subsection (2)(b)(ii)(A), the total amount of the credit under this
1135 Subsection (2)(b) may not exceed $50,000 per commercial unit.
1136 (C) The credit under this Subsection (2)(b) is allowed for any commercial energy
1137 system completed and placed in service on or after January 1, 2007.
1138 (iii) A business entity that leases a commercial energy system installed on a
1139 commercial unit is eligible for the tax credit under this Subsection (2)(b) if the lessee can
1140 confirm that the lessor irrevocably elects not to claim the credit.
1141 (iv) Only the principal recovery portion of the lease payments, which is the cost

1142 incurred by a business entity in acquiring a commercial energy system, excluding interest
1143 charges and maintenance expenses, is eligible for the tax credit under this Subsection (2)(b).
1144 (v) A business entity that leases a commercial energy system is eligible to use the tax
1145 credit under this Subsection (2)(b) for a period no greater than seven years from the initiation
1146 of the lease.
1147 (vi) A tax credit allowed by this Subsection (2)(b) may not be carried forward or
1148 carried back.
1149 (c) (i) For taxable years beginning on or after January 1, 2007, a business entity that
1150 owns a commercial energy system situated in Utah using wind, geothermal electricity, or
1151 biomass equipment capable of producing a total of 660 or more kilowatts of electricity is
1152 entitled to a refundable tax credit as provided in this Subsection (2)(c) if:
1153 (A) the commercial energy system supplies all or part of the energy required by
1154 commercial units owned or used by the business entity; or
1155 (B) the business entity sells all or part of the energy produced by the commercial
1156 energy system as a commercial enterprise.
1157 (ii) (A) A business entity is entitled to a tax credit under this section equal to the
1158 product of:
1159 (I) 0.35 cents; and
1160 (II) the kilowatt hours of electricity produced and either used or sold during the taxable
1161 year.
1162 (B) (I) The credit calculated under Subsection (2)(c)(ii)(A) may be claimed for
1163 production occurring during a period of 48 months beginning with the month in which the
1164 commercial energy system is placed in commercial service.
1165 (II) The credit allowed by this Subsection (2)(c) for each year may not be carried
1166 forward or carried back.
1167 (C) The credit under this Subsection (2)(c) is allowed for any commercial energy
1168 system completed and placed in service on or after January 1, 2007.
1169 (iii) A business entity that leases a commercial energy system installed on a
1170 commercial unit is eligible for the tax credit under this Subsection (2)(c) if the lessee can
1171 confirm that the lessor irrevocably elects not to claim the credit.
1172 (d) (i) A tax credit under Subsection (2)(a) or (b) may be claimed for the taxable year

1173 in which the energy system is completed and placed in service.
1174 (ii) Additional energy systems or parts of energy systems may be claimed for
1175 subsequent years.
1176 (iii) If the amount of a tax credit under Subsection (2)(a) exceeds a business entity's tax
1177 liability under this chapter for a taxable year, the amount of the credit exceeding the liability
1178 may be carried forward for a period which does not exceed the next four taxable years.
1179 (3) (a) [The] Except as provided in Subsection (3)(b), the tax credits provided for
1180 under Subsection (2) are in addition to any tax credits provided under the laws or rules and
1181 regulations of the United States.
1182 (b) A purchaser of one or more solar units that claims a tax credit under Section
1183 59-7-614.2 for the purchase of the one or more solar units may not claim a tax credit under this
1184 section for that purchase.
1185 [(b)] (c) (i) The Utah Geological Survey may set standards for residential and
1186 commercial energy systems claiming a credit under Subsections (2)(a) and (b) that cover the
1187 safety, reliability, efficiency, leasing, and technical feasibility of the systems to ensure that the
1188 systems eligible for the tax credit use the state's renewable and nonrenewable energy resources
1189 in an appropriate and economic manner.
1190 (ii) The Utah Geological Survey may set standards for residential and commercial
1191 energy systems that establish the reasonable costs of an energy system, as used in Subsections
1192 (2)(a)(ii)(A) and (2)(b)(ii)(A), as an amount per unit of energy production.
1193 (iii) A tax credit may not be taken under Subsection (2) until the Utah Geological
1194 Survey has certified that the energy system has been completely installed and is a viable system
1195 for saving or production of energy from renewable resources.
1196 [(c)] (d) The Utah Geological Survey and the commission may make rules in
1197 accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, that are
1198 necessary to implement this section.
1199 (4) (a) On or before October 1, 2012, and every five years thereafter, the Utah Tax
1200 Review Commission shall review each tax credit provided by this section and make
1201 recommendations to the Revenue and Taxation Interim Committee concerning whether the
1202 credit should be continued, modified, or repealed.
1203 (b) The Utah Tax Review Commission's report under Subsection (4)(a) shall include

1204 information concerning the cost of the credit, the purpose and effectiveness of the credit, and
1205 the state's benefit from the credit.
1206 Section 22. Section 59-7-614.2 is enacted to read:
1207 59-7-614.2. Nonrefundable tax credit for qualifying solar projects.
1208 (1) As used in this section:
1209 (a) "Active solar system" is as defined in Section 59-7-614 .
1210 (b) "Purchaser" means a taxpayer that purchases one or more solar units from a
1211 qualifying political subdivision.
1212 (c) "Qualifying political subdivision" means:
1213 (i) a city or town in this state;
1214 (ii) an interlocal entity created under Title 11, Chapter 13, Interlocal Cooperation Act;
1215 or
1216 (iii) a special service district created under Title 17A, Chapter 2, Part 13, Utah Special
1217 Service District Act.
1218 (d) "Qualifying solar project" means the portion of an active solar system:
1219 (i) that a qualifying political subdivision:
1220 (A) constructs;
1221 (B) controls; or
1222 (C) owns;
1223 (ii) with respect to which the qualifying political subdivision described in Subsection
1224 (1)(c)(i) sells one or more solar units; and
1225 (iii) that generates electrical output that is furnished:
1226 (A) to one or more residential units; or
1227 (B) for the benefit of one or more residential units.
1228 (e) "Residential unit" is as defined in Section 59-7-614 .
1229 (f) "Solar unit" means a portion of the electrical output:
1230 (i) of a qualifying solar project;
1231 (ii) that a qualifying political subdivision sells to a purchaser; and
1232 (iii) the purchase of which requires that the purchaser agree to bear a proportionate
1233 share of the expense of the qualifying solar project:
1234 (A) in accordance with a written agreement between the purchaser and the qualifying

1235 political subdivision;
1236 (B) in exchange for a credit on the purchaser's electrical bill; and
1237 (C) as determined by a formula established by the qualifying political subdivision.
1238 (2) Subject to Subsection (3), for taxable years beginning on or after January 1, 2008, a
1239 purchaser may claim a nonrefundable tax credit equal to the product of:
1240 (a) the amount the purchaser pays to purchase one or more solar units during the
1241 taxable year; and
1242 (b) 25%.
1243 (3) For a taxable year, a tax credit under this section may not exceed $2,000 on a
1244 return.
1245 (4) A purchaser may carry forward a tax credit under this section for a period that does
1246 not exceed the next four taxable years if:
1247 (a) the purchaser is allowed to claim a tax credit under this section for a taxable year;
1248 and
1249 (b) the amount of the tax credit exceeds the purchaser's tax liability under this chapter
1250 for that taxable year.
1251 (5) Subject to Section 59-7-614 , a tax credit under this section is in addition to any
1252 other tax credit allowed by this chapter.
1253 (6) (a) On or before October 1, 2012, and every five years after October 1, 2012, the
1254 Utah Tax Review Commission shall review the tax credit allowed by this section and make
1255 recommendations to the Revenue and Taxation Interim Committee concerning whether the tax
1256 credit should be continued, modified, or repealed.
1257 (b) The Utah Tax Review Commission's report under Subsection (6)(a) shall include
1258 information concerning the cost of the tax credit, the purpose and effectiveness of the tax
1259 credit, and the state's benefit from the tax credit.
1260 Section 23. Section 59-10-103 is amended to read:
1261 59-10-103. Definitions.
1262 (1) As used in this chapter:
1263 (a) "Adjusted gross income":
1264 (i) for a resident or nonresident individual, is as defined in Section 62, Internal
1265 Revenue Code; or

1266 (ii) for a resident or nonresident estate or trust, is as calculated in Section 67(e),
1267 Internal Revenue Code.
1268 [(b) "Adoption expenses" means:]
1269 [(i) any actual medical and hospital expenses of the mother of the adopted child which
1270 are incident to the child's birth;]
1271 [(ii) any welfare agency fees or costs;]
1272 [(iii) any child placement service fees or costs;]
1273 [(iv) any legal fees or costs; or]
1274 [(v) any other fees or costs relating to an adoption.]
1275 [(c) "Adult with a disability" means an individual who:]
1276 [(i) is 18 years of age or older;]
1277 [(ii) is eligible for services under Title 62A, Chapter 5, Services for People with
1278 Disabilities; and]
1279 [(iii) is not enrolled in:]
1280 [(A) an education program for students with disabilities that is authorized under
1281 Section 53A-15-301 ; or]
1282 [(B) a school established under Title 53A, Chapter 25, Schools for the Deaf and Blind.]
1283 [(d) (i) For purposes of Subsection 59-10-114 (2)(l), "capital gain transaction" means a
1284 transaction that results in a:]
1285 [(A) short-term capital gain; or]
1286 [(B) long-term capital gain.]
1287 [(ii) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act,
1288 the commission may by rule define the term "transaction."]
1289 [(e) "Commercial domicile" means the principal place from which the trade or business
1290 of a Utah small business corporation is directed or managed.]
1291 [(f)] (b) "Corporation" includes:
1292 (i) [associations] an association;
1293 (ii) a joint stock [companies] company; and
1294 (iii) an insurance [companies] company.
1295 [(g) "Dependent child with a disability" means an individual 21 years of age or younger
1296 who:]

1297 [(i) (A) is diagnosed by a school district representative under rules adopted by the State
1298 Board of Education as having a disability classified as:]
1299 [(I) autism;]
1300 [(II) deafness;]
1301 [(III) preschool developmental delay;]
1302 [(IV) dual sensory impairment;]
1303 [(V) hearing impairment;]
1304 [(VI) intellectual disability;]
1305 [(VII) multidisability;]
1306 [(VIII) orthopedic impairment;]
1307 [(IX) other health impairment;]
1308 [(X) traumatic brain injury; or]
1309 [(XI) visual impairment;]
1310 [(B) is not receiving residential services from:]
1311 [(I) the Division of Services for People with Disabilities created under Section
1312 62A-5-102 ; or]
1313 [(II) a school established under Title 53A, Chapter 25, Schools for the Deaf and Blind;
1314 and]
1315 [(C) is enrolled in:]
1316 [(I) an education program for students with disabilities that is authorized under Section
1317 53A-15-301 ; or]
1318 [(II) a school established under Title 53A, Chapter 25, Schools for the Deaf and Blind;
1319 or]
1320 [(ii) is identified under guidelines of the Department of Health as qualified for:]
1321 [(A) Early Intervention; or]
1322 [(B) Infant Development Services.]
1323 [(h)] (c) "Distributable net income" is as defined in Section 643, Internal Revenue
1324 Code.
1325 [(i)] (d) "Employee" is as defined in Section 59-10-401 .
1326 [(j)] (e) "Employer" is as defined in Section 59-10-401 .
1327 [(k)] (f) "Federal taxable income":

1328 (i) for a resident or nonresident individual, means taxable income as defined by Section
1329 63, Internal Revenue Code; or
1330 (ii) for a resident or nonresident estate or trust, is as calculated in Section 641(a) and
1331 (b), Internal Revenue Code.
1332 [(l)] (g) "Fiduciary" means:
1333 (i) a guardian;
1334 (ii) a trustee;
1335 (iii) an executor;
1336 (iv) an administrator;
1337 (v) a receiver;
1338 (vi) a conservator; or
1339 (vii) any person acting in any fiduciary capacity for any individual.
1340 (h) "Guaranteed annuity interest" is as defined in 26 C.F.R. Sec. 1.170A-6(c)(2).
1341 [(m)] (i) "Homesteaded land diminished from the Uintah and Ouray Reservation"
1342 means the homesteaded land that was held to have been diminished from the Uintah and Ouray
1343 Reservation in Hagen v. Utah, 510 U.S. 399 (1994).
1344 [(n)] (j) "Individual" means a natural person and includes aliens and minors.
1345 [(o)] (k) "Irrevocable trust" means a trust in which the settlor may not revoke or
1346 terminate all or part of the trust without the consent of a person who has a substantial beneficial
1347 interest in the trust and the interest would be adversely affected by the exercise of the settlor's
1348 power to revoke or terminate all or part of the trust.
1349 [(p) For purposes of Subsection 59-10-114 (2)(l), "long-term capital gain" is as defined
1350 in Section 1222, Internal Revenue Code.]
1351 (l) "Military service" is as defined in Pub. L. No. 108-189, Sec. 101.
1352 [(q)] (m) "Nonresident individual" means an individual who is not a resident of this
1353 state.
1354 [(r)] (n) "Nonresident trust" or "nonresident estate" means a trust or estate which is not
1355 a resident estate or trust.
1356 [(s)] (o) (i) "Partnership" includes a syndicate, group, pool, joint venture, or other
1357 unincorporated organization:
1358 (A) through or by means of which any business, financial operation, or venture is

1359 carried on; and
1360 (B) which is not, within the meaning of this chapter:
1361 (I) a trust;
1362 (II) an estate; or
1363 (III) a corporation.
1364 (ii) "Partnership" does not include any organization not included under the definition of
1365 "partnership" in Section 761, Internal Revenue Code.
1366 (iii) "Partner" includes a member in a syndicate, group, pool, joint venture, or
1367 organization described in Subsection (1)[(s)](o)(i).
1368 [(t) "Qualifying military servicemember" means a member of:]
1369 [(i) The Utah Army National Guard;]
1370 [(ii) The Utah Air National Guard; or]
1371 [(iii) the following if the member is assigned to a unit that is located in the state:]
1372 [(A) The Army Reserve;]
1373 [(B) The Naval Reserve;]
1374 [(C) The Air Force Reserve;]
1375 [(D) The Marine Corps Reserve; or]
1376 [(E) The Coast Guard Reserve.]
1377 [(u) "Qualifying stock" means stock that is:]
1378 [(i) (A) common; or]
1379 [(B) preferred;]
1380 [(ii) as defined by the commission by rule, originally issued to:]
1381 [(A) a resident or nonresident individual; or]
1382 [(B) a partnership if the resident or nonresident individual making a subtraction from
1383 federal taxable income in accordance with Subsection 59-10-114 (2)(l):]
1384 [(I) was a partner when the stock was issued; and]
1385 [(II) remains a partner until the last day of the taxable year for which the resident or
1386 nonresident individual makes the subtraction from federal taxable income in accordance with
1387 Subsection 59-10-114 (2)(l); and]
1388 [(iii) issued:]
1389 [(A) by a Utah small business corporation;]

1390 [(B) on or after January 1, 2003; and]
1391 [(C) for:]
1392 [(I) money; or]
1393 [(II) other property, except for stock or securities.]
1394 (p) "Qualified nongrantor charitable lead trust" means a trust:
1395 (i) that is irrevocable;
1396 (ii) that has a trust term measured by:
1397 (A) a fixed term of years; or
1398 (B) the life of a person living on the day on which the trust is created;
1399 (iii) under which:
1400 (A) a portion of the value of the trust assets is distributed during the trust term:
1401 (I) to an organization described in Section 170(c), Internal Revenue Code; and
1402 (II) as a:
1403 (Aa) guaranteed annuity interest; or
1404 (Bb) unitrust interest; and
1405 (B) assets remaining in the trust at the termination of the trust term are distributed to a
1406 beneficiary:
1407 (I) designated in the trust; and
1408 (II) that is not an organization described in Section 170(c), Internal Revenue Code;
1409 (iv) for which the trust is allowed a deduction under Section 642(c), Internal Revenue
1410 Code; and
1411 (v) under which the grantor of the trust is not treated as the owner of any portion of the
1412 trust for federal income tax purposes.
1413 [(v)] (q) (i) "Resident individual" means:
1414 (A) an individual who is domiciled in this state for any period of time during the
1415 taxable year, but only for the duration of the period during which the individual is domiciled in
1416 this state; or
1417 (B) an individual who is not domiciled in this state but:
1418 (I) maintains a permanent place of abode in this state; and
1419 (II) spends in the aggregate 183 or more days of the taxable year in this state.
1420 (ii) For purposes of Subsection (1)[(v)] (q)(i)(B), a fraction of a calendar day shall be

1421 counted as a whole day.
1422 [(w)] (r) "Resident estate" or "resident trust" is as defined in Section 75-7-103 .
1423 [(x) For purposes of Subsection 59-10-114 (2)(l), "short-term capital gain" is as defined
1424 in Section 1222, Internal Revenue Code.]
1425 (s) "Servicemember" is as defined in Pub. L. No. 108-189, Sec. 101.
1426 (t) "State income tax percentage for a nonresident estate or trust" means a percentage
1427 equal to a nonresident estate's or trust's state taxable income for the taxable year divided by the
1428 nonresident estate's or trust's total adjusted gross income for that taxable year after making the
1429 adjustments required by:
1430 (i) Section 59-10-202 ;
1431 (ii) Section 59-10-207 ;
1432 (iii) Section 59-10-209.1 ; or
1433 (iv) Section 59-10-210 ;
1434 (u) "State income tax percentage for a nonresident individual" means a percentage
1435 equal to a nonresident individual's state taxable income for the taxable year divided by the
1436 difference between:
1437 (i) the nonresident individual's total adjusted gross income for that taxable year, after
1438 making the:
1439 (A) additions and subtractions required by Section 59-10-114 ; and
1440 (B) adjustments required by Section 59-10-115 ; and
1441 (ii) if the nonresident individual described in Subsection (1)(u)(i) is a servicemember,
1442 the compensation the servicemember receives for military service if the servicemember is
1443 serving in compliance with military orders.
1444 (v) "State income tax percentage for a part-year resident individual" means, for a
1445 taxable year, a fraction:
1446 (i) the numerator of which is the sum of:
1447 (A) subject to Subsections 59-10-1404 (3) and (4), for the time period during the
1448 taxable year that the part-year resident individual is a resident, the part-year resident
1449 individual's total adjusted gross income for that time period, after making the:
1450 (I) additions and subtractions required by Section 59-10-114 ; and
1451 (II) adjustments required by Section 59-10-115 ; and

1452 (B) for the time period during the taxable year that the part-year resident individual is a
1453 nonresident, an amount calculated by:
1454 (I) determining the part-year resident individual's adjusted gross income for that time
1455 period, after making the:
1456 (Aa) additions and subtractions required by Section 59-10-114 ; and
1457 (Bb) adjustments required by Section 59-10-115 ; and
1458 (II) calculating the portion of the amount determined under Subsection (1)(v)(i)(B)(I)
1459 that is derived from Utah sources in accordance with Section 59-10-117 ; and
1460 (ii) the denominator of which is the difference between:
1461 (A) the part-year resident individual's total adjusted gross income for that taxable year,
1462 after making the:
1463 (I) additions and subtractions required by Section 59-10-114 ; and
1464 (II) adjustments required by Section 59-10-115 ; and
1465 (B) if the part-year resident individual is a servicemember, any compensation the
1466 servicemember receives for military service during the portion of the taxable year that the
1467 servicemember is a nonresident if the servicemember is serving in compliance with military
1468 orders.
1469 [(y)] (w) "Taxable income" or "state taxable income":
1470 (i) subject to Subsection [ 59-10-302 (2)] 59-10-1404 (3), for a resident individual [other
1471 than a resident individual described in Subsection (1)(y)(iii)], means the resident individual's
1472 [federal taxable] adjusted gross income after making the:
1473 (A) additions and subtractions required by Section 59-10-114 ; and
1474 (B) adjustments required by Section 59-10-115 ;
1475 (ii) for a nonresident individual [other than a nonresident individual described in
1476 Subsection (1)(y)(iii), is as defined in Section 59-10-116 ;], is an amount calculated by:
1477 (A) determining the nonresident individual's adjusted gross income for the taxable
1478 year, after making the:
1479 (I) additions and subtractions required by Section 59-10-114 ; and
1480 (II) adjustments required by Section 59-10-115 ; and
1481 (B) calculating the portion of the amount determined under Subsection (1)(w)(ii)(A)
1482 that is derived from Utah sources in accordance with Section 59-10-117 ;

1483 [(iii) for a resident or nonresident individual that collects and pays a tax described in
1484 Part 12, Single Rate Individual Income Tax Act, is as defined in Section 59-10-1202 ;]
1485 [(iv)] (iii) for a resident estate or trust, is as calculated under Section 59-10-201.1 ; and
1486 [(v)] (iv) for a nonresident estate or trust, is as calculated under Section 59-10-204 .
1487 [(z)] (x) "Taxpayer" means any individual, estate, [or] trust, or beneficiary of an estate
1488 or trust, [whose income is] that has income subject in whole or part to the tax imposed by this
1489 chapter.
1490 (y) "Trust term" means a time period:
1491 (i) beginning on the day on which a qualified nongrantor charitable lead trust is
1492 created; and
1493 (ii) ending on the day on which the qualified nongrantor charitable lead trust described
1494 in Subsection (1)(y)(i) terminates.
1495 [(aa)] (z) "Uintah and Ouray Reservation" means the lands recognized as being
1496 included within the Uintah and Ouray Reservation in:
1497 (i) Hagen v. Utah, 510 U.S. 399 (1994); and
1498 (ii) Ute Indian Tribe v. Utah, 114 F.3d 1513 (10th Cir. 1997).
1499 [(bb) (i) "Utah small business corporation" means a corporation that:]
1500 [(A) is a small business corporation as defined in Section 1244(c)(3), Internal Revenue
1501 Code;]
1502 [(B) except as provided in Subsection (1)(bb)(ii), meets the requirements of Section
1503 1244(c)(1)(C), Internal Revenue Code; and]
1504 [(C) has its commercial domicile in this state.]
1505 [(ii) Notwithstanding Subsection (1)(bb)(i)(B), the time period described in Section
1506 1244(c)(1)(C) and Section 1244(c)(2), Internal Revenue Code, for determining the source of a
1507 corporation's aggregate gross receipts shall end on the last day of the taxable year for which the
1508 resident or nonresident individual makes a subtraction from federal taxable income in
1509 accordance with Subsection 59-10-114 (2)(l).]
1510 (aa) "Unadjusted income" means an amount equal to the difference between:
1511 (i) the total income required to be reported by a resident or nonresident estate or trust
1512 on the resident or nonresident estate's or trust's federal income tax return for estates and trusts
1513 for the taxable year; and

1514 (ii) the sum of the following:
1515 (A) fees paid or incurred to the fiduciary of a resident or nonresident estate or trust:
1516 (I) for administering the resident or nonresident estate or trust; and
1517 (II) that the resident or nonresident estate or trust deducts as allowed on the resident or
1518 nonresident estate's or trust's federal income tax return for estates and trusts for the taxable
1519 year;
1520 (B) the income distribution deduction that a resident or nonresident estate or trust
1521 deducts under Section 651 or 661, Internal Revenue Code, as allowed on the resident or
1522 nonresident estate's or trust's federal income tax return for estates and trusts for the taxable
1523 year;
1524 (C) the amount that a resident or nonresident estate or trust deducts as a deduction for
1525 estate tax or generation skipping transfer tax under Section 691(c), Internal Revenue Code, as
1526 allowed on the resident or nonresident estate's or trust's federal income tax return for estates
1527 and trusts for the taxable year; and
1528 (D) the amount that a resident or nonresident estate or trust deducts as a personal
1529 exemption under Section 642(b), Internal Revenue Code, as allowed on the resident or
1530 nonresident estate's or trust's federal income tax return for estates and trusts for the taxable
1531 year.
1532 (bb) "Unitrust interest" is as defined in 26 C.F.R. Sec. 1.170A-6(c)(2).
1533 (cc) "Ute tribal member" means a person who is enrolled as a member of the Ute
1534 Indian Tribe of the Uintah and Ouray Reservation.
1535 (dd) "Ute tribe" means the Ute Indian Tribe of the Uintah and Ouray Reservation.
1536 (ee) "Wages" is as defined in Section 59-10-401 .
1537 (2) (a) Any term used in this chapter has the same meaning as when used in
1538 comparable context in the laws of the United States relating to federal income taxes unless a
1539 different meaning is clearly required.
1540 (b) Any reference to the Internal Revenue Code or to the laws of the United States shall
1541 mean the Internal Revenue Code or other provisions of the laws of the United States relating to
1542 federal income taxes that are in effect for the taxable year.
1543 (c) Any reference to a specific section of the Internal Revenue Code or other provision
1544 of the laws of the United States relating to federal income taxes shall include any

1545 corresponding or comparable provisions of the Internal Revenue Code as [hereafter] amended,
1546 redesignated, or reenacted.
1547 Section 24. Section 59-10-104 is amended to read:
1548 59-10-104. Tax basis -- Tax rate -- Exemption.
1549 (1) [Except as provided in Subsection (5) or Part 12, Single Rate Individual Income
1550 Tax Act, for] For taxable years beginning on or after January 1, [2006] 2008, [but beginning on
1551 or before December 31, 2007,] a tax is imposed on the state taxable income of [every] a
1552 resident individual as provided in this section.
1553 [(2) For an individual, other than a husband and wife or head of household required to
1554 use the tax table under Subsection (3), the tax under this section is imposed in accordance with
1555 the following income brackets:]
1556 [If the state taxable income is: The tax is:]
1557 [Less than or equal to $1,000 2.3% of the state taxable income]
1558 [Greater than $1,000 but less than $23, plus 3.3% of state taxable]
1559 [or equal to $2,000 income greater than $1,000]
1560 [Greater than $2,000 but less than $56, plus 4.2% of state taxable]
1561 [or equal to $3,000 income greater than $2,000]
1562 [Greater than $3,000 but less than $98, plus 5.2% of state taxable]
1563 [or equal to $4,000 income greater than $3,000]
1564 [Greater than $4,000 but less than $150, plus 6% of state taxable]
1565 [or equal to $5,500 income greater than $4,000]
1566 [Greater than $5,500 $240, plus 6.98% of state taxable]
1567 [income greater than $5,500]
1568 [(3) For a husband and wife filing a single return jointly, or a head of household as
1569 defined in Section 2(b), Internal Revenue Code, filing a single return, the tax under this section
1570 is imposed in accordance with the following income brackets:]
1571 [If the state taxable income is: The tax is:]
1572 [Less than or equal to $2,000 2.3% of the state taxable income]
1573 [Greater than $2,000 but less than $46, plus 3.3% of state taxable]
1574 [or equal to $4,000 income greater than $2,000]
1575 [Greater than $4,000 but less than $112, plus 4.2% of state taxable]

1576 [or equal to $6,000 income greater than $4,000]
1577 [Greater than $6,000 but less than $196, plus 5.2% of state taxable]
1578 [or equal to $8,000 income greater than $6,000]
1579 [Greater than $8,000 but less than $300, plus 6% of state taxable]
1580 [or equal to $11,000 income greater than $8,000]
1581 [Greater than $11,000 $480, plus 6.98% of state taxable]
1582 [income greater than $11,000]
1583 [(4) (a) For taxable years beginning on or after January 1, 2009, the commission shall:]
1584 [(i) make the following adjustments to the income brackets under Subsection (2):]
1585 [(A) increase or decrease the income brackets under Subsection (2) by a percentage
1586 equal to the percentage difference between the consumer price index for the preceding calendar
1587 year and the consumer price index for the calendar year 2007; and]
1588 [(B) after making an increase or decrease under Subsection (4)(a)(i)(A), round the
1589 income brackets under Subsection (2) to the nearest whole dollar;]
1590 [(ii) after making the adjustments described in Subsection (4)(a)(i) to the income
1591 brackets under Subsection (2), adjust the income brackets under Subsection (3) so that for each
1592 income bracket under Subsection (2) there is a corresponding income bracket under Subsection
1593 (3) that is equal to the product of:]
1594 [(A) each income bracket under Subsection (2); and]
1595 [(B) two; and]
1596 [(iii) to the extent necessary to reflect an adjustment under Subsection (4)(a)(i) or (ii):]
1597 [(A) increase or decrease the amount of tax under Subsection (2) or (3) prior to adding
1598 in the portion of the tax calculated as a percentage of state taxable income; and]
1599 [(B) after making an increase or decrease under Subsection (4)(a)(iii)(A), round the
1600 amount of tax under Subsection (2) or (3) to the nearest whole dollar.]
1601 [(b) The commission may not increase or decrease the tax rate percentages provided in
1602 Subsection (2) or (3).]
1603 [(c) For purposes of Subsection (4)(a)(i), the commission shall calculate the consumer
1604 price index as provided in Sections 1(f)(4) and 1(f)(5), Internal Revenue Code.]
1605 (2) For purposes of Subsection (1), for a taxable year, the tax is an amount equal to the
1606 product of:

1607 (a) the resident individual's state taxable income for that taxable year; and
1608 (b) 5%.
1609 [(5)] (3) This section does not apply to a resident individual exempt from taxation
1610 under Section 59-10-104.1 .
1611 Section 25. Section 59-10-104.1 is amended to read:
1612 59-10-104.1. Exemption from taxation.
1613 (1) For purposes of this section:
1614 (a) "Personal exemptions" means the total exemption amount an individual is allowed
1615 to claim for the taxable year under Section 151, Internal Revenue Code, for:
1616 (i) the individual;
1617 (ii) the individual's spouse; and
1618 (iii) the individual's dependents.
1619 (b) "Standard deduction":
1620 (i) [except as provided in Subsection (1)(b)(ii),] means the standard deduction an
1621 individual is allowed to claim for the taxable year under Section 63, Internal Revenue Code;
1622 and
1623 (ii) notwithstanding Subsection (1)(b)(i), does not include an additional amount
1624 allowed under Section 63(f), Internal Revenue Code, for an individual or an individual's spouse
1625 who is:
1626 (A) blind; or
1627 (B) 65 years of age or older.
1628 (2) For taxable years beginning on or after January 1, 2002, an individual is exempt
1629 from a tax imposed by Section 59-10-104 or 59-10-116 [or described in Section 59-10-1203 ]
1630 if the individual's adjusted gross income on the individual's federal individual income tax
1631 return for the taxable year is less than or equal to the sum of the individual's:
1632 (a) personal exemptions for that taxable year; and
1633 (b) standard deduction for that taxable year.
1634 Section 26. Section 59-10-110 is amended to read:
1635 59-10-110. Disallowance of federal tax credits.
1636 [No] A credit applied directly to the income tax calculated for federal income tax
1637 purposes [pursuant to] in accordance with the Internal Revenue Code [shall] may not be

1638 applied in calculating the tax due under this chapter.
1639 Section 27. Section 59-10-114 is amended to read:
1640 59-10-114. Additions to and subtractions from adjusted gross income of an
1641 individual.
1642 (1) There shall be added to [federal taxable] adjusted gross income of a resident or
1643 nonresident individual:
1644 [(a) the amount of any income tax imposed by this or any predecessor Utah individual
1645 income tax law and the amount of any income tax imposed by the laws of another state, the
1646 District of Columbia, or a possession of the United States, to the extent deducted from adjusted
1647 gross income in determining federal taxable income;]
1648 [(b)] (a) a lump sum distribution that the taxpayer does not include in adjusted gross
1649 income on the taxpayer's federal individual income tax return for the taxable year;
1650 [(c)] (b) [for taxable years beginning on or after January 1, 2002,] the amount of a
1651 child's income calculated under Subsection [(5)] (4) that:
1652 (i) a parent elects to report on the parent's federal individual income tax return for the
1653 taxable year; and
1654 (ii) the parent does not include in adjusted gross income on the parent's federal
1655 individual income tax return for the taxable year;
1656 [(d) 25% of the personal exemptions, as defined and calculated in the Internal Revenue
1657 Code;]
1658 [(e)] (c) (i) a withdrawal from a medical care savings account and any penalty imposed
1659 [in] for the taxable year if:
1660 [(i)] (A) the resident or nonresident individual [did] does not deduct [or include] the
1661 amounts on the resident or nonresident individual's federal individual income tax return
1662 [pursuant to] under Section 220, Internal Revenue Code;
1663 [(ii)] (B) the withdrawal is subject to Subsections 31A-32a-105 (1) and (2); and
1664 [(iii)] (C) the withdrawal is [deducted by]:
1665 (I) subtracted on a return the resident or nonresident individual [under Subsection
1666 (2)(h);] files under this chapter for a taxable year beginning on or before December 31, 2007;
1667 or
1668 (II) used as the basis for a resident or nonresident individual to claim a tax credit under

1669 Section 59-10-1021 ;
1670 (ii) a disbursement required to be added to adjusted gross income in accordance with
1671 Subsection 31A-32a-105 (3); or
1672 (iii) an amount required to be added to adjusted gross income in accordance with
1673 Subsection 31A-32a-105 (5)(c);
1674 [(f)] (d) the amount withdrawn under Title 53B, Chapter 8a, Higher Education Savings
1675 Incentive Program, from the account of a resident or nonresident individual who is an account
1676 owner as defined in Section 53B-8a-102 , for the taxable year for which the amount is
1677 withdrawn, if that amount withdrawn from the account of the resident or nonresident individual
1678 who is the account owner:
1679 (i) is not expended for higher education costs as defined in Section 53B-8a-102 ; and
1680 (ii) is:
1681 (A) subtracted by the resident or nonresident individual:
1682 (I) who is the account owner; and
1683 [(II) in accordance with Subsection (2)(i); or]
1684 (II) on the resident or nonresident individual's return filed under this chapter for a
1685 taxable year beginning on or before December 31, 2007; or
1686 (B) used as the basis for the resident or nonresident individual who is the account
1687 owner to claim a tax credit under Section [ 59-10-1206.1 ] 59-10-1017 ;
1688 [(g)] (e) except as provided in Subsection (6), [for taxable years beginning on or after
1689 January 1, 2003,] for bonds, notes, and other evidences of indebtedness acquired on or after
1690 January 1, 2003, the interest from bonds, notes, and other evidences of indebtedness issued by
1691 one or more of the following entities:
1692 (i) a state other than this state;
1693 (ii) the District of Columbia;
1694 (iii) a political subdivision of a state other than this state; or
1695 (iv) an agency or instrumentality of an entity described in Subsections (1)[(g)](e)(i)
1696 through (iii);
1697 [(h)] (f) subject to Subsection (2)[(n)](c), any distribution received by a resident
1698 beneficiary of a resident trust of income that was taxed at the trust level for federal tax
1699 purposes, but was subtracted from state taxable income of the trust pursuant to Subsection

1700 59-10-202 (2)[(c)](b);
1701 [(i)] (g) any distribution received by a resident beneficiary of a nonresident trust of
1702 undistributed distributable net income realized by the trust on or after January 1, 2004, if that
1703 undistributed distributable net income was taxed at the trust level for federal tax purposes, but
1704 was not taxed at the trust level by any state, with undistributed distributable net income
1705 considered to be distributed from the most recently accumulated undistributed distributable net
1706 income; and
1707 [(j)] (h) any adoption expense:
1708 (i) for which a resident or nonresident individual receives reimbursement from another
1709 person; and
1710 (ii) to the extent to which the resident or nonresident individual [deducts] subtracts that
1711 adoption expense:
1712 [(A) under Subsection (2)(c); or]
1713 (A) on a return filed under this chapter for a taxable year beginning on or before
1714 December 31, 2007; or
1715 (B) from federal taxable income on a federal individual income tax return.
1716 (2) There shall be subtracted from [federal taxable] adjusted gross income of a resident
1717 or nonresident individual:
1718 (a) the difference between:
1719 [(a)] (i) the interest or a dividend on [obligations or securities] an obligation or security
1720 of the United States [and its possessions or of any] or an authority, commission, [or]
1721 instrumentality, or possession of the United States, to the extent that interest or dividend is:
1722 (A) included in adjusted gross income for federal income tax purposes for the taxable
1723 year [but]; and
1724 (B) exempt from state income taxes under the laws of the United States[, but the
1725 amount subtracted under this Subsection (2)(a) shall be reduced by]; and
1726 (ii) any interest on indebtedness incurred or continued to purchase or carry the
1727 [obligations or securities] obligation or security described in [this] Subsection (2)(a)(i)[, and by
1728 any expenses incurred in the production of interest or dividend income described in this
1729 Subsection (2)(a) to the extent that such expenses, including amortizable bond premiums, are
1730 deductible in determining federal taxable income];

1731 [(b) 1/2 of the net amount of any income tax paid or payable to the United States after
1732 all allowable credits, as reported on the United States individual income tax return of the
1733 taxpayer for the same taxable year;]
1734 [(c) the amount of adoption expenses for one of the following taxable years as elected
1735 by the resident or nonresident individual:]
1736 [(i) regardless of whether a court issues an order granting the adoption, the taxable year
1737 in which the adoption expenses are:]
1738 [(A) paid; or]
1739 [(B) incurred;]
1740 [(ii) the taxable year in which a court issues an order granting the adoption; or]
1741 [(iii) any year in which the resident or nonresident individual may claim the federal
1742 adoption expenses credit under Section 23, Internal Revenue Code;]
1743 [(d) amounts received by taxpayers under age 65 as retirement income which, for
1744 purposes of this section, means pensions and annuities, paid from an annuity contract
1745 purchased by an employer under a plan which meets the requirements of Section 404(a)(2),
1746 Internal Revenue Code, or purchased by an employee under a plan which meets the
1747 requirements of Section 408, Internal Revenue Code, or paid by the United States, a state, or
1748 political subdivision thereof, or the District of Columbia, to the employee involved or the
1749 surviving spouse;]
1750 [(e) for each taxpayer age 65 or over before the close of the taxable year, a $7,500
1751 personal retirement exemption;]
1752 [(f) 75% of the amount of the personal exemption, as defined and calculated in the
1753 Internal Revenue Code, for each dependent child with a disability and adult with a disability
1754 who is claimed as a dependent on a taxpayer's return;]
1755 [(g) subject to the limitations of Subsection (3)(e), amounts a taxpayer pays during the
1756 taxable year for health care insurance, as defined in Title 31A, Chapter 1, General Provisions:]
1757 [(i) for:]
1758 [(A) the taxpayer;]
1759 [(B) the taxpayer's spouse; and]
1760 [(C) the taxpayer's dependents; and]
1761 [(ii) to the extent the taxpayer does not deduct the amounts under Section 125, 162, or

1762 213, Internal Revenue Code, in determining federal taxable income for the taxable year;]
1763 [(h) (i) except as provided in this Subsection (2)(h), the amount of a contribution made
1764 during the taxable year on behalf of the taxpayer to a medical care savings account and interest
1765 earned on a contribution to a medical care savings account established pursuant to Title 31A,
1766 Chapter 32a, Medical Care Savings Account Act, to the extent the contribution is accepted by
1767 the account administrator as provided in the Medical Care Savings Account Act, and if the
1768 taxpayer did not deduct or include amounts on the taxpayer's federal individual income tax
1769 return pursuant to Section 220, Internal Revenue Code; and]
1770 [(ii) a contribution deductible under this Subsection (2)(h) may not exceed either of the
1771 following:]
1772 [(A) the maximum contribution allowed under the Medical Care Savings Account Act
1773 for the tax year multiplied by two for taxpayers who file a joint return, if neither spouse is
1774 covered by health care insurance as defined in Section 31A-1-301 or self-funded plan that
1775 covers the other spouse, and each spouse has a medical care savings account; or]
1776 [(B) the maximum contribution allowed under the Medical Care Savings Account Act
1777 for the tax year for taxpayers:]
1778 [(I) who do not file a joint return; or]
1779 [(II) who file a joint return, but do not qualify under Subsection (2)(h)(ii)(A);]
1780 [(i) subject to Subsection (1)(f), the amount of a qualified investment as defined in
1781 Section 53B-8a-102 that:]
1782 [(i) a resident or nonresident individual who is an account owner as defined in Section
1783 53B-8a-102 makes during the taxable year;]
1784 [(ii) the resident or nonresident individual described in Subsection (2)(i)(i) does not
1785 deduct on a federal individual income tax return; and]
1786 [(iii) does not exceed the maximum amount of the qualified investment that may be
1787 subtracted from federal taxable income for a taxable year in accordance with Subsections
1788 53B-8a-106 (1)(e) and (f);]
1789 [(j) for taxable years beginning on or after January 1, 2000, any amounts paid for
1790 premiums for long-term care insurance as defined in Section 31A-1-301 to the extent the
1791 amounts paid for long-term care insurance were not deducted under Section 213, Internal
1792 Revenue Code, in determining federal taxable income;]

1793 [(k)] (b) for taxable years beginning on or after January 1, 2000, if the conditions of
1794 Subsection [(4)] (3)(a) are met, the amount of income derived by a Ute tribal member:
1795 (i) during a time period that the Ute tribal member resides on homesteaded land
1796 diminished from the Uintah and Ouray Reservation; and
1797 (ii) from a source within the Uintah and Ouray Reservation;
1798 [(l) (i) for taxable years beginning on or after January 1, 2003, the total amount of a
1799 resident or nonresident individual's short-term capital gain or long-term capital gain on a
1800 capital gain transaction:]
1801 [(A) that occurs on or after January 1, 2003;]
1802 [(B) if 70% or more of the gross proceeds of the capital gain transaction are expended:]
1803 [(I) to purchase qualifying stock in a Utah small business corporation; and]
1804 [(II) within a 12-month period after the day on which the capital gain transaction
1805 occurs; and]
1806 [(C) if, prior to the purchase of the qualifying stock described in Subsection
1807 (2)(l)(i)(B)(I), the resident or nonresident individual did not have an ownership interest in the
1808 Utah small business corporation that issued the qualifying stock; and]
1809 [(ii) in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act,
1810 the commission may make rules:]
1811 [(A) defining the term "gross proceeds"; and]
1812 [(B) for purposes of Subsection (2)(l)(i)(C), prescribing the circumstances under which
1813 a resident or nonresident individual has an ownership interest in a Utah small business
1814 corporation;]
1815 [(m) for the taxable year beginning on or after January 1, 2005, but beginning on or
1816 before December 31, 2005, the first $2,200 of income a qualifying military servicemember
1817 receives:]
1818 [(i) for service:]
1819 [(A) as a qualifying military servicemember; or]
1820 [(B) under an order into active service in accordance with Section 39-1-5 ; and]
1821 [(ii) to the extent that income is included in adjusted gross income on that resident or
1822 nonresident individual's federal individual income tax return for that taxable year;]
1823 [(n)] (c) an amount received by a resident or nonresident individual or distribution

1824 received by a resident or nonresident beneficiary of a resident trust:
1825 (i) if that amount or distribution constitutes a refund of taxes imposed by:
1826 (A) a state; or
1827 (B) the District of Columbia; and
1828 (ii) to the extent that amount or distribution is included in adjusted gross income for
1829 that taxable year on the federal individual income tax return of the resident or nonresident
1830 individual or resident or nonresident beneficiary of a resident trust;
1831 [(o)] (d) the amount of a railroad retirement benefit:
1832 (i) paid:
1833 (A) in accordance with The Railroad Retirement Act of 1974, 45 U.S.C. Sec. 231 et
1834 seq.;
1835 (B) to a resident or nonresident individual; and
1836 (C) for the taxable year; and
1837 (ii) to the extent that railroad retirement benefit is included in adjusted gross income on
1838 that resident or nonresident individual's federal individual income tax return for that taxable
1839 year; and
1840 [(p)] (e) an amount:
1841 (i) received by an enrolled member of an American Indian tribe; and
1842 (ii) to the extent that the state is not authorized or permitted to impose a tax under this
1843 part on that amount in accordance with:
1844 (A) federal law;
1845 (B) a treaty; or
1846 (C) a final decision issued by a court of competent jurisdiction.
1847 [(3) (a) For purposes of Subsection (2)(d), the amount of retirement income subtracted
1848 for taxpayers under 65 shall be the lesser of the amount included in federal taxable income, or
1849 $4,800, except that:]
1850 [(i) for married taxpayers filing joint returns, for each $1 of adjusted gross income
1851 earned over $32,000, the amount of the retirement income exemption that may be subtracted
1852 shall be reduced by 50 cents;]
1853 [(ii) for married taxpayers filing separate returns, for each $1 of adjusted gross income
1854 earned over $16,000, the amount of the retirement income exemption that may be subtracted

1855 shall be reduced by 50 cents; and]
1856 [(iii) for individual taxpayers, for each $1 of adjusted gross income earned over
1857 $25,000, the amount of the retirement income exemption that may be subtracted shall be
1858 reduced by 50 cents.]
1859 [(b) For purposes of Subsection (2)(e), the amount of the personal retirement
1860 exemption shall be further reduced according to the following schedule:]
1861 [(i) for married taxpayers filing joint returns, for each $1 of adjusted gross income
1862 earned over $32,000, the amount of the personal retirement exemption shall be reduced by 50
1863 cents;]
1864 [(ii) for married taxpayers filing separate returns, for each $1 of adjusted gross income
1865 earned over $16,000, the amount of the personal retirement exemption shall be reduced by 50
1866 cents; and]
1867 [(iii) for individual taxpayers, for each $1 of adjusted gross income earned over
1868 $25,000, the amount of the personal retirement exemption shall be reduced by 50 cents.]
1869 [(c) For purposes of Subsections (3)(a) and (b), adjusted gross income shall be
1870 calculated by adding to adjusted gross income any interest income not otherwise included in
1871 adjusted gross income.]
1872 [(d) For purposes of determining ownership of items of retirement income common
1873 law doctrine will be applied in all cases even though some items may have originated from
1874 service or investments in a community property state. Amounts received by the spouse of a
1875 living retiree because of the retiree's having been employed in a community property state are
1876 not deductible as retirement income of such spouse.]
1877 [(e) For purposes of Subsection (2)(g), a subtraction for an amount paid for health care
1878 insurance as defined in Title 31A, Chapter 1, General Provisions, is not allowed:]
1879 [(i) for an amount that is reimbursed or funded in whole or in part by the federal
1880 government, the state, or an agency or instrumentality of the federal government or the state;
1881 and]
1882 [(ii) for a taxpayer who is eligible to participate in a health plan maintained and funded
1883 in whole or in part by the taxpayer's employer or the taxpayer's spouse's employer.]
1884 [(4)] (3) (a) A subtraction for an amount described in Subsection (2)[(k)](b) is allowed
1885 only if:

1886 (i) the taxpayer is a Ute tribal member; and
1887 (ii) the governor and the Ute tribe execute and maintain an agreement meeting the
1888 requirements of this Subsection [(4)] (3).
1889 (b) The agreement described in Subsection [(4)] (3)(a):
1890 (i) may not:
1891 (A) authorize the state to impose a tax in addition to a tax imposed under this chapter;
1892 (B) provide a subtraction under this section greater than or different from the
1893 subtraction described in Subsection (2)[(k)](b); or
1894 (C) affect the power of the state to establish rates of taxation; and
1895 (ii) shall:
1896 (A) provide for the implementation of the subtraction described in Subsection
1897 (2)[(k)](b);
1898 (B) be in writing;
1899 (C) be signed by:
1900 (I) the governor; and
1901 (II) the chair of the Business Committee of the Ute tribe;
1902 (D) be conditioned on obtaining any approval required by federal law; and
1903 (E) state the effective date of the agreement.
1904 (c) (i) The governor shall report to the commission by no later than February 1 of each
1905 year regarding whether or not an agreement meeting the requirements of this Subsection [(4)]
1906 (3) is in effect.
1907 (ii) If an agreement meeting the requirements of this Subsection [(4)] (3) is terminated,
1908 the subtraction permitted under Subsection (2)[(k)](b) is not allowed for taxable years
1909 beginning on or after the January 1 following the termination of the agreement.
1910 (d) For purposes of Subsection (2)[(k)](b) and in accordance with Title 63, Chapter
1911 46a, Utah Administrative Rulemaking Act, the commission may make rules:
1912 (i) for determining whether income is derived from a source within the Uintah and
1913 Ouray Reservation; and
1914 (ii) that are substantially similar to how adjusted gross income derived from Utah
1915 sources is determined under Section 59-10-117 .
1916 [(5)] (4) (a) For purposes of this Subsection [(5)] (4), "Form 8814" means:

1917 (i) the federal individual income tax Form 8814, Parents' Election To Report Child's
1918 Interest and Dividends; or
1919 (ii) (A) [for taxable years beginning on or after January 1, 2002,] a form designated by
1920 the commission in accordance with Subsection [(5)] (4)(a)(ii)(B) as being substantially similar
1921 to 2000 Form 8814 if for purposes of federal individual income taxes the information
1922 contained on 2000 Form 8814 is reported on a form other than Form 8814; and
1923 (B) for purposes of Subsection [(5)] (4)(a)(ii)(A) and in accordance with Title 63,
1924 Chapter 46a, Utah Administrative Rulemaking Act, the commission may make rules
1925 designating a form as being substantially similar to 2000 Form 8814 if for purposes of federal
1926 individual income taxes the information contained on 2000 Form 8814 is reported on a form
1927 other than Form 8814.
1928 (b) The amount of a child's income added to adjusted gross income under Subsection
1929 (1)[(c)](b) is equal to the difference between:
1930 (i) the lesser of:
1931 (A) the base amount specified on Form 8814; and
1932 (B) the sum of the following reported on Form 8814:
1933 (I) the child's taxable interest;
1934 (II) the child's ordinary dividends; and
1935 (III) the child's capital gain distributions; and
1936 (ii) the amount not taxed that is specified on Form 8814.
1937 [(6)] (5) Notwithstanding Subsection (1)[(g)](e), interest from bonds, notes, and other
1938 evidences of indebtedness issued by an entity described in Subsections (1)[(g)](e)(i) through
1939 (iv) may not be added to [federal taxable] adjusted gross income of a resident or nonresident
1940 individual if, as annually determined by the commission:
1941 (a) for an entity described in Subsection (1)[(g)](e)(i) or (ii), the entity and all of the
1942 political subdivisions, agencies, or instrumentalities of the entity do not impose a tax based on
1943 income on any part of the bonds, notes, and other evidences of indebtedness of this state; or
1944 (b) for an entity described in Subsection (1)[(g)](e)(iii) or (iv), the following do not
1945 impose a tax based on income on any part of the bonds, notes, and other evidences of
1946 indebtedness of this state:
1947 (i) the entity; or

1948 (ii) (A) the state in which the entity is located; or
1949 (B) the District of Columbia, if the entity is located within the District of Columbia.
1950 Section 28. Section 59-10-115 is amended to read:
1951 59-10-115. Adjustments to adjusted gross income.
1952 (1) The commission shall allow an adjustment to [federal taxable] adjusted gross
1953 income of a [taxpayer] resident or nonresident individual if the [taxpayer] resident or
1954 nonresident individual would otherwise:
1955 (a) receive a double tax benefit under this part; or
1956 (b) suffer a double tax detriment under this part.
1957 (2) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
1958 commission may make rules to allow for the adjustment to [federal taxable] adjusted gross
1959 income required by Subsection (1).
1960 Section 29. Section 59-10-116 is amended to read:
1961 59-10-116. Tax on nonresident individual -- Calculation -- Exemption.
1962 [(1) For purposes of this section:]
1963 [(a) "Military service" is as defined in Pub. L. No. 108-189, Sec. 101.]
1964 [(b) "Servicemember" is as defined in Pub. L. No. 108-189, Sec. 101.]
1965 [(c) "State income tax percentage" means a percentage equal to a nonresident
1966 individual's adjusted gross income for the taxable year received from Utah sources, as
1967 determined under Section 59-10-117 , divided by the difference between:]
1968 [(i) the nonresident individual's total adjusted gross income for that taxable year; and]
1969 [(ii) if the nonresident individual described in Subsection (1)(c)(i) is a servicemember,
1970 the compensation the servicemember receives for military service if the servicemember is
1971 serving in compliance with military orders.]
1972 [(d) "State taxable income" means a nonresident individual's federal taxable income
1973 after making the:]
1974 [(i) additions and subtractions required by Section 59-10-114 ; and]
1975 [(ii) adjustments required by Section 59-10-115 .]
1976 [(e) "Unapportioned state tax" means the product of the:]
1977 [(i) difference between:]
1978 [(A) a nonresident individual's state taxable income; and]

1979 [(B) if the nonresident individual described in Subsection (1)(e)(i)(A) is a
1980 servicemember, compensation the servicemember receives for military service if the
1981 servicemember is serving in compliance with military orders; and]
1982 [(ii) tax rate imposed under Section 59-10-104 .]
1983 [(2)] (1) Except as provided in Subsection [(3)] (2) [or Part 12, Single Rate Individual
1984 Income Tax Act], a tax is imposed on a nonresident individual in an amount equal to the
1985 product of the [nonresident individual's]:
1986 [(a) unapportioned state tax; and]
1987 [(b) state income tax percentage.]
1988 (a) nonresident individual's state taxable income; and
1989 (b) percentage listed in Subsection 59-10-104 (2).
1990 [(3)] (2) This section does not apply to a nonresident individual exempt from taxation
1991 under Section 59-10-104.1 .
1992 [(4) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act,
1993 for purposes of Subsection (1), the commission may by rule define what constitutes
1994 compensation.]
1995 Section 30. Section 59-10-117 is amended to read:
1996 59-10-117. State taxable income derived from Utah sources.
1997 (1) For purposes of Section 59-10-116 , [adjusted gross] state taxable income [derived
1998 from Utah sources] includes those items includable in [adjusted gross] state taxable income
1999 attributable to or resulting from:
2000 (a) the ownership in this state of any interest in real or tangible personal property,
2001 including real property or property rights from which ["]gross income from mining[,"] as
2002 defined by Section 613(c), Internal Revenue Code, is derived; or
2003 (b) the carrying on of a business, trade, profession, or occupation in this state.
2004 (2) For the purposes of Subsection (1):
2005 (a) income from intangible personal property, including annuities, dividends, interest,
2006 and gains from the disposition of intangible personal property shall constitute income derived
2007 from Utah sources only to the extent that [such] the income is from property employed in a
2008 trade, business, profession, or occupation carried on in this state;
2009 (b) [deductions] a deduction with respect to a capital [losses] loss, net long-term capital

2010 [gains] gain, [and] or net operating [losses] loss shall be based solely on income, gain, loss, and
2011 deduction connected with Utah sources, under rules prescribed by the commission in
2012 accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, but otherwise
2013 shall be determined in the same manner as the corresponding federal deductions;
2014 (c) [salaries, wages, commissions, and] a salary, wage, commission, or compensation
2015 for personal services rendered outside this state [shall] may not be considered to be derived
2016 from Utah sources;
2017 (d) a nonresident shareholder's distributive share of ordinary income, gain, loss, and
2018 deduction derived from or connected with Utah sources shall be determined under Section
2019 59-10-118 ;
2020 (e) a nonresident, other than a dealer holding property primarily for sale to customers
2021 in the ordinary course of the dealer's trade or business, may not be considered to carry on a
2022 trade, business, profession, or occupation in this state solely by reason of the purchase or sale
2023 of property for the nonresident's own account;
2024 (f) if a trade, business, profession, or occupation is carried on partly within and partly
2025 without this state, [items] an item of income, gain, loss, [and deductions] or a deduction
2026 derived from or connected with Utah sources shall be determined in accordance with [the
2027 provisions of] Section 59-10-118 ;
2028 (g) a nonresident partner's distributive share of partnership income, gain, loss, and
2029 deduction derived from or connected with Utah sources shall be determined under Section
2030 [ 59-10-303 ] 59-10-1405 ;
2031 (h) the share of a nonresident estate or trust [and nonresident beneficiaries] or a
2032 nonresident beneficiary of any estate or trust in income, gain, loss, [and] or deduction derived
2033 from or connected with Utah sources shall be determined under Section 59-10-207 ; and
2034 (i) any dividend, interest, or distributive share of income, gain, or loss from a real
2035 estate investment trust, as defined in Section [ 59-7-116.5 ] 59-7-101 , distributed or allocated to
2036 a nonresident investor in the trust, including any shareholder, beneficiary, or owner of a
2037 beneficial interest in the trust, shall be income from intangible personal property under
2038 Subsection (2)(a), and shall constitute income derived from Utah sources only to the extent the
2039 nonresident investor is employing its beneficial interest in the trust in a trade, business,
2040 profession, or occupation carried on by the investor in this state.

2041 Section 31. Section 59-10-118 is amended to read:
2042 59-10-118. Division of income for tax purposes.
2043 (1) As used in this section [unless the context otherwise requires]:
2044 (a) "Business income" means income arising from transactions and activity in the
2045 regular course of [the] a taxpayer's trade or business and includes income from tangible and
2046 intangible property if the acquisition, management, and disposition of the property constitutes
2047 integral parts of the taxpayer's regular trade or business operations.
2048 (b) "Commercial domicile" means the principal place from which the trade or business
2049 of [the] a taxpayer is directed or managed.
2050 [(c) "Compensation" means wages, salaries, commissions, and any other form of
2051 remuneration paid to employee for personal services.]
2052 [(d)] (c) "Nonbusiness income" means all income other than business income.
2053 [(e)] (d) "Sales" means all gross receipts of [the] a taxpayer not allocated under
2054 Subsections (3) through (7).
2055 [(f)] (e) "State" means any state of the United States, the District of Columbia, the
2056 commonwealth of Puerto Rico, [and] or any possession of the United States.
2057 (2) [Any] A taxpayer having business income [which] that is taxable both within and
2058 without this state, shall allocate and apportion [his] the taxpayer's net income as provided in
2059 this section.
2060 (3) Rents and royalties from real or tangible personal property, capital gains, interest,
2061 dividends, or patent or copyright royalties, to the extent that they constitute nonbusiness
2062 income, shall be allocated as provided in Subsections (4) through (7).
2063 (4) (a) Net rents and royalties from real property located in this state are allocable to
2064 this state.
2065 (b) Net rents and royalties from tangible personal property are allocable to this state:
2066 (i) if and to the extent that the property is utilized in this state; or
2067 (ii) in their entirety if the taxpayer's commercial domicile is in this state and the
2068 taxpayer is not organized under the laws of or taxable in the state in which the property is
2069 utilized.
2070 (c) The extent of utilization of tangible personal property in a state is determined by
2071 multiplying the rents and royalties by a fraction, the numerator of which is the number of days

2072 of physical location of the property in the state during the rental or royalty period in the taxable
2073 year and the denominator of which is the number of days of physical location of the property
2074 everywhere during all rental or royalty periods in the taxable year. If the physical location of
2075 the property during the rental or royalty period is unknown or unascertainable by the taxpayer,
2076 tangible personal property is utilized in the state in which the property was located at the time
2077 the rental or royalty payer obtained possession.
2078 (5) (a) Capital gains and losses from sales of real property located in this state are
2079 allocable to this state.
2080 (b) Capital gains and losses from sales of tangible personal property are allocable to
2081 this state if:
2082 (i) the property [had] has a situs in this state at the time of the sale; or
2083 (ii) the taxpayer's commercial domicile is in this state and the taxpayer is not taxable in
2084 the state in which the property had a situs.
2085 (c) Capital gains and losses from sales of intangible personal property are allocable to
2086 this state if the taxpayer's commercial domicile is in this state.
2087 (6) Interest and dividends are allocable to this state if the taxpayer's commercial
2088 domicile is in this state.
2089 (7) (a) Patent and copyright royalties are allocable to this state:
2090 (i) if and to the extent that the patent or copyright is utilized by the payer in this state;
2091 or
2092 (ii) if and to the extent that the patent or copyright is utilized by the payer in a state in
2093 which the taxpayer is not taxable and the taxpayer's commercial domicile is in this state.
2094 (b) A patent is utilized in a state to the extent that it is employed in production,
2095 fabrication, manufacturing, or other processing in the state or to the extent that a patented
2096 product is produced in the state. If the basis of receipts from patent royalties does not permit
2097 allocation to states or if the accounting procedures do not reflect states of utilization, the patent
2098 is utilized in the state in which the taxpayer's commercial domicile is located.
2099 (8) All business income shall be apportioned to this state [by multiplying the income
2100 by a fraction, the numerator of which is the property factor plus the payroll factor plus the sales
2101 factor, and the denominator of which is three] using the same methods, procedures, and
2102 requirements of Sections 59-7-311 through 59-7-320 .

2103 [(9) The property factor is a fraction, the numerator of which is the average value of the
2104 taxpayer's real and tangible personal property owned or rented and used in this state during the
2105 tax period and the denominator of which is the average value of all the taxpayer's real and
2106 tangible personal property owned or rented and used during the tax period.]
2107 [(10) Property owned by the taxpayer is valued at its original cost. Property rented by
2108 the taxpayer is valued at eight times the net annual rental rate. Net annual rental rate is the
2109 annual rental rate paid by the taxpayer less any annual rental rate received by the taxpayer from
2110 subrentals.]
2111 [(11) The average value of property shall be determined by averaging the values at the
2112 beginning and ending of the tax period but the commission may require the averaging of
2113 monthly values during the tax period, if reasonably required to reflect properly the average
2114 value of the taxpayer's property.]
2115 [(12) The payroll factor is a fraction, the numerator of which is the total amount paid in
2116 this state during the tax period by the taxpayer for compensation, and the denominator of which
2117 is the total compensation paid everywhere during the tax period.]
2118 [(13) Compensation is paid in this state if:]
2119 [(a) the individual's service is performed entirely within the state; or]
2120 [(b) the individual's service is performed both within and without the state, but the
2121 service performed without the state is incidental to the individual's service within the state; or]
2122 [(c) some of the service is performed in the state and:]
2123 [(i) the base of operations or, if there is no base of operations, the place from which the
2124 service is directed or controlled is in the state; or]
2125 [(ii) the base of operations or the place from which the service is directed or controlled
2126 is not in any state in which some part of the service is performed, but the individual's residence
2127 is in this state.]
2128 [(14) The sales factor is a fraction, the numerator of which is the total sales of the
2129 taxpayer in this state during the tax period, and the denominator of which is the total sales of
2130 the taxpayer everywhere during the tax period.]
2131 [(15) Sales of tangible personal property are in this state if the property is delivered or
2132 shipped to a purchaser within this state regardless of the f.o.b. point or other conditions of the
2133 sale.]

2134 [(16) Sales, other than sales of tangible personal property, are in this state if:]
2135 [(a) the income-producing activity is performed in this state; or]
2136 [(b) the income-producing activity is performed both in and outside this state and a
2137 greater proportion of the income-producing activity is performed in this state than in any other
2138 state, based on costs of performance.]
2139 [(17) If the allocation and apportionment provisions of this chapter do not fairly
2140 represent the extent of the taxpayer's business activity in this state, the taxpayer may petition
2141 for or the commission may require, in respect of all or any part of the taxpayer's business
2142 activity, if reasonable:]
2143 [(a) separate accounting;]
2144 [(b) the exclusion of any one or more of the factors;]
2145 [(c) the inclusion of one or more additional factors which will fairly represent the
2146 taxpayer's business activity in this state; or]
2147 [(d) the employment of any other method to effectuate an equitable allocation and
2148 apportionment of the taxpayer's income.]
2149 Section 32. Section 59-10-119 is amended to read:
2150 59-10-119. Returns by husband and wife, either or both of whom is a
2151 nonresident.
2152 (1) If the [federal taxable] adjusted gross income of a husband and wife [(] who are
2153 both nonresidents of this state[)] is reported or determined on separate federal individual
2154 income tax returns, [their] the husband's and wife's state taxable incomes in this state shall be
2155 separately determined.
2156 (2) If the [federal taxable] adjusted gross income of a husband and wife [(] who are
2157 both nonresidents[)] of this state is reported or determined on a joint federal individual income
2158 tax return [their], the husband's and wife's tax shall be reported or determined in this state on a
2159 joint return.
2160 (3) (a) If [either husband or wife] one spouse is a nonresident of this state and the other
2161 spouse is a resident of this state, separate taxes shall be determined on [their] each spouse's
2162 separate state taxable incomes on [such forms as the commission shall prescribe, unless both
2163 elect to determine their state taxable income as if both were residents] forms prescribed by the
2164 commission.

2165 (b) Notwithstanding Subsection (3)(a), a husband and wife may elect to be considered
2166 to be residents of this state for purposes of determining state taxable income for a taxable year.
2167 (c) If [a husband and wife (one being a resident, the other a nonresident)] one spouse
2168 who is a nonresident of this state and the other spouse who is a resident of this state file a joint
2169 federal income tax return, but determine [their] state taxable income separately, [they] the
2170 spouses shall compute their taxable incomes in this state as if their [federal taxable] adjusted
2171 gross incomes had been determined separately.
2172 Section 33. Section 59-10-120 is amended to read:
2173 59-10-120. Change of status as resident or nonresident.
2174 (1) If an individual changes [his] the individual's status during [his] the taxable year
2175 from resident to nonresident or from nonresident to resident, the commission may by rule,
2176 made in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, require
2177 [him] the individual to file one return for the portion of the taxable year during which [he] the
2178 individual is a resident and another return for the portion of the taxable year during which [he]
2179 the individual is a nonresident.
2180 (2) [Except as provided in Subsection (3) the] The taxable income of the individual
2181 described in Subsection (1) shall be determined as provided in this chapter for residents and for
2182 nonresidents as if the individual's taxable year for federal income tax purposes were limited to
2183 the period of [his] the individual's resident and nonresident status respectively.
2184 [(3) There shall be included in determining taxable income from sources within or
2185 without this state, as the case may be, income, gain, loss, or deduction accrued prior to the
2186 change of status, even though not otherwise includable or allowable in respect of the period
2187 prior to such change, but the taxation or deduction of items received or accrued prior to the
2188 change of status shall not be affected by the change.]
2189 Section 34. Section 59-10-121 is amended to read:
2190 59-10-121. Proration when two returns required.
2191 [Where two returns are required to be filed as provided in] If an individual is required
2192 to file two returns for a taxable year under Section 59-10-120 :
2193 (1) personal exemptions and the standard deduction as used on the federal individual
2194 income tax return shall be prorated between the two returns, under rules prescribed by the
2195 commission in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, to

2196 reflect the proportions of the taxable year during which the individual was a resident and a
2197 nonresident; and
2198 (2) the total amount of the taxes due [thereon shall] on the two returns may not be less
2199 than the total amount of the taxes that would be due if the total of the taxable incomes reported
2200 on the two returns [were includable] had been included in one return.
2201 Section 35. Section 59-10-122 is amended to read:
2202 59-10-122. Taxable year.
2203 (1) For purposes of [the] a tax imposed by this chapter, [a taxpayer's] the taxable year
2204 of a resident or nonresident individual or resident or nonresident estate or trust shall be the
2205 same as [his] the taxable year of the resident or nonresident individual or resident or
2206 nonresident estate or trust for federal income tax purposes.
2207 (2) (a) If [a taxpayer's] the taxable year of a resident or nonresident individual or
2208 resident or nonresident estate or trust is changed for federal income tax purposes, [his] that
2209 taxable year for purposes of [the] a tax imposed by this chapter shall be [similarly] changed in
2210 the same manner as the change for federal income tax purposes.
2211 (b) If a change in a taxable year results in a taxable period of less than 12 months for
2212 federal income tax purposes, [the] that same taxable period shall be used in computing [the] a
2213 tax imposed by this chapter.
2214 Section 36. Section 59-10-123 is amended to read:
2215 59-10-123. Accounting method.
2216 (1) For purposes of [the] a tax imposed by this chapter, a [taxpayer's] resident or
2217 nonresident individual's or resident or nonresident estate's or trust's method of accounting shall
2218 be the same as the method [employed] of accounting the resident or nonresident individual or
2219 resident or nonresident estate or trust uses for federal income tax purposes.
2220 (2) If a [taxpayer's] resident or nonresident individual's or resident or nonresident
2221 estate's or trust's method of accounting is changed for federal income tax purposes, [his] the
2222 resident or nonresident individual's or resident or nonresident estate's or trust's method of
2223 accounting shall be [similarly] changed [and reflected in each return filed for Utah individual
2224 income tax purposes] in the same manner:
2225 (a) for purposes of a tax imposed by this chapter; and
2226 (b) for any taxable year for which [such] the change in the method of accounting is

2227 [reflected in his return] made for federal income tax purposes.
2228 Section 37. Section 59-10-124 is amended to read:
2229 59-10-124. Adjustments between taxable years after change in accounting
2230 method.
2231 (1) In computing [a taxpayer's] a resident or nonresident individual's or resident or
2232 nonresident estate's or trust's state taxable income for [any] a taxable year under a method of
2233 accounting different from the method under which the [taxpayer's] resident or nonresident
2234 individual's or resident or nonresident estate's or trust's state taxable income [for the previous
2235 year] was computed[, there shall be taken into account those adjustments which are
2236 determined, under rules prescribed by the commission, to be necessary solely by reason of the
2237 change, to prevent double inclusion or exclusion of an item of gross income, or double
2238 allowance or disallowance of an item of deduction or credit.] for the previous taxable year,
2239 state taxable income shall be increased or decreased:
2240 (a) to prevent double inclusion or exclusion of an item of gross income as a result of
2241 the change in the method of accounting; or
2242 (b) to prevent double allowance or disallowance of a subtraction from or addition to
2243 gross income as a result of the change in the method of accounting.
2244 (2) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
2245 commission may make rules for making an increase or decrease required by Subsection (1).
2246 Section 38. Section 59-10-125 is amended to read:
2247 59-10-125. Adjustment after change of accounting method.
2248 (1) If a taxpayer's method of accounting is changed, other than from an accrual to an
2249 installment method, any additional tax that results from adjustments determined to be necessary
2250 solely by reason of the change [shall] may not be greater than if [such] those adjustments were
2251 ratably allocated and included for the taxable year of the change and the preceding taxable
2252 years, not in excess of two, during which the taxpayer used the method of accounting from
2253 which the change is made.
2254 (2) If a taxpayer's method of accounting is changed from an accrual to an installment
2255 method, any additional tax for the taxable year of [such] the change [of] in the method of
2256 accounting and for any subsequent taxable year that is attributable to the receipt of installment
2257 payments properly accrued in a prior taxable year, shall be reduced by the portion of tax for any

2258 prior taxable year attributable to the accrual of such installment payments, under rules
2259 prescribed by the commission in accordance with Title 63, Chapter 46a, Utah Administrative
2260 Rulemaking Act.
2261 Section 39. Section 59-10-126 is amended to read:
2262 59-10-126. Business entities not subject to tax -- Exceptions.
2263 (1) [An association, trust, or other unincorporated organization] A business entity that
2264 is taxable as a corporation for federal income tax purposes [shall]:
2265 (a) may not be subject to the tax imposed by this chapter[, but shall be]; and
2266 (b) is subject to [the provisions of Title 59,] Chapter 7, Corporate Franchise and
2267 Income Taxes.
2268 [(2) To the extent an association, trust, or other unincorporated organization which by
2269 reason of its purposes or activities is exempt from federal income tax, it shall be exempt from
2270 the tax imposed by this chapter, but to the extent that such an otherwise exempt organization
2271 has, or is treated as having, income subject to tax for federal tax purposes, it shall be subject to
2272 the provisions of Title 59, Chapter 7.]
2273 (2) A business entity that is exempt from federal income taxation is exempt from the
2274 tax imposed by this chapter.
2275 (3) Notwithstanding Subsection (2), if a business entity that is exempt from federal
2276 income taxation has income that is subject to federal income taxation, that income is subject to
2277 taxation under Chapter 7, Corporate Franchise and Income Taxes.
2278 Section 40. Section 59-10-201 is amended to read:
2279 59-10-201. Taxation of resident trusts and estates.
2280 (1) [A] Except as provided in Subsection (2), a tax determined in accordance with the
2281 [rates] rate prescribed by [Section 59-10-104 for individuals filing separately] Subsection
2282 59-10-104 (2)(b) is imposed for each taxable year on the state taxable income of each resident
2283 estate or trust[, except for trusts].
2284 (2) The following are not subject to a tax imposed by this part:
2285 (a) a resident estate or trust that is not required to file a federal income tax return for
2286 estates and trusts for the taxable year; or
2287 (b) a resident trust taxed as [corporations] a corporation.
2288 [(2)] (3) A resident estate or trust shall be allowed the credit provided in Section

2289 59-10-1003 , relating to an income tax imposed by another state, except that the limitation shall
2290 be computed by reference to the taxable income of the estate or trust.
2291 [(3)] (4) The property of the Utah Educational Savings Plan trust established in Title
2292 53B, Chapter 8a, Higher Education Savings Incentive Program, and its income from operations
2293 and investments are exempt from all taxation by the state under this chapter.
2294 Section 41. Section 59-10-201.1 is amended to read:
2295 59-10-201.1. State taxable income of a resident estate or trust defined.
2296 [The] For a taxable year, the state taxable income of a resident estate or trust means [its
2297 federal taxable] the unadjusted income [as calculated in Section 641 (a) and (b), Internal
2298 Revenue Code] of the resident estate or trust for that taxable year, as adjusted by Sections
2299 59-10-202 , 59-10-209.1 , and 59-10-210 .
2300 Section 42. Section 59-10-202 is amended to read:
2301 59-10-202. Additions to and subtractions from unadjusted income of a resident or
2302 nonresident estate or trust.
2303 (1) There shall be added to[ federal taxable] unadjusted income of a resident or
2304 nonresident estate or trust:
2305 [(a) the amount of any income tax imposed by this or any predecessor Utah individual
2306 income tax law and the amount of any income tax imposed by the laws of another state, the
2307 District of Columbia, or a possession of the United States, to the extent deducted from federal
2308 adjusted total income as defined in Section 62, Internal Revenue Code, in determining federal
2309 taxable income;]
2310 [(b)] (a) a lump sum distribution allowable as a deduction under Section 402(d)(3) [of
2311 the], Internal Revenue Code, to the extent deductible under Section 62(a)(8) [of the], Internal
2312 Revenue Code, in determining adjusted gross income;
2313 [(c)] (b) except as provided in Subsection (3), [for taxable years beginning on or after
2314 January 1, 2003,] for bonds, notes, and other evidences of indebtedness acquired on or after
2315 January 1, 2003, the interest from bonds, notes, and other evidences of indebtedness issued by
2316 one or more of the following entities:
2317 (i) a state other than this state;
2318 (ii) the District of Columbia;
2319 (iii) a political subdivision of a state other than this state; or

2320 (iv) an agency or instrumentality of an entity described in Subsections (1)[(c)](b)(i)
2321 through (iii);
2322 [(d)] (c) any portion of federal taxable income for a taxable year if that federal taxable
2323 income is derived from stock:
2324 (i) in an S corporation; and
2325 (ii) that is held by an electing small business trust;
2326 [(e) (i)] (d) the amount withdrawn under Title 53B, Chapter 8a, Higher Education
2327 Savings Incentive Program, from the account of a resident or nonresident estate or trust that is
2328 an account owner as defined in Section 53B-8a-102 , for the taxable year for which the amount
2329 is withdrawn, if that amount withdrawn from the account of the resident or nonresident estate
2330 or trust that is the account owner:
2331 [(A)] (i) is not expended for higher education costs as defined in Section 53B-8a-102 ;
2332 and
2333 [(B)] (ii) is:
2334 (A) subtracted by the resident or nonresident estate or trust:
2335 (I) that is the account owner; and
2336 [(II) in accordance with Subsection (2)(j)(i); and]
2337 [(ii) the amount withdrawn under Title 53B, Chapter 8a, Higher Education Savings
2338 Incentive Program, from the account of a resident or nonresident estate or trust that is an
2339 account owner as defined in Section 53B-8a-102 , for the taxable year beginning on or after
2340 January 1, 2007, but beginning on or before December 31, 2007, if that amount withdrawn
2341 from the account of the resident or nonresident estate or trust that is the account owner:]
2342 [(A) is not expended for higher education costs as defined in Section 53B-8a-102 ; and]
2343 [(B) is subtracted by the resident or nonresident estate or trust:]
2344 [(I) that is the account owner; and]
2345 [(II) in accordance with Subsection (2)(j)(ii); and]
2346 (II) on the resident or nonresident estate's or trust's return filed under this chapter for a
2347 taxable year beginning on or before December 31, 2007; or
2348 (B) used as the basis for the resident or nonresident estate or trust that is the account
2349 owner to claim a tax credit under Section 59-10-1017 ; and
2350 [(f)] (e) any fiduciary adjustments required by Section 59-10-210 .

2351 (2) There shall be subtracted from [federal taxable] unadjusted income of a resident or
2352 nonresident estate or trust:
2353 (a) the interest or a dividend on obligations or securities of the United States and its
2354 possessions or of any authority, commission, or instrumentality of the United States, to the
2355 extent that interest or dividend is included in gross income for federal income tax purposes for
2356 the taxable year but exempt from state income taxes under the laws of the United States, but
2357 the amount subtracted under this Subsection (2) shall be reduced by any interest on
2358 indebtedness incurred or continued to purchase or carry the obligations or securities described
2359 in this Subsection (2), and by any expenses incurred in the production of interest or dividend
2360 income described in this Subsection (2) to the extent that such expenses, including amortizable
2361 bond premiums, are deductible in determining federal taxable income;
2362 [(b) 1/2 of the net amount of any income tax paid or payable to the United States after
2363 all allowable credits, as per the United States fiduciary income tax return of the taxpayer for the
2364 same taxable year;]
2365 [(c)] (b) income of an irrevocable resident trust if:
2366 (i) the income would not be treated as state taxable income derived from Utah sources
2367 under Section 59-10-204 if received by a nonresident trust;
2368 (ii) the trust first became a resident trust on or after January 1, 2004;
2369 (iii) no assets of the trust were held, at any time after January 1, 2003, in another
2370 resident irrevocable trust created by the same settlor or the spouse of the same settlor;
2371 (iv) the trustee of the trust is a trust company as defined in Subsection 7-5-1 (1)(d);
2372 (v) the amount subtracted under this Subsection (2)(b) is reduced to the extent the
2373 settlor or any other person is treated as an owner of any portion of the trust under Subtitle A,
2374 Subchapter J, Subpart E of the Internal Revenue Code; and
2375 (vi) the amount subtracted under this Subsection (2)(b) is reduced by any interest on
2376 indebtedness incurred or continued to purchase or carry the assets generating the income
2377 described in this Subsection (2)(b), and by any expenses incurred in the production of income
2378 described in this Subsection (2)(b), to the extent that those expenses, including amortizable
2379 bond premiums, are deductible in determining federal taxable income;
2380 [(d)] (c) if the conditions of Subsection (4)(a) are met, the amount of income of a
2381 resident or nonresident estate or trust derived from a deceased Ute tribal member:

2382 (i) during a time period that the Ute tribal member resided on homesteaded land
2383 diminished from the Uintah and Ouray Reservation; and
2384 (ii) from a source within the Uintah and Ouray Reservation;
2385 [(e) (i) for taxable years beginning on or after January 1, 2003, the total amount of a
2386 resident or nonresident estate's or trust's short-term capital gain or long-term capital gain on a
2387 capital gain transaction:]
2388 [(A) that occurs on or after January 1, 2003;]
2389 [(B) if 70% or more of the gross proceeds of the capital gain transaction are expended:]
2390 [(I) to purchase qualifying stock in a Utah small business corporation; and]
2391 [(II) within a 12-month period after the day on which the capital gain transaction
2392 occurs; and]
2393 [(C) if, prior to the purchase of the qualifying stock described in Subsection
2394 (2)(e)(i)(B)(I), the resident or nonresident estate or trust did not have an ownership interest in
2395 the Utah small business corporation that issued the qualifying stock; and]
2396 [(ii) in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act,
2397 the commission may make rules:]
2398 [(A) defining the term "gross proceeds"; and]
2399 [(B) for purposes of Subsection (2)(e)(i)(C), prescribing the circumstances under which
2400 a resident or nonresident estate or trust has an ownership interest in a Utah small business
2401 corporation;]
2402 [(f) for the taxable year beginning on or after January 1, 2005, but beginning on or
2403 before December 31, 2005, the first $2,200 of income of a resident or nonresident estate or
2404 trust that is derived from a deceased qualifying military servicemember:]
2405 [(i) for service:]
2406 [(A) as a qualifying military servicemember; or]
2407 [(B) under an order into active service in accordance with Section 39-1-5 ; and]
2408 [(ii) to the extent that income is included in total income on that resident or nonresident
2409 estate's or trust's federal income tax return for estates and trusts for that taxable year;]
2410 [(g)] (d) any amount:
2411 (i) received by a resident or nonresident estate or trust;
2412 (ii) that constitutes a refund of taxes imposed by:

2413 (A) a state; or
2414 (B) the District of Columbia; and
2415 (iii) to the extent that amount is included in total income on that resident or nonresident
2416 estate's or trust's federal tax return for estates and trusts for that taxable year;
2417 [(h)] (e) the amount of a railroad retirement benefit:
2418 (i) paid:
2419 (A) in accordance with The Railroad Retirement Act of 1974, 45 U.S.C. Sec. 231 et
2420 seq.;
2421 (B) to a resident or nonresident estate or trust derived from a deceased resident or
2422 nonresident individual; and
2423 (C) for the taxable year; and
2424 (ii) to the extent that railroad retirement benefit is included in total income on that
2425 resident or nonresident estate's or trust's federal tax return for estates and trusts;
2426 [(i)] (f) an amount:
2427 (i) received by a resident or nonresident estate or trust if that amount is derived from a
2428 deceased enrolled member of an American Indian tribe; and
2429 (ii) to the extent that the state is not authorized or permitted to impose a tax under this
2430 part on that amount in accordance with:
2431 (A) federal law;
2432 (B) a treaty; or
2433 (C) a final decision issued by a court of competent jurisdiction;
2434 [(j) (i) subject to Subsection (1)(e)(i), for taxable years beginning on or after January 1,
2435 2007, the amount of a qualified investment as defined in Section 53B-8a-102 that:]
2436 [(A) a resident or nonresident estate or trust that is an account owner as defined in
2437 Section 53B-8a-102 makes during the taxable year;]
2438 [(B) the resident or nonresident estate or trust described in Subsection (2)(j)(i)(A) does
2439 not deduct on a federal tax return for estates and trusts; and]
2440 [(C) does not exceed the maximum amount of the qualified investment that may be
2441 subtracted from federal taxable income for a taxable year in accordance with Subsections
2442 53B-8a-106 (1)(e) and (f); and]
2443 [(ii) subject to Subsection (1)(e)(ii), for the taxable year beginning on or after January

2444 1, 2007, but beginning on or before December 31, 2007 only, and in addition to any subtraction
2445 a resident or nonresident estate or trust that is an account owner as defined in Section
2446 53B-8a-102 makes in accordance with Subsection (2)(j)(i), the amount of a qualified
2447 investment as defined in Section 53B-8a-102 that:]
2448 [(A) a resident or nonresident estate or trust that is an account owner as defined in
2449 Section 53B-8a-102 could have subtracted under Subsection (2)(j)(i) for the taxable year
2450 beginning on or after January 1, 2006, but beginning on or before December 31, 2006, had the
2451 subtraction under Subsection (2)(j)(i) been in effect for the taxable year beginning on or after
2452 January 1, 2006, but beginning on or before December 31, 2006;]
2453 [(B) the resident or nonresident estate or trust described in Subsection (2)(j)(ii)(A)
2454 makes during the taxable year beginning on or after January 1, 2006, but beginning on or
2455 before December 31, 2006;]
2456 [(C) the resident or nonresident estate or trust described in Subsection (2)(j)(ii)(A) does
2457 not deduct on a federal tax return for estates and trusts; and]
2458 [(D) does not exceed the maximum amount of the qualified investment that may be
2459 subtracted from federal taxable income:]
2460 [(I) for the taxable year beginning on or after January 1, 2006, but beginning on or
2461 before December 31, 2006; and]
2462 [(II) in accordance with Subsections 53B-8a-106 (1)(e) and (f); and]
2463 (g) the amount that a qualified nongrantor charitable lead trust deducts under Section
2464 642(c), Internal Revenue Code, as a charitable contribution deduction, as allowed on the
2465 qualified nongrantor charitable lead trust's federal income tax return for estates and trusts for
2466 the taxable year; and
2467 [(k)] (h) any fiduciary adjustments required by Section 59-10-210 .
2468 (3) Notwithstanding Subsection (1)[(c)](b), interest from bonds, notes, and other
2469 evidences of indebtedness issued by an entity described in Subsections (1)[(c)](b)(i) through
2470 (iv) may not be added to [federal taxable] unadjusted income of a resident or nonresident estate
2471 or trust if, as annually determined by the commission:
2472 (a) for an entity described in Subsection (1)[(c)](b)(i) or (ii), the entity and all of the
2473 political subdivisions, agencies, or instrumentalities of the entity do not impose a tax based on
2474 income on any part of the bonds, notes, and other evidences of indebtedness of this state; or

2475 (b) for an entity described in Subsection (1)[(c)](b)(iii) or (iv), the following do not
2476 impose a tax based on income on any part of the bonds, notes, and other evidences of
2477 indebtedness of this state:
2478 (i) the entity; or
2479 (ii) (A) the state in which the entity is located; or
2480 (B) the District of Columbia, if the entity is located within the District of Columbia.
2481 (4) (a) A subtraction for an amount described in Subsection (2)[(d)](c) is allowed only
2482 if:
2483 (i) the income is derived from a deceased Ute tribal member; and
2484 (ii) the governor and the Ute tribe execute and maintain an agreement meeting the
2485 requirements of this Subsection (4).
2486 (b) The agreement described in Subsection (4)(a):
2487 (i) may not:
2488 (A) authorize the state to impose a tax in addition to a tax imposed under this chapter;
2489 (B) provide a subtraction under this section greater than or different from the
2490 subtraction described in Subsection (2)[(d)](c); or
2491 (C) affect the power of the state to establish rates of taxation; and
2492 (ii) shall:
2493 (A) provide for the implementation of the subtraction described in Subsection
2494 (2)[(d)](c);
2495 (B) be in writing;
2496 (C) be signed by:
2497 (I) the governor; and
2498 (II) the chair of the Business Committee of the Ute tribe;
2499 (D) be conditioned on obtaining any approval required by federal law; and
2500 (E) state the effective date of the agreement.
2501 (c) (i) The governor shall report to the commission by no later than February 1 of each
2502 year regarding whether or not an agreement meeting the requirements of this Subsection (4) is
2503 in effect.
2504 (ii) If an agreement meeting the requirements of this Subsection (4) is terminated, the
2505 subtraction permitted under Subsection (2)[(d)](c) is not allowed for taxable years beginning

2506 on or after the January 1 following the termination of the agreement.
2507 (d) For purposes of Subsection (2)[(d)](c) and in accordance with Title 63, Chapter
2508 46a, Utah Administrative Rulemaking Act, the commission may make rules:
2509 (i) for determining whether income is derived from a source within the Uintah and
2510 Ouray Reservation; and
2511 (ii) that are substantially similar to how adjusted gross income derived from Utah
2512 sources is determined under Section 59-10-117 .
2513 Section 43. Section 59-10-204 is amended to read:
2514 59-10-204. State taxable income of a nonresident estate or trust.
2515 [The] For a taxable year, the state taxable income of a nonresident estate or trust [shall
2516 be its state taxable] is an amount calculated by:
2517 (1) determining the unadjusted income [as calculated in Section 59-10-201.1 ,] of the
2518 nonresident estate or trust for that taxable year after making the adjustments required by:
2519 (a) Section 59-10-202 ;
2520 (b) Section 59-10-207 ;
2521 (c) Section 59-10-209.1 ; or
2522 (d) Section 59-10-210 ; and
2523 (2) calculating the portion of the amount determined under Subsection (1) that is
2524 derived from Utah sources determined in accordance with the principles of Section 59-10-117 [,
2525 and adjusted as provided in Section 59-10-207 ].
2526 Section 44. Section 59-10-205 is amended to read:
2527 59-10-205. Tax on income derived from Utah sources.
2528 [A tax] (1) Except as provided in Subsection (2), a tax is imposed on a nonresidential
2529 estate or trust in an amount equal to the product of:
2530 (a) the nonresident estate's or trust's state taxable income[, as calculated in Section
2531 59-10-204 , of every nonresident estate or trust in accordance with the rates prescribed in
2532 Section 59-10-104 for individuals filing separately. The tax shall only be applied to income
2533 derived from Utah sources as adjusted by Section 59-10-207 , including such items from
2534 another estate or trust of which the first estate or trust is a beneficiary.] as determined under
2535 Section 59-10-204 ; and
2536 (b) the percentage listed in Subsection 59-10-104 (2).

2537 (2) The following are not subject to a tax imposed by this part:
2538 (a) a nonresident estate or trust that is not required to file a federal income tax return
2539 for estates and trusts for the taxable year; or
2540 (b) a nonresident trust taxed as a corporation.
2541 Section 45. Section 59-10-207 is amended to read:
2542 59-10-207. Share of a nonresident estate or trust and beneficiaries in state taxable
2543 income.
2544 (1) The following shall be determined as provided in this section:
2545 [(1) The](a) the share of a nonresident estate or trust [and its beneficiaries in items] or
2546 a nonresident beneficiary of a nonresident estate or trust in an item of income, gain, loss, [and]
2547 or deduction [entering into the definition of] that constitutes distributable net income; and [the
2548 share]
2549 (b) for purposes of Section 59-10-116 , the share of a nonresident beneficiary of any
2550 estate or trust in estate or trust income, gain, loss, [and] or deduction [shall be determined as
2551 follows:].
2552 (2) (a) [To] The modifications described in Sections 59-10-202 and 59-10-210 shall be
2553 added to or subtracted from the amount of [items] an item of income, gain, loss, [and] or
2554 deduction that [enter into the definition of] constitutes distributable net income [there shall be
2555 added or subtracted, as the case may be, the modifications described in Sections 59-10-202 and
2556 59-10-210 ] to the extent [they relate to items] the item relates to an item of income, gain, loss,
2557 [and] or deduction that also [enter into the definition of] constitutes distributable net income.
2558 [No]
2559 (b) A modification [shall] may not be made under this section [that has the effect of
2560 duplicating] if the modification duplicates an item already reflected in [the definition of]
2561 distributable net income.
2562 [(b)] (3) (a) The amount determined under Subsection [(1)] (2)(a) shall be allocated
2563 among the estate or trust and [its] the beneficiaries [(including solely for the purpose of this
2564 allocation, resident beneficiaries)] of the estate or trust, including a resident beneficiary, in
2565 proportion to [their respective shares of federal] the estate's, trust's, or beneficiary's share of
2566 distributable net income. [The amounts so allocated shall have]
2567 (b) An amount allocated in accordance with Subsection (3)(a) has the same character

2568 as for federal income tax purposes.
2569 [(c)] (4) (a) If [the] an estate or trust [has no federal] does not have distributable net
2570 income for the taxable year, the share of each beneficiary in the [net] amount determined under
2571 Subsection [(1)] (2)(a) shall be in proportion to [his] the beneficiary's share of the estate or trust
2572 income for [such] that taxable year, under state law or the terms of the governing instrument,
2573 that is required to be distributed currently and any other amounts of [such] that income
2574 distributed in [such] that taxable year. [Any]
2575 (b) For purposes of this Subsection (4), any balance of [such] net income shall be
2576 allocated to the estate or trust.
2577 [(2) The] (5) (a) In accordance with Title 63, Chapter 46a, Utah Administrative
2578 Rulemaking Act, the commission may by rule establish [such] one or more other [method or]
2579 methods of determining the [respective] shares of [the beneficiaries] a beneficiary and of [the]
2580 an estate or trust in [its]:
2581 (i) income derived from sources in this state[,]; and [in the]
2582 (ii) modifications related [thereto, as may be appropriate and equitable. The] to
2583 income, gain, loss, or deduction.
2584 (b) A fiduciary may elect to use [any other methods prescribed in] a method allowed by
2585 this Subsection (5) only [when] if the allocation of [such respective shares] a share under [this
2586 section would result] Subsection (3) or (4):
2587 (i) results in an inequity in the allocation [which]; and
2588 (ii) the inequity described in Subsection (5)(b)(i) is substantial [both]:
2589 (A) in amount; and
2590 (B) in relation to the total amount of the modifications [referred to] described in
2591 Subsection [(1)] (2)(a).
2592 Section 46. Section 59-10-209.1 is amended to read:
2593 59-10-209.1. Adjustments to unadjusted income.
2594 (1) The commission shall allow an adjustment to [state taxable] unadjusted income of a
2595 resident or nonresident estate or trust if the resident or nonresident estate or trust would
2596 otherwise:
2597 (a) receive a double tax benefit under this chapter; or
2598 (b) suffer a double tax detriment under this chapter.

2599 (2) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
2600 commission may make rules to allow for the adjustment to [state taxable] unadjusted income
2601 required by Subsection (1).
2602 Section 47. Section 59-10-210 is amended to read:
2603 59-10-210. Fiduciary adjustments.
2604 (1) A share of the fiduciary adjustments described in Subsection (2) shall be added to
2605 or subtracted from [federal taxable] unadjusted income:
2606 (a) of:
2607 (i) a resident or nonresident estate or trust; or
2608 (ii) a resident or nonresident beneficiary of a resident or nonresident estate or trust; and
2609 (b) as provided in this section.
2610 (2) For purposes of Subsection (1), the fiduciary adjustments are the following
2611 amounts:
2612 (a) the additions to and subtractions from [federal taxable] unadjusted income of a
2613 resident or nonresident estate or trust required by Section 59-10-202 [, except for Subsection
2614 59-10-202 (2)(b)]; and
2615 (b) a tax credit claimed by a resident or nonresident estate or trust as allowed by:
2616 (i) Section 59-6-102 ;
2617 (ii) Part 10, Nonrefundable Tax Credit Act;
2618 (iii) Part 11, Refundable Tax Credit Act;
2619 (iv) Section 59-13-202 ;
2620 (v) Section 63-38f-413 ; or
2621 (vi) Section 63-38f-503 .
2622 (3) (a) The respective shares of an estate or trust and its beneficiaries, including for the
2623 purpose of this allocation a nonresident beneficiary, in the state fiduciary adjustments, shall be
2624 allocated in proportion to their respective shares of federal distributable net income of the
2625 estate or trust.
2626 (b) If the estate or trust described in Subsection (3)(a) has no federal distributable net
2627 income for the taxable year, the share of each beneficiary in the fiduciary adjustments shall be
2628 allocated in proportion to that beneficiary's share of the estate or trust income for the taxable
2629 year that is, under state law or the governing instrument, required to be distributed currently

2630 plus any other amounts of that income distributed in that taxable year.
2631 (c) After making the allocations required by Subsections (3)(a) and (b), any balance of
2632 the fiduciary adjustments shall be allocated to the estate or trust.
2633 (4) (a) The commission shall allow a fiduciary to use a method for determining the
2634 allocation of the fiduciary adjustments described in Subsection (2) other than the method
2635 described in Subsection (3) if using the method described in Subsection (3) results in an
2636 inequity:
2637 (i) in allocating the fiduciary adjustments described in Subsection (2); and
2638 (ii) if the inequity is substantial:
2639 (A) in amount; and
2640 (B) in relation to the total amount of the fiduciary adjustments described in Subsection
2641 (2).
2642 (b) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
2643 commission may make rules authorizing a fiduciary to use a method for determining the
2644 allocation of the fiduciary adjustments described in Subsection (2) other than the method
2645 described in Subsection (3) if using the method described in Subsection (3) results in an
2646 inequity:
2647 (i) in allocating the fiduciary adjustments described in Subsection (2); and
2648 (ii) if the inequity is substantial:
2649 (A) in amount; and
2650 (B) in relation to the total amount of the fiduciary adjustments described in Subsection
2651 (2).
2652 Section 48. Section 59-10-507 is amended to read:
2653 59-10-507. Return by a pass-through entity.
2654 (1) [For purposes of] As used in this section[, "taxable]:
2655 (a) "Pass-through entity" is as defined in Section 59-10-1402 .
2656 (b) "Taxable year" means a year or other time period that would be a taxable year of a
2657 [partnership if the partnership] pass-through entity if the pass-through entity were subject to
2658 taxation under this chapter.
2659 (2) A [partnership] pass-through entity having any income derived from sources in this
2660 state shall make a return for the taxable year as prescribed by the commission.

2661 (3) For purposes of Subsection (2), a [partnership's] pass-through entity's income
2662 derived from sources in this state shall be determined in accordance with [Section 59-10-303]
2663 the principles of Section 59-10-1405 .
2664 Section 49. Section 59-10-1002.1 , which is renumbered from Section 59-10-1016 is
2665 renumbered and amended to read:
2666 [59-10-1016]. 59-10-1002.1. Removal of tax credit from tax return and
2667 prohibition on claiming or carrying forward a tax credit -- Conditions for removal and
2668 prohibition on claiming or carrying forward a tax credit -- Commission reporting
2669 requirements.
2670 (1) As used in this section, "tax return" means a tax return filed in accordance with this
2671 chapter.
2672 (2) Beginning two taxable years after the requirements of Subsection (3) are met:
2673 (a) the commission shall remove a tax credit allowed under this part from each tax
2674 return on which the tax credit appears; and
2675 (b) a claimant, estate, or trust filing a tax return may not claim or carry forward the tax
2676 credit.
2677 (3) The commission shall remove a tax credit allowed under this part from a tax return
2678 and a claimant, estate, or trust filing a tax return may not claim or carry forward [a] the tax
2679 credit as provided in Subsection (2) if:
2680 (a) the total amount of the tax credit claimed or carried forward by all claimants,
2681 estates, or trusts filing tax returns is less than $10,000 per year for three consecutive taxable
2682 years beginning on or after January 1, 2002; and
2683 (b) less than ten claimants, estates, and trusts per year for the three consecutive taxable
2684 years described in Subsection (3)(a), file a tax return claiming or carrying forward the tax
2685 credit.
2686 (4) The commission shall, on or before the November interim meeting of the year after
2687 the taxable year in which the requirements of Subsection (3) are met:
2688 (a) report to the Revenue and Taxation Interim Committee that in accordance with this
2689 section:
2690 (i) the commission is required to remove a tax credit from each tax return on which the
2691 tax credit appears; and

2692 (ii) a claimant, estate, or trust filing a tax return may not claim or carry forward the tax
2693 credit; and
2694 (b) notify each state agency required by statute to assist in the administration of the tax
2695 credit that in accordance with this section:
2696 (i) the commission is required to remove a tax credit from each tax return on which the
2697 tax credit appears; and
2698 (ii) a claimant, estate, or trust filing a tax return may not claim or carry forward the tax
2699 credit.
2700 Section 50. Section 59-10-1002.2 , which is renumbered from Section 59-10-1206.9 is
2701 renumbered and amended to read:
2702 [59-10-1206.9]. 59-10-1002.2. Apportionment of tax credits.
2703 (1) A nonresident individual or a part-year resident individual that claims a tax credit
2704 in accordance with Section [ 59-10-1206.1 , 59-10-1206.2 , or 59-10-1206.3 ] 59-10-1017 ,
2705 59-10-1018 , 59-10-1019 , 59-10-1021 , 59-10-1022 , 59-10-1023 , or 59-10-1024 , may only claim
2706 an apportioned amount of the tax credit equal to:
2707 [(1)] (a) for a nonresident individual, the product of:
2708 [(a)] (i) the state income tax percentage for the nonresident individual; and
2709 [(b)] (ii) the amount of the tax credit that the nonresident individual would have been
2710 allowed to claim but for the apportionment requirements of this section; or
2711 [(2)] (b) for a part-year resident individual, the product of:
2712 [(a)] (i) the state income tax percentage for the part-year resident individual; and
2713 [(b)] (ii) the amount of the tax credit that the part-year resident individual would have
2714 been allowed to claim but for the apportionment requirements of this section.
2715 (2) A nonresident estate or trust that claims a tax credit in accordance with Section
2716 59-10-1017 , 59-10-1020 , 59-10-1022 , or 59-10-1024 , may only claim an apportioned amount
2717 of the tax credit equal to the product of:
2718 (a) the state income tax percentage for the nonresident estate or trust; and
2719 (b) the amount of the tax credit that the nonresident estate or trust would have been
2720 allowed to claim but for the apportionment requirements of this section.
2721 Section 51. Section 59-10-1014 is amended to read:
2722 59-10-1014. Renewable energy systems tax credit -- Definitions -- Limitations --

2723 State tax credit in addition to allowable federal credits -- Certification -- Rulemaking
2724 authority.
2725 (1) As used in this part:
2726 (a) "Active solar system":
2727 (i) means a system of equipment capable of collecting and converting incident solar
2728 radiation into thermal, mechanical, or electrical energy, and transferring these forms of energy
2729 by a separate apparatus to storage or to the point of use; and
2730 (ii) includes water heating, space heating or cooling, and electrical or mechanical
2731 energy generation.
2732 (b) "Biomass system" means any system of apparatus and equipment for use in
2733 converting material into biomass energy, as defined in Section 59-12-102 , and transporting that
2734 energy by separate apparatus to the point of use or storage.
2735 (c) "Business entity" means any entity under which business is conducted or transacted.
2736 (d) "Direct-use geothermal system" means a system of apparatus and equipment
2737 enabling the direct use of thermal energy, generally between 100 and 300 degrees Fahrenheit,
2738 that is contained in the earth to meet energy needs, including heating a building, an industrial
2739 process, and aquaculture.
2740 (e) "Geothermal electricity" means energy contained in heat that continuously flows
2741 outward from the earth that is used as a sole source of energy to produce electricity.
2742 (f) "Geothermal heat-pump system" means a system of apparatus and equipment
2743 enabling the use of thermal properties contained in the earth at temperatures well below 100
2744 degrees Fahrenheit to help meet heating and cooling needs of a structure.
2745 (g) "Hydroenergy system" means a system of apparatus and equipment capable of
2746 intercepting and converting kinetic water energy into electrical or mechanical energy and
2747 transferring this form of energy by separate apparatus to the point of use or storage.
2748 (h) "Passive solar system":
2749 (i) means a direct thermal system that utilizes the structure of a building and its
2750 operable components to provide for collection, storage, and distribution of heating or cooling
2751 during the appropriate times of the year by utilizing the climate resources available at the site;
2752 and
2753 (ii) includes those portions and components of a building that are expressly designed

2754 and required for the collection, storage, and distribution of solar energy.
2755 (i) "Residential energy system" means any active solar, passive solar, biomass,
2756 direct-use geothermal, geothermal heat-pump system, wind, or hydroenergy system used to
2757 supply energy to or for any residential unit.
2758 (j) "Residential unit" means any house, condominium, apartment, or similar dwelling
2759 unit that serves as a dwelling for a person, group of persons, or a family but does not include
2760 property subject to a fee under:
2761 (i) Section 59-2-404 ;
2762 (ii) Section 59-2-405 ;
2763 (iii) Section 59-2-405.1 ;
2764 (iv) Section 59-2-405.2 ; or
2765 (v) Section 59-2-405.3 .
2766 (k) "Utah Geological Survey" means the Utah Geological Survey established in Section
2767 63-73-5 .
2768 (l) "Wind system" means a system of apparatus and equipment capable of intercepting
2769 and converting wind energy into mechanical or electrical energy and transferring these forms of
2770 energy by a separate apparatus to the point of use or storage.
2771 (2) For taxable years beginning on or after January 1, 2007, a claimant, estate, or trust
2772 may claim a nonrefundable tax credit as provided in this section if:
2773 (a) a claimant, estate, or trust that is not a business entity purchases and completes or
2774 participates in the financing of a residential energy system to supply all or part of the energy for
2775 the claimant's, estate's, or trust's residential unit in the state; or
2776 (b) (i) a claimant, estate, or trust that is a business entity sells a residential unit to
2777 another claimant, estate, or trust that is not a business entity before making a claim for a tax
2778 credit under Subsection (6) or Section 59-7-614 ; and
2779 (ii) the claimant, estate, or trust that is a business entity assigns its right to the tax credit
2780 to the claimant, estate, or trust that is not a business entity as provided in Subsection (6)(c) or
2781 Subsection 59-7-614 (2)(a)(iii).
2782 (3) (a) The tax credit described in Subsection (2) is equal to 25% of the reasonable
2783 costs of each residential energy system, including installation costs, against any income tax
2784 liability of the claimant, estate, or trust under this chapter for the taxable year in which the

2785 residential energy system is completed and placed in service.
2786 (b) The total amount of each tax credit under this section may not exceed $2,000 per
2787 residential unit.
2788 (c) The tax credit under this section is allowed for any residential energy system
2789 completed and placed in service on or after January 1, 2007.
2790 (4) (a) The tax credit provided for in this section shall be claimed in the return for the
2791 taxable year in which the residential energy system is completed and placed in service.
2792 (b) Additional residential energy systems or parts of residential energy systems may be
2793 similarly claimed in returns for subsequent taxable years as long as the total amount claimed
2794 does not exceed $2,000 per residential unit.
2795 (c) If the amount of the tax credit under this section exceeds the income tax liability of
2796 the claimant, estate, or trust claiming the tax credit under this section for that taxable year, then
2797 the amount not used may be carried over for a period that does not exceed the next four taxable
2798 years.
2799 (5) (a) A claimant, estate, or trust that is not a business entity that leases a residential
2800 energy system installed on a residential unit is eligible for the residential energy tax credit if
2801 that claimant, estate, or trust confirms that the lessor irrevocably elects not to claim the tax
2802 credit.
2803 (b) Only the principal recovery portion of the lease payments, which is the cost
2804 incurred by the claimant, estate, or trust in acquiring the residential energy system excluding
2805 interest charges and maintenance expenses, is eligible for the tax credits.
2806 (c) A claimant, estate, or trust described in this Subsection (5) may use the tax credits
2807 for a period that does not exceed seven years from the initiation of the lease.
2808 (6) (a) A claimant, estate, or trust that is a business entity that purchases and completes
2809 or participates in the financing of a residential energy system to supply all or part of the energy
2810 required for a residential unit owned or used by the claimant, estate, or trust that is a business
2811 entity and situated in Utah is entitled to a nonrefundable tax credit as provided in this
2812 Subsection (6).
2813 (b) (i) For taxable years beginning on or after January 1, 2007, a claimant, estate, or
2814 trust that is a business entity is entitled to a nonrefundable tax credit equal to 25% of the
2815 reasonable costs of a residential energy system installed with respect to each residential unit it

2816 owns or uses, including installation costs, against any tax due under this chapter for the taxable
2817 year in which the energy system is completed and placed in service.
2818 (ii) The total amount of the tax credit under this Subsection (6) may not exceed $2,000
2819 per residential unit.
2820 (iii) The tax credit under this Subsection (6) is allowed for any residential energy
2821 system completed and placed in service on or after January 1, 2007.
2822 (c) If a claimant, estate, or trust that is a business entity sells a residential unit to a
2823 claimant, estate, or trust that is not a business entity before making a claim for the tax credit
2824 under this Subsection (6), the claimant, estate, or trust that is a business entity may:
2825 (i) assign its right to this tax credit to the claimant, estate, or trust that is not a business
2826 entity; and
2827 (ii) if the claimant, estate, or trust that is a business entity assigns its right to the tax
2828 credit to a claimant, estate, or trust that is not a business entity under Subsection (6)(c)(i), the
2829 claimant, estate, or trust that is not a business entity may claim the tax credit as if that claimant,
2830 estate, or trust that is not a business entity had completed or participated in the costs of the
2831 residential energy system under this section.
2832 (7) (a) A tax credit under this section may be claimed for the taxable year in which the
2833 residential energy system is completed and placed in service.
2834 (b) Additional residential energy systems or parts of residential energy systems may be
2835 claimed for subsequent years.
2836 (c) If the amount of a tax credit under this section exceeds the tax liability of the
2837 claimant, estate, or trust claiming the tax credit under this section for a taxable year, the amount
2838 of the tax credit exceeding the tax liability may be carried over for a period which does not
2839 exceed the next four taxable years.
2840 (8) (a) [The] Except as provided in Subsection (8)(b), tax credits provided for under
2841 this section are in addition to any tax credits provided under the laws or rules and regulations of
2842 the United States.
2843 (b) A purchaser of one or more solar units that claims a tax credit under Section
2844 59-10-1024 for the purchase of the one or more solar units may not claim a tax credit under this
2845 section for that purchase.
2846 (9) (a) The Utah Geological Survey may set standards for residential energy systems

2847 that cover the safety, reliability, efficiency, leasing, and technical feasibility of the systems to
2848 ensure that the systems eligible for the tax credit use the state's renewable and nonrenewable
2849 energy resources in an appropriate and economic manner.
2850 (b) The Utah Geological Survey may set standards for residential and commercial
2851 energy systems that establish the reasonable costs of an energy system, as used in Subsections
2852 (3)(a) and (6)(b)(i), as an amount per unit of energy production.
2853 (c) A tax credit may not be taken under this section until the Utah Geological Survey
2854 has certified that the energy system has been completely installed and is a viable system for
2855 saving or production of energy from renewable resources.
2856 (10) The Utah Geological Survey and the commission may make rules in accordance
2857 with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, that are necessary to
2858 implement this section.
2859 (11) (a) On or before October 1, 2012, and every five years thereafter, the Utah Tax
2860 Review Commission shall review each tax credit provided by this section and make
2861 recommendations to the Revenue and Taxation Interim Committee concerning whether the
2862 credit should be continued, modified, or repealed.
2863 (b) The Utah Tax Review Commission's report under Subsection (11)(a) shall include
2864 information concerning the cost of the credit, the purpose and effectiveness of the credit, and
2865 the state's benefit from the credit.
2866 Section 52. Section 59-10-1017 , which is renumbered from Section 59-10-1206.1 is
2867 renumbered and amended to read:
2868 [59-10-1206.1]. 59-10-1017. Utah Educational Savings Plan tax credit.
2869 (1) As used in this section:
2870 (a) "Account owner" is as defined in Section 53B-8a-102 .
2871 [(b) "Claimant" means a resident or nonresident individual that has state taxable
2872 income under this part.]
2873 [(c)] (b) "Higher education costs" is as defined in Section 53B-8a-102 .
2874 [(d)] (c) "Maximum amount of a qualified investment for the taxable year" means, for
2875 a taxable year:
2876 (i) for a claimant, estate, or trust that is an account owner, if that claimant, estate, or
2877 trust is [a person] other than husband and wife account owners who file a single return jointly,

2878 the maximum amount of a qualified investment:
2879 (A) listed in Subsection 53B-8a-106 (1)(e)(ii); and
2880 (B) increased or decreased for that taxable year in accordance with Subsection
2881 53B-8a-106 (1)(f); or
2882 (ii) for claimants who are husband and wife account owners who file a single return
2883 jointly, the maximum amount of a qualified investment:
2884 (A) listed in Subsection 53B-8a-106 (1)(e)(iii); and
2885 (B) increased or decreased for that taxable year in accordance with Subsection
2886 53B-8a-106 (1)(f).
2887 [(e)] (d) "Qualified investment" is as defined in Section 53B-8a-102 .
2888 (2) [For taxable years beginning on or after January 1, 2007, a] Except as provided in
2889 Section 59-10-1002.2 , a claimant, estate, or trust that is an account owner may claim a
2890 nonrefundable tax credit equal to the product of:
2891 (a) the lesser of:
2892 (i) the amount of a qualified investment the claimant, estate, or trust:
2893 (A) makes during the taxable year; and
2894 (B) does not deduct:
2895 (I) for a claimant, on the claimant's federal individual income tax return; or
2896 (II) for an estate or trust, on the estate's or trust's federal income tax return; or
2897 (ii) the maximum amount of a qualified investment for the taxable year if the amount
2898 described in Subsection (2)(a)(i) is greater than the maximum amount of a qualified investment
2899 for the taxable year; and
2900 [(b) (i) for the taxable year beginning on or after January 1, 2007, but beginning on or
2901 before December 31, 2007, 5.35%; or]
2902 [(ii) for taxable years beginning on or after January 1, 2008, 5%.]
2903 (b) 5%.
2904 (3) A tax credit under this section may not be carried forward or carried back.
2905 Section 53. Section 59-10-1018 , which is renumbered from Section 59-10-1206.2 is
2906 renumbered and amended to read:
2907 [59-10-1206.2]. 59-10-1018. Definitions -- Nonrefundable taxpayer tax
2908 credits.

2909 (1) As used in this section:
2910 [(a) "Claimant" means a resident or nonresident individual that has state taxable
2911 income under this part.]
2912 [(b)] (a) "Head of household filing status" means a head of household, as defined in
2913 Section 2(b), Internal Revenue Code, who files a single federal individual income tax return for
2914 the taxable year.
2915 [(c)] (b) "Joint filing status" means:
2916 (i) a husband and wife who file a single return jointly under this chapter for a taxable
2917 year; or
2918 (ii) a surviving spouse, as defined in Section 2(a), Internal Revenue Code, who files a
2919 single federal individual income tax return for the taxable year.
2920 [(d)] (c) "Single filing status" means:
2921 (i) a single individual who files a single federal individual income tax return for the
2922 taxable year; or
2923 (ii) a married individual who:
2924 (A) does not file a single federal individual income tax return jointly with that married
2925 individual's spouse for the taxable year; and
2926 (B) files a single federal individual income tax return for the taxable year.
2927 (2) Except as provided in Section [ 59-10-1206.9 ] 59-10-1002.2 , and subject to
2928 Subsections (3) through (5), [for taxable years beginning on or after January 1, 2008,] a
2929 claimant may claim a nonrefundable tax credit against taxes otherwise due under this part equal
2930 to the sum of:
2931 (a) (i) for a claimant that deducts the standard deduction on the claimant's federal
2932 individual income tax return for the taxable year, 6% of the amount the claimant deducts as
2933 allowed as the standard deduction on the claimant's federal individual income tax return for
2934 that taxable year; or
2935 (ii) for a claimant that itemizes deductions on the claimant's federal individual income
2936 tax return for the taxable year, the product of:
2937 (A) the difference between:
2938 (I) the amount the claimant deducts as allowed as an itemized deduction on the
2939 claimant's federal individual income tax return for that taxable year; and

2940 (II) any amount of state or local income taxes the claimant deducts as allowed as an
2941 itemized deduction on the claimant's federal individual income tax return for that taxable year;
2942 and
2943 (B) 6%; and
2944 (b) [6%] the product of:
2945 (i) 75% of the total amount the claimant [would have been allowed to claim] deducts
2946 as allowed as a personal exemption deduction on the claimant's [state] federal individual
2947 income tax return [had the claimant filed an individual income tax return under Part 1,
2948 Determination and Reporting of Tax Liability and Information, for the taxable year] for that
2949 taxable year; and
2950 (ii) 6%.
2951 (3) A claimant may not carry forward or carry back a tax credit under this section.
2952 (4) The tax credit allowed by Subsection (2) shall be reduced by $.013 for each dollar
2953 by which a claimant's state taxable income exceeds:
2954 (a) for a claimant who has a single filing status, $12,000;
2955 (b) for a claimant who has a head of household filing status, $18,000; or
2956 (c) for a claimant who has a joint filing status, $24,000.
2957 (5) (a) For taxable years beginning on or after January 1, 2009, the commission shall
2958 increase or decrease the following dollar amounts by a percentage equal to the percentage
2959 difference between the consumer price index for the preceding calendar year and the consumer
2960 price index for calendar year 2007:
2961 (i) the dollar amount listed in Subsection (4)(a); and
2962 (ii) the dollar amount listed in Subsection (4)(b).
2963 (b) After the commission increases or decreases the dollar amounts listed in Subsection
2964 (5)(a), the commission shall round those dollar amounts listed in Subsection (5)(a) to the
2965 nearest whole dollar.
2966 (c) After the commission rounds the dollar amounts as required by Subsection (5)(b),
2967 the commission shall increase or decrease the dollar amount listed in Subsection (4)(c) so that
2968 the dollar amount listed in Subsection (4)(c) is equal to the product of:
2969 (i) the dollar amount listed in Subsection (4)(a); and
2970 (ii) two.

2971 (d) For purposes of Subsection (5)(a), the commission shall calculate the consumer
2972 price index as provided in Sections 1(f)(4) and 1(f)(5), Internal Revenue Code.
2973 Section 54. Section 59-10-1019 , which is renumbered from Section 59-10-1206.3 is
2974 renumbered and amended to read:
2975 [59-10-1206.3]. 59-10-1019. Definitions -- Nonrefundable retirement tax
2976 credits.
2977 (1) As used in this section:
2978 (a) "Eligible age 65 or older retiree" means a [resident or nonresident individual]
2979 claimant, regardless of whether that [individual] claimant is retired, who:
2980 (i) is 65 years of age or older; and
2981 (ii) was born on or before December 31, 1952[; and].
2982 [(iii) has state taxable income under this part.]
2983 (b) (i) "Eligible retirement income" means income received by an eligible under age 65
2984 retiree as a pension or annuity if that pension or annuity is:
2985 (A) paid to the eligible under age 65 retiree or the surviving spouse of an eligible under
2986 age 65 retiree; and
2987 (B) (I) paid from an annuity contract purchased by an employer under a plan that meets
2988 the requirements of Section 404(a)(2), Internal Revenue Code;
2989 (II) purchased by an employee under a plan that meets the requirements of Section 408,
2990 Internal Revenue Code; or
2991 (III) paid by:
2992 (Aa) the United States;
2993 (Bb) a state or a political subdivision of a state; or
2994 (Cc) the District of Columbia.
2995 (ii) "Eligible retirement income" does not include amounts received by the spouse of a
2996 living eligible under age 65 retiree because of the eligible under age 65 retiree's having been
2997 employed in a community property state.
2998 (c) "Eligible under age 65 retiree" means a [resident or nonresident individual]
2999 claimant, regardless of whether that [individual] claimant is retired, who:
3000 (i) is younger than 65 years of age;
3001 (ii) was born on or before December 31, 1952; and

3002 (iii) has eligible retirement income for the taxable year for which a tax credit is claimed
3003 under this section[; and].
3004 [(iv) has state taxable income under this part.]
3005 (d) "Head of household filing status" is as defined in Section [ 59-10-1206.2 ]
3006 59-10-1018 .
3007 (e) "Joint filing status" is as defined in Section [ 59-10-1206.2 ] 59-10-1018 .
3008 (f) "Married filing separately status" means a married individual who:
3009 (i) does not file a single federal individual income tax return jointly with that married
3010 individual's spouse for the taxable year; and
3011 (ii) files a single federal individual income tax return for the taxable year.
3012 (g) "Modified adjusted gross income" means the sum of an eligible age 65 or older
3013 retiree's or eligible under age 65 retiree's:
3014 (i) adjusted gross income for the taxable year for which a tax credit is claimed under
3015 this section; [and]
3016 (ii) any interest income that is not included in adjusted gross income for the taxable
3017 year described in Subsection (1)(g)(i)[.]; and
3018 (iii) any addition to adjusted gross income required by Section 59-10-114 for the
3019 taxable year described in Subsection (1)(g)(i).
3020 (h) "Single filing status" means a single individual who files a single federal individual
3021 income tax return for the taxable year.
3022 (2) Except as provided in Section [ 59-10-1206.9 ] 59-10-1002.2 and subject to
3023 Subsections (3) through (6)[, for taxable years beginning on or after January 1, 2008]:
3024 (a) each eligible age 65 or older retiree may claim a nonrefundable tax credit of $450
3025 against taxes otherwise due under this part; or
3026 (b) each eligible under age 65 retiree may claim a nonrefundable tax credit against
3027 taxes otherwise due under this part in an amount equal to the lesser of:
3028 (i) $288; or
3029 (ii) the product of:
3030 (A) the eligible under age 65 retiree's eligible retirement income for the taxable year for
3031 which the eligible under age 65 retiree claims a tax credit under this section; and
3032 (B) 6%.

3033 (3) A tax credit under this section may not be carried forward or carried back.
3034 (4) The sum of the tax credits allowed by Subsection (2)[(a)] claimed on one return
3035 filed under this part shall be reduced by $.025 for each dollar by which [an eligible age 65 or
3036 older retiree's] modified adjusted gross income for purposes of the return exceeds:
3037 (a) for [an eligible age 65 or older retiree who has] a federal individual income tax
3038 return that is allowed a married filing separately status, $16,000;
3039 (b) for [an eligible age 65 or older retiree who has] a federal individual income tax
3040 return that is allowed a single filing status, $25,000; [or]
3041 (c) for [an eligible age 65 or older retiree who has] a federal individual income tax
3042 return that is allowed a head of household filing status [or a joint filing status], $32,000[.]; or
3043 (d) for a return under this chapter that is allowed a joint filing status, $32,000.
3044 [(5) The sum of the tax credits allowed by Subsection (2)(b) claimed on one return
3045 filed under this part shall be reduced by $.025 for each dollar by which an eligible under age 65
3046 retiree's modified adjusted gross income exceeds:]
3047 [(a) for an eligible under age 65 retiree who has a married filing separately status,
3048 $16,000;]
3049 [(b) for an eligible under age 65 retiree who has a single filing status, $25,000; or]
3050 [(c) for an eligible under age 65 retiree who has a head of household filing status or a
3051 joint filing status, $32,000.]
3052 [(6)] (5) For purposes of determining the ownership of items of retirement income
3053 under this section, common law doctrine shall be applied in all cases even though some items
3054 of retirement income may have originated from service or investments in a community property
3055 state.
3056 Section 55. Section 59-10-1020 is enacted to read:
3057 59-10-1020. Nonrefundable estate or trust tax credit.
3058 (1) For taxable years beginning on or after January 1, 2008, an estate or trust may claim
3059 a nonrefundable tax credit against taxes otherwise due under Part 2, Trusts and Estates, equal
3060 to the product of:
3061 (a) the sum of:
3062 (i) the amount that a resident or nonresident estate or trust deducts under Section 163,
3063 Internal Revenue Code, for interest paid or accrued, as allowed on the resident or nonresident

3064 estate's or trust's federal income tax return for estates and trusts for the taxable year;
3065 (ii) the amount that a resident or nonresident estate or trust deducts under Section 164,
3066 Internal Revenue Code, for taxes paid or accrued other than for any amount paid or accrued for
3067 state or local income taxes for the taxable year, as allowed on the resident or nonresident
3068 estate's or trust's federal income tax return for estates and trusts for the taxable year;
3069 (iii) the amount that a resident or nonresident estate or trust other than a qualified
3070 nongrantor charitable lead trust deducts under Section 642(c), Internal Revenue Code, as a
3071 charitable contribution deduction, as allowed on the resident or nonresident estate's or trust's
3072 federal income tax return for estates and trusts for the taxable year;
3073 (iv) subject to Subsection (3), the amount that a resident or nonresident estate or trust
3074 deducts as an attorney, accountant, or return preparer fee, as allowed on the resident or
3075 nonresident estate's or trust's federal income tax return for estates and trusts for the taxable
3076 year; and
3077 (v) subject to Subsection (3), the amount that a resident or nonresident estate or trust
3078 deducts as an other deduction or miscellaneous itemized deduction, as allowed on the resident
3079 or nonresident estate's or trust's federal income tax return for estates and trusts for the taxable
3080 year; and
3081 (b) 6%.
3082 (2) An estate or trust may not carry forward or carry back a tax credit under this
3083 section.
3084 (3) The tax credit allowed by Subsection (1) shall be reduced by $.013 for each dollar
3085 by which an estate's or trust's taxable income exceeds $12,000.
3086 (4) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act:
3087 (a) for purposes of Subsection (1)(a)(iv), the commission may make rules for
3088 determining what constitutes an attorney, accountant, or return preparer fee if that attorney,
3089 accountant, or return preparer fee is consistent with an attorney, accountant, or return preparer
3090 fee that may be deducted on a federal income tax return for estates and trusts; or
3091 (b) for purposes of Subsection (1)(a)(v), the commission may make rules for
3092 determining what constitutes an other deduction or miscellaneous itemized deduction if that
3093 other deduction or miscellaneous itemized deduction is consistent with an other deduction or
3094 miscellaneous itemized deduction that may be deducted on a federal income tax return for

3095 estates and trusts.
3096 Section 56. Section 59-10-1021 is enacted to read:
3097 59-10-1021. Nonrefundable medical care savings account tax credit.
3098 (1) As used in this section:
3099 (a) "Account administrator" is as defined in Section 31A-32a-102 .
3100 (b) "Account holder" is as defined in Section 31A-32a-102 .
3101 (c) "Eligible medical expense" is as defined in Section 31A-32a-102 .
3102 (d) "Eligible spouse claimants" means claimants who are spouses if:
3103 (i) the claimants file a single return jointly as husband and wife;
3104 (ii) neither spouse is covered by:
3105 (A) health care insurance as defined in Section 31A-1-301 ; or
3106 (B) a self-funded plan that covers the other spouse; and
3107 (iii) each spouse is an account holder.
3108 (e) "Medical care savings account" is as defined in Section 31A-32a-102 .
3109 (2) Except as provided in Section 59-10-1002.2 and subject to Subsections (3) and (4),
3110 for taxable years beginning on or after January 1, 2008, a claimant may claim a nonrefundable
3111 tax credit for:
3112 (a) a contribution:
3113 (i) made during the taxable year;
3114 (ii) made to a medical care savings account in accordance with Title 31A, Chapter 32a,
3115 Medical Care Savings Account Act;
3116 (iii) that is accepted by the account administrator; and
3117 (iv) that the claimant does not deduct on the claimant's federal individual income tax
3118 return under Section 220, Internal Revenue Code; and
3119 (b) interest on the contribution described in Subsection (2)(a).
3120 (3) (a) For eligible spouse claimants, a tax credit under this section is equal to the
3121 product of:
3122 (i) the greater of:
3123 (A) the sum of:
3124 (I) the amount contributed in accordance with Title 31A, Chapter 32a, Medical Care
3125 Savings Account Act, by or on behalf of the husband, not to exceed the amount described in

3126 Subsection 31A-32a-103 (2)(a)(i); and
3127 (II) the amount contributed in accordance with Title 31A, Chapter 32a, Medical Care
3128 Savings Account Act, by or on behalf of the wife, not to exceed the amount described in
3129 Subsection 31A-32a-103 (2)(a)(i); or
3130 (B) an amount equal to the sum of all eligible medical expenses paid by the eligible
3131 spouse claimants on behalf of:
3132 (I) the husband;
3133 (II) the wife; or
3134 (III) a dependent of the:
3135 (Aa) husband; or
3136 (Bb) wife; and
3137 (ii) 5%.
3138 (b) For a claimant other than eligible spouse claimants, a tax credit under this section is
3139 equal to the product of:
3140 (i) the greater of:
3141 (A) the amount contributed by or on behalf of the claimant, not to exceed the amount
3142 described in Subsection 31A-32a-103 (2)(a)(i); or
3143 (B) an amount equal to the sum of all eligible medical expenses paid by the claimant
3144 on behalf of:
3145 (I) the claimant;
3146 (II) the claimant's spouse; or
3147 (III) a dependent of the claimant; and
3148 (ii) 5%.
3149 (4) A tax credit under this section may not be carried forward or carried back.
3150 Section 57. Section 59-10-1022 is enacted to read:
3151 59-10-1022. Nonrefundable tax credit for capital gain transactions.
3152 (1) As used in this section:
3153 (a) (i) "Capital gain transaction" means a transaction that results in a:
3154 (A) short-term capital gain; or
3155 (B) long-term capital gain.
3156 (ii) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act,

3157 the commission may by rule define the term "transaction."
3158 (b) "Commercial domicile" means the principal place from which the trade or business
3159 of a Utah small business corporation is directed or managed.
3160 (c) "Long-term capital gain" is as defined in Section 1222, Internal Revenue Code.
3161 (d) "Qualifying stock" means stock that is:
3162 (i) (A) common; or
3163 (B) preferred;
3164 (ii) as defined by the commission by rule made in accordance with Title 63, Chapter
3165 46a, Utah Administrative Rulemaking Act, originally issued to:
3166 (A) a claimant, estate, or trust; or
3167 (B) a partnership if the claimant, estate, or trust that claims a tax credit under this
3168 section:
3169 (I) was a partner on the day on which the stock was issued; and
3170 (II) remains a partner until the last day of the taxable year for which the claimant,
3171 estate, or trust claims a tax credit under this section; and
3172 (iii) issued:
3173 (A) by a Utah small business corporation;
3174 (B) on or after January 1, 2008; and
3175 (C) for:
3176 (I) money; or
3177 (II) other property, except for stock or securities.
3178 (e) "Short-term capital gain" is as defined in Section 1222, Internal Revenue Code.
3179 (f) (i) "Utah small business corporation" means a corporation that:
3180 (A) except as provided in Subsection (1)(f)(ii), is a small business corporation as
3181 defined in Section 1244(c)(3), Internal Revenue Code;
3182 (B) except as provided in Subsection (1)(f)(iii), meets the requirements of Section
3183 1244(c)(1)(C), Internal Revenue Code; and
3184 (C) has its commercial domicile in this state.
3185 (ii) The dollar amount listed in Section 1244(c)(3)(A) is considered to be $2,500,000.
3186 (iii) The phrase "the date the loss on such stock was sustained" in Sections
3187 1244(c)(1)(C) and 1244(c)(2), Internal Revenue Code, is considered to be "the last day of the

3188 taxable year for which the claimant, estate, or trust claims a tax credit under this section."
3189 (2) For taxable years beginning on or after January 1, 2008, a claimant, estate, or trust
3190 that meets the requirements of Subsection (3) may claim a nonrefundable tax credit equal to the
3191 product of:
3192 (a) the total amount of the claimant's, estate's, or trust's short-term capital gain or
3193 long-term capital gain on a capital gain transaction that occurs on or after January 1, 2008; and
3194 (b) 5%.
3195 (3) For purposes of Subsection (2), a claimant, estate, or trust may claim the
3196 nonrefundable tax credit allowed by Subsection (2) if:
3197 (a) 70% or more of the gross proceeds of the capital gain transaction are expended:
3198 (i) to purchase qualifying stock in a Utah small business corporation; and
3199 (ii) within a 12-month period after the day on which the capital gain transaction occurs;
3200 and
3201 (b) prior to the purchase of the qualifying stock described in Subsection (3)(a)(i), the
3202 claimant, estate, or trust did not have an ownership interest in the Utah small business
3203 corporation that issued the qualifying stock.
3204 (4) A claimant, estate, or trust may not carry forward or carry back a tax credit under
3205 this section.
3206 (5) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
3207 commission may make rules:
3208 (a) defining the term "gross proceeds"; and
3209 (b) prescribing the circumstances under which a claimant, estate, or trust has an
3210 ownership interest in a Utah small business corporation.
3211 Section 58. Section 59-10-1023 is enacted to read:
3212 59-10-1023. Nonrefundable tax credit for amounts paid under a health benefit
3213 plan.
3214 (1) As used in this section:
3215 (a) "Claimant with dependents" means a claimant:
3216 (i) regardless of the claimant's filing status for purposes of filing a federal individual
3217 income tax return for the taxable year; and
3218 (ii) who claims one or more dependents under Section 151, Internal Revenue Code, as

3219 allowed on the claimant's federal individual income tax return for the taxable year.
3220 (b) "Eligible insured individual" means:
3221 (i) the claimant who is insured under a health benefit plan;
3222 (ii) the spouse of the claimant described in Subsection (1)(b)(i) if:
3223 (A) the claimant files a single return jointly under this chapter with the claimant's
3224 spouse for the taxable year; and
3225 (B) the spouse is insured under the health benefit plan described in Subsection
3226 (1)(b)(i); or
3227 (iii) a dependent of the claimant described in Subsection (1)(b)(i) if:
3228 (A) the claimant claims the dependent under Section 151, Internal Revenue Code, as
3229 allowed on the claimant's federal individual income tax return for the taxable year; and
3230 (B) the dependent is insured under the health benefit plan described in Subsection
3231 (1)(b)(i).
3232 (c) "Excluded expenses" means an amount a claimant pays for insurance offered under
3233 a health benefit plan for a taxable year if:
3234 (i) the claimant claims a tax credit for that amount under Section 35, Internal Revenue
3235 Code:
3236 (A) on the claimant's federal individual income tax return for the taxable year; and
3237 (B) with respect to an eligible insured individual;
3238 (ii) the claimant deducts that amount under Section 162 or 213, Internal Revenue
3239 Code:
3240 (A) on the claimant's federal individual income tax return for the taxable year; and
3241 (B) with respect to an eligible insured individual; or
3242 (iii) the claimant excludes that amount from gross income under Section 106 or 125,
3243 Internal Revenue Code, with respect to an eligible insured individual.
3244 (d) (i) "Health benefit plan" is as defined in Section 31A-1-301 .
3245 (ii) "Health benefit plan" does not include equivalent self-insurance as defined by the
3246 Insurance Department by rule made in accordance with Title 63, Chapter 46a, Utah
3247 Administrative Rulemaking Act.
3248 (e) "Joint claimant with no dependents" means a husband and wife who:
3249 (i) file a single return jointly under this chapter for the taxable year; and

3250 (ii) do not claim a dependent under Section 151, Internal Revenue Code, on the
3251 husband's and wife's federal individual income tax return for the taxable year.
3252 (f) "Single claimant with no dependents" means:
3253 (i) a single individual who:
3254 (A) files a single federal individual income tax return for the taxable year; and
3255 (B) does not claim a dependent under Section 151, Internal Revenue Code, on the
3256 single individual's federal individual income tax return for the taxable year;
3257 (ii) a head of household:
3258 (A) as defined in Section 2(b), Internal Revenue Code, who files a single federal
3259 individual income tax return for the taxable year; and
3260 (B) who does not claim a dependent under Section 151, Internal Revenue Code, on the
3261 head of household's federal individual income tax return for the taxable year; or
3262 (iii) a married individual who:
3263 (A) does not file a single federal individual income tax return jointly with that married
3264 individual's spouse for the taxable year; and
3265 (B) does not claim a dependent under Section 151, Internal Revenue Code, on that
3266 married individual's federal individual income tax return for the taxable year.
3267 (2) Subject to Subsection (3), and except as provided in Subsection (4), for taxable
3268 years beginning on or after January 1, 2009, a claimant may claim a nonrefundable tax credit
3269 equal to the product of:
3270 (a) the difference between:
3271 (i) the total amount the claimant pays during the taxable year for:
3272 (A) insurance offered under a health benefit plan; and
3273 (B) an eligible insured individual; and
3274 (ii) excluded expenses; and
3275 (b) 5%.
3276 (3) The maximum amount of a tax credit described in Subsection (2) a claimant may
3277 claim on a return for a taxable year is:
3278 (a) for a single claimant with no dependents, $300;
3279 (b) for a joint claimant with no dependents, $600; or
3280 (c) for a claimant with dependents, $900.

3281 (4) A claimant may not claim a tax credit under this section if the claimant is eligible to
3282 participate in insurance offered under a health benefit plan maintained and funded in whole or
3283 in part by:
3284 (a) the claimant's employer; or
3285 (b) another person's employer.
3286 (5) A claimant may not carry forward or carry back a tax credit under this section.
3287 Section 59. Section 59-10-1024 is enacted to read:
3288 59-10-1024. Nonrefundable tax credit for qualifying solar projects.
3289 (1) As used in this section:
3290 (a) "Active solar system" is as defined in Section 59-10-1014 .
3291 (b) "Purchaser" means a claimant, estate, or trust that purchases one or more solar units
3292 from a qualifying political subdivision.
3293 (c) "Qualifying political subdivision" means:
3294 (i) a city or town in this state;
3295 (ii) an interlocal entity created under Title 11, Chapter 13, Interlocal Cooperation Act;
3296 or
3297 (iii) a special service district created under Title 17A, Chapter 2, Part 13, Utah Special
3298 Service District Act.
3299 (d) "Qualifying solar project" means the portion of an active solar system:
3300 (i) that a qualifying political subdivision:
3301 (A) constructs;
3302 (B) controls; or
3303 (C) owns;
3304 (ii) with respect to which the qualifying political subdivision described in Subsection
3305 (1)(c)(i) sells one or more solar units; and
3306 (iii) that generates electrical output that is furnished:
3307 (A) to one or more residential units; or
3308 (B) for the benefit of one or more residential units.
3309 (e) "Residential unit" is as defined in Section 59-10-1014 .
3310 (f) "Solar unit" means a portion of the electrical output:
3311 (i) of a qualifying solar project;

3312 (ii) that a qualifying political subdivision sells to a purchaser; and
3313 (iii) the purchase of which requires that the purchaser agree to bear a proportionate
3314 share of the expense of the qualifying solar project:
3315 (A) in accordance with a written agreement between the purchaser and the qualifying
3316 political subdivision;
3317 (B) in exchange for a credit on the purchaser's electrical bill; and
3318 (C) as determined by a formula established by the qualifying political subdivision.
3319 (2) Subject to Subsection (3), for taxable years beginning on or after January 1, 2009, a
3320 purchaser may claim a nonrefundable tax credit equal to the product of:
3321 (a) the amount the purchaser pays to purchase one or more solar units during the
3322 taxable year; and
3323 (b) 25%.
3324 (3) For a taxable year, a tax credit under this section may not exceed $2,000 on a
3325 return.
3326 (4) A purchaser may carry forward a tax credit under this section for a period that does
3327 not exceed the next four taxable years if:
3328 (a) the purchaser is allowed to claim a tax credit under this section for a taxable year;
3329 and
3330 (b) the amount of the tax credit exceeds the purchaser's tax liability under this chapter
3331 for that taxable year.
3332 (5) Subject to Section 59-10-1014 , a tax credit under this section is in addition to any
3333 other tax credit allowed by this chapter.
3334 (6) (a) On or before October 1, 2012, and every five years after October 1, 2012, the
3335 Utah Tax Review Commission shall review the tax credit allowed by this section and make
3336 recommendations to the Revenue and Taxation Interim Committee concerning whether the tax
3337 credit should be continued, modified, or repealed.
3338 (b) The Utah Tax Review Commission's report under Subsection (6)(a) shall include
3339 information concerning the cost of the tax credit, the purpose and effectiveness of the tax
3340 credit, and the state's benefit from the tax credit.
3341 Section 60. Section 59-10-1106 is amended to read:
3342 59-10-1106. Renewable energy tax credit.

3343 (1) As used in this section:
3344 (a) "Active solar system" is as defined in Section 59-10-1014 .
3345 (b) "Biomass system" is as defined in Section 59-10-1014 .
3346 (c) "Business entity" is as defined in Section 59-10-1014 .
3347 (d) "Commercial energy system" means any active solar, passive solar, geothermal
3348 electricity, direct-use geothermal, geothermal heat-pump system, wind, hydroenergy, or
3349 biomass system used to supply energy to a commercial unit or as a commercial enterprise.
3350 (e) "Commercial enterprise" means a business entity [whose purpose is to produce]
3351 that:
3352 (i) is a claimant, estate, or trust; and
3353 (ii) has the purpose of producing electrical, mechanical, or thermal energy for sale from
3354 a commercial energy system.
3355 (f) (i) "Commercial unit" means any building or structure that a business entity that is a
3356 claimant, estate, or trust uses to transact its business.
3357 (ii) Notwithstanding Subsection (1)(f)(i):
3358 (A) in the case of an active solar system used for agricultural water pumping or a wind
3359 system, each individual energy generating device shall be a commercial unit; and
3360 (B) if an energy system is the building or structure that a business entity that is a
3361 claimant, estate, or trust uses to transact its business, a commercial unit is the complete energy
3362 system itself.
3363 (g) "Direct-use geothermal system" is as defined in Section 59-10-1014 .
3364 (h) "Geothermal electricity" is as defined in Section 59-10-1014 .
3365 (i) "Geothermal heat-pump system" is as defined in Section 59-10-1014 .
3366 (j) "Hydroenergy system" is as defined in Section 59-10-1014 .
3367 [(k) "Individual taxpayer" means any person who is a taxpayer as defined in Section
3368 59-10-103 and an individual as defined in Section 59-10-103 .]
3369 [(l)] (k) "Passive solar system" is as defined in Section 59-10-1014 .
3370 [(m)] (l) "Utah Geological Survey" means the Utah Geological Survey established in
3371 Section 63-73-5 .
3372 [(n)] (m) "Wind system" is as defined in Section 59-10-1014 .
3373 (2) (a) (i) [For taxable years beginning on or after January 1, 2007, a] A business entity

3374 that is a claimant, estate, or trust that purchases or participates in the financing of a commercial
3375 energy system situated in Utah is entitled to a refundable tax credit as provided in this
3376 Subsection (2)(a) if the commercial energy system does not use wind, geothermal electricity, or
3377 biomass equipment capable of producing a total of 660 or more kilowatts of electricity and:
3378 (A) the commercial energy system supplies all or part of the energy required by
3379 commercial units owned or used by the business entity that is a claimant, estate, or trust; or
3380 (B) the business entity that is a claimant, estate, or trust sells all or part of the energy
3381 produced by the commercial energy system as a commercial enterprise.
3382 (ii) (A) A business entity that is a claimant, estate, or trust is entitled to a tax credit of
3383 up to 10% of the reasonable costs of any commercial energy system installed, including
3384 installation costs, against any tax due under this chapter for the taxable year in which the
3385 commercial energy system is completed and placed in service.
3386 (B) Notwithstanding Subsection (2)(a)(ii)(A), the total amount of the credit under this
3387 Subsection (2)(a) may not exceed $50,000 per commercial unit.
3388 (C) The credit under this Subsection (2)(a) is allowed for any commercial energy
3389 system completed and placed in service on or after January 1, 2007.
3390 (iii) A business entity that is a claimant, estate, or trust that leases a commercial energy
3391 system installed on a commercial unit is eligible for the tax credit under this Subsection (2)(a)
3392 if the lessee can confirm that the lessor irrevocably elects not to claim the credit.
3393 (iv) Only the principal recovery portion of the lease payments, which is the cost
3394 incurred by a business entity that is a claimant, estate, or trust in acquiring a commercial energy
3395 system, excluding interest charges and maintenance expenses, is eligible for the tax credit
3396 under this Subsection (2)(a).
3397 (v) A business entity that is a claimant, estate, or trust that leases a commercial energy
3398 system is eligible to use the tax credit under this Subsection (2)(a) for a period no greater than
3399 seven years from the initiation of the lease.
3400 (b) (i) [For taxable years beginning on or after January 1, 2007, a] A business entity
3401 that is a claimant, estate, or trust that owns a commercial energy system situated in Utah using
3402 wind, geothermal electricity, or biomass equipment capable of producing a total of 660 or more
3403 kilowatts of electricity is entitled to a refundable tax credit as provided in this section if:
3404 (A) the commercial energy system supplies all or part of the energy required by

3405 commercial units owned or used by the business entity that is a claimant, estate, or trust; or
3406 (B) the business entity that is a claimant, estate, or trust sells all or part of the energy
3407 produced by the commercial energy system as a commercial enterprise.
3408 (ii) A business entity that is a claimant, estate, or trust is entitled to a tax credit under
3409 this Subsection (2)(b) equal to the product of:
3410 (A) 0.35 cents; and
3411 (B) the kilowatt hours of electricity produced and either used or sold during the taxable
3412 year.
3413 (iii) The credit allowed by this Subsection (2)(b):
3414 (A) may be claimed for production occurring during a period of 48 months beginning
3415 with the month in which the commercial energy system is placed in service; and
3416 (B) may not be carried forward or back.
3417 (iv) A business entity that is a claimant, estate, or trust that leases a commercial energy
3418 system installed on a commercial unit is eligible for the tax credit under this section if the
3419 lessee can confirm that the lessor irrevocably elects not to claim the credit.
3420 (3) The tax credits provided for under this section are in addition to any tax credits
3421 provided under the laws or rules and regulations of the United States.
3422 (4) (a) The Utah Geological Survey may set standards for commercial energy systems
3423 claiming a tax credit under Subsection (2)(a) that cover the safety, reliability, efficiency,
3424 leasing, and technical feasibility of the systems to ensure that the systems eligible for the tax
3425 credit use the state's renewable and nonrenewable energy resources in an appropriate and
3426 economic manner.
3427 (b) A tax credit may not be taken under this section until the Utah Geological Survey
3428 has certified that the commercial energy system has been completely installed and is a viable
3429 system for saving or production of energy from renewable resources.
3430 (5) The Utah Geological Survey and the commission may make rules in accordance
3431 with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, that are necessary to
3432 implement this section.
3433 (6) (a) On or before October 1, 2012, and every five years thereafter, the Utah Tax
3434 Review Commission shall review each tax credit provided by this section and make
3435 recommendations to the Revenue and Taxation Interim Committee concerning whether the

3436 credit should be continued, modified, or repealed.
3437 (b) The Utah Tax Review Commission's report under Subsection (6)(a) shall include
3438 information concerning the cost of the credit, the purpose and effectiveness of the credit, and
3439 the state's benefit from the credit.
3440 Section 61. Section 59-10-1301 is enacted to read:
3441 Part 13. Individual Income Tax Contribution Act
3442 59-10-1301. Title.
3443 This part is known as the "Individual Income Tax Contribution Act."
3444 Section 62. Section 59-10-1302 is enacted to read:
3445 59-10-1302. Definitions.
3446 As used in this part, "contribution" means a contribution a resident or nonresident
3447 individual makes on an individual income tax return as allowed by this part.
3448 Section 63. Section 59-10-1303 is enacted to read:
3449 59-10-1303. Contributions -- Amount -- Procedure for designating a contribution
3450 -- Joint return -- Contribution irrevocable.
3451 (1) A resident or nonresident individual that makes a contribution under this part, other
3452 than Section 59-10-1311 , may designate as the contribution any whole dollar amount of $1 or
3453 more.
3454 (2) If a resident or nonresident individual designating a contribution under this part
3455 other than Section 59-10-1311 :
3456 (a) is owed an individual income tax refund for the taxable year, the amount of the
3457 contribution under this part shall be deducted from the resident or nonresident individual's
3458 individual income tax refund; or
3459 (b) is not owed an individual income tax refund for the taxable year, the resident or
3460 nonresident individual may remit a contribution under this part with the resident or nonresident
3461 individual's individual income tax return.
3462 (3) If a husband and wife file a single individual income tax return jointly, a
3463 contribution under this part, other than Section 59-10-1311 , shall be a joint contribution.
3464 (4) A contribution under this part is irrevocable for the taxable year for which the
3465 resident or nonresident individual makes the contribution.
3466 Section 64. Section 59-10-1304 , which is renumbered from Section 59-10-551 is

3467 renumbered and amended to read:
3468 [59-10-551]. 59-10-1304. Removal of designation and prohibitions on
3469 collection for certain contributions on income tax form -- Conditions for removal and
3470 prohibitions on collection -- Commission reporting requirements.
3471 (1) (a) If a contribution or combination of contributions described in Subsection (1)(b)
3472 generate less than $30,000 per year for three consecutive years, the commission shall remove
3473 the designation for the contribution from the individual income tax return and may not collect
3474 the contribution from a resident or nonresident individual beginning two taxable years after the
3475 three-year period for which the contribution generates less than $30,000 per year.
3476 (b) The following contributions apply to Subsection (1)(a):
3477 (i) the contribution provided for in Section [ 59-10-530 ] 59-10-1305 ;
3478 (ii) the contribution provided for in Section [ 59-10-530.5 ] 59-10-1306 ;
3479 (iii) the sum of the contributions provided for in Subsection [ 59-10-549 ]
3480 59-10-1307 (1)(a);
3481 (iv) the contribution provided for in Subsection [ 59-10-549 ] 59-10-1307 (1)(b);
3482 (v) the contribution provided for in Section [ 59-10-550 ] 59-10-1308 ;
3483 (vi) the contribution provided for in Section [ 59-10-550.1 ] 59-10-1309 ; or
3484 (vii) the contribution provided for in Section [ 59-10-550.2 ] 59-10-1310 .
3485 (2) If the commission removes the designation for a contribution under Subsection (1),
3486 the commission shall report to the Revenue and Taxation Interim Committee that the
3487 commission removed the designation on or before the November interim meeting of the year in
3488 which the commission determines to remove the designation.
3489 Section 65. Section 59-10-1305 , which is renumbered from Section 59-10-530 is
3490 renumbered and amended to read:
3491 [59-10-530]. 59-10-1305. Nongame wildlife contribution -- Credit to
3492 Wildlife Resources Account.
3493 [(1) The Legislature hereby declares that wildlife species which are endangered,
3494 threatened with extinction, not commonly pursued, killed, or consumed either for sport or
3495 profit, and are not nuisance predators presently being brought under control by the state
3496 referred to herein as "nongame wildlife," have need of special protection and that it is in the
3497 public interest to preserve, protect, perpetuate, and enhance nongame wildlife resources of this

3498 state through preservation of a satisfactory environment and an ecological balance. The
3499 Legislature specifically recognizes that such nongame wildlife includes protected wildlife,
3500 endangered and threatened wildlife, aquatic wildlife, specialized habitat wildlife, both
3501 terrestrial and aquatic types, and mollusks, crustaceans, and other invertebrates under the
3502 jurisdiction of the Division of Wildlife Resources. This section is enacted to provide a means
3503 by which such protection may be financially aided through a voluntary check-off designation
3504 on state income tax return forms. The intent of the Legislature is that this program of the
3505 income tax check-off is supplemental to any other funding and in no way is intended to take the
3506 place of the funding that would otherwise be appropriated for this purpose.]
3507 (1) As used in this section, "nongame wildlife" means wildlife species that are:
3508 (a) (i) protected;
3509 (ii) endangered; or
3510 (iii) threatened with extinction;
3511 (b) under the jurisdiction of the Division of Wildlife Resources, including:
3512 (i) aquatic wildlife;
3513 (ii) a crustacean;
3514 (iii) an invertebrate;
3515 (iv) a mollusk; or
3516 (v) specialized habitat wildlife, including an aquatic or terrestrial type of specialized
3517 habitat wildlife;
3518 (c) not commonly pursued, killed, or consumed for sport or profit; and
3519 (d) not nuisance predators presently being brought under control by the state.
3520 (2) Except as provided in Section [ 59-10-551 , each individual taxpayer required to file
3521 a return pursuant to Section 59-10-502 ] 59-10-1304 , a resident or nonresident individual that
3522 files an individual income tax return under this chapter may designate on the resident or
3523 nonresident individual's individual income tax return a contribution [of $1, $5, $10, or another
3524 amount not less than $1, or no contribution, to the state Nongame Wildlife Program] as
3525 provided in this part to preserve, protect, perpetuate, and enhance nongame wildlife resources
3526 of the state through preservation of a satisfactory environment and an ecological balance. [If
3527 the return is a joint return, any amount designated as a contribution to this program is to be
3528 deducted from the individual's state tax refund and shall be a joint contribution. This option,

3529 once exercised, is irrevocable during the tax year in which it was effective.]
3530 [(3) The commission may promulgate rules to effectuate the provisions of this section.]
3531 [(4)] (3) The commission shall:
3532 (a) determine annually the total amount of contributions designated [pursuant to] in
3533 accordance with this section; and [shall report such amount to the state treasurer who shall
3534 credit such amount]
3535 (b) credit the amount described in Subsection (3)(a) to the Wildlife Resources Account
3536 [as provided for in Section 23-14-14 ] in accordance with Section 23-14-13 .
3537 [(5) This section applies to calendar-year taxpayers beginning January 1, 1980, and to
3538 fiscal-year taxpayers for any part of the taxable year accruing after December 31, 1979, and to
3539 all taxable years thereafter.]
3540 Section 66. Section 59-10-1306 , which is renumbered from Section 59-10-530.5 is
3541 renumbered and amended to read:
3542 [59-10-530.5]. 59-10-1306. Homeless contribution -- Credit to Pamela
3543 Atkinson Homeless Trust Account.
3544 (1) [(a)] Except as provided in Section [ 59-10-551 , each taxpayer required to file a
3545 return pursuant to Section 59-10-502 may designate on the return a contribution of $2, $5, $10,
3546 or another amount not less than $2, or no contribution,] 59-10-1304 , a resident or nonresident
3547 individual that files an individual income tax return under this chapter may designate on the
3548 resident or nonresident individual's individual income tax return a contribution to the Pamela
3549 Atkinson Homeless Trust Account as provided in this part.
3550 [(b) Any amount designated as a contribution to this program is to be deducted from
3551 the individual's state tax refund and, if a joint return, shall be a joint contribution.]
3552 [(c) This option, once exercised, is irrevocable during the tax year in which it was
3553 effective.]
3554 [(d) If no refund is due, the taxpayer may remit the contribution with the return.]
3555 [(2) The commission may make rules to implement this section.]
3556 [(3)] (2) The commission shall:
3557 (a) determine annually the total amount of contributions designated [pursuant to] in
3558 accordance with this section; and [shall report such amount to the state treasurer who shall
3559 credit such amount]

3560 (b) credit the amount described in Subsection (2)(a) to the Pamela Atkinson Homeless
3561 Trust Account [as provided for in] created by Section 9-4-803 .
3562 [(4) This section applies to calendar-year taxpayers beginning January 1, 1988, and to
3563 fiscal-year taxpayers for any part of the taxable year accruing after December 31, 1988, and to
3564 all taxable years thereafter.]
3565 Section 67. Section 59-10-1307 , which is renumbered from Section 59-10-549 is
3566 renumbered and amended to read:
3567 [59-10-549]. 59-10-1307. Contributions for education.
3568 (1) Except as provided in Section [59-10-551 , a taxpayer that files a return pursuant to
3569 Section 59-10-502 ] 59-10-1304 , a resident or nonresident individual that files an individual
3570 income tax return under this chapter may designate on the resident or nonresident individual's
3571 individual income tax return a contribution as provided in this [section] part to:
3572 (a) (i) the foundation of any school district if that foundation is exempt from federal
3573 income taxation under Section 501(c)(3), Internal Revenue Code; or
3574 (ii) a school district described in Title 53A, Chapter 2, School Districts, if the school
3575 district has not established a foundation; or
3576 (b) a college campus of the Utah College of Applied Technology listed in Section
3577 53B-2a-105 [; or].
3578 [(c) for taxable years beginning on or after January 1, 2004, but beginning on or before
3579 December 31, 2006, the Uniform School Fund.]
3580 [(2) (a) A taxpayer may designate as a contribution under this section any whole dollar
3581 amount of $1 or more.]
3582 [(b) (i) If the taxpayer is owed an individual income tax refund for the taxable year, the
3583 amount of a contribution under this section shall be deducted from the taxpayer's individual
3584 income tax refund.]
3585 [(ii) If the taxpayer is not owed an individual income tax refund for the taxable year,
3586 the taxpayer may remit a contribution under this section with the taxpayer's individual income
3587 tax return.]
3588 [(c) If a taxpayer files a joint return, the contribution under this section shall be a joint
3589 contribution.]
3590 [(d) A contribution under this section is irrevocable during the taxable year for which

3591 the taxpayer makes the contribution.]
3592 [(3)] (2) If a [taxpayer] resident or nonresident individual designates an amount as a
3593 contribution under:
3594 (a) Subsection (1)(a)(i), but does not designate a particular school district foundation to
3595 receive the contribution, the contribution shall be made to the Utah State Office of Education to
3596 be distributed to one or more associations of foundations:
3597 (i) if those foundations that are members of the association are established in
3598 accordance with Section 53A-4-205 ; and
3599 (ii) as determined by the Utah State Office of Education; or
3600 (b) Subsection (1)(a)(ii), but does not designate a particular school district to receive
3601 the contribution, the contribution shall be made to the Utah State Office of Education.
3602 [(4) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act,
3603 the commission may make rules to implement this section.]
3604 [(5)] (3) The commission shall:
3605 (a) determine annually the total amount of contributions designated to each entity
3606 described in Subsection (1) in accordance with this section; and
3607 [(b) report this amount to the state treasurer.]
3608 [(6) The state treasurer shall credit any contributions reported to the state treasurer in
3609 accordance with Subsection (5):]
3610 [(a)] (b) subject to Subsection [(3)] (2), [if a taxpayer designates a contribution to an
3611 entity listed in Subsection (1)(a) or (b) in accordance with this section, to the entity that is
3612 designated by the taxpayer; or] credit the amounts described in Subsection (1) to the entities.
3613 [(b) if a taxpayer designates a contribution to the Uniform School Fund under
3614 Subsection (1)(c) in accordance with this section, to the Uniform School Fund.]
3615 Section 68. Section 59-10-1308 , which is renumbered from Section 59-10-550 is
3616 renumbered and amended to read:
3617 [59-10-550]. 59-10-1308. Children's organ transplants contribution --
3618 Credit to Kurt Oscarson Children's Organ Transplant Trust Account.
3619 (1) Except as provided in Section [ 59-10-551 , a taxpayer who files a return pursuant to
3620 Section 59-10-502 ] 59-10-1304 , a resident or nonresident individual that files an individual
3621 income tax return under this chapter may designate on the resident or nonresident individual's

3622 individual income tax return a contribution [of the amount of his refund, if any, or any other
3623 amount in excess of $1 to the trust account created in] to the Kurt Oscarson Children's Organ
3624 Transplant Trust Account created by Section 26-18a-4 .
3625 [(2) Any amount designated as a contribution to this trust account shall be deducted
3626 from the individual's state tax refund and, if a joint return, is a joint contribution. This option,
3627 once exercised, is irrevocable during the tax year in which it was effective. If no refund is due,
3628 the taxpayer may remit any contribution over $1 with the return.]
3629 [(3) The commission may make rules to implement this section.]
3630 [(4)] (2) The commission shall:
3631 (a) determine annually the total amount of contributions designated [under] in
3632 accordance with this section; and [shall report the amount to the state treasurer, who shall]
3633 (b) credit the amount described in Subsection (2)(a) to the [restricted account] Kurt
3634 Oscarson Children's Organ Transplant Trust Account created [in] by Section 26-18a-4 .
3635 [(5) This section applies to calendar-year taxpayers beginning January 1, 1992, and to
3636 fiscal-year taxpayers for any part of the taxable year accruing after December 31, 1992, and to
3637 each subsequent taxable year.]
3638 Section 69. Section 59-10-1309 , which is renumbered from Section 59-10-550.1 is
3639 renumbered and amended to read:
3640 [59-10-550.1]. 59-10-1309. Contribution to Wolf Depredation and
3641 Management Restricted Account.
3642 (1) Except as provided in Section [ 59-10-551 , for taxable years beginning on or after
3643 January 1, 2004] 59-10-1304 , a resident or nonresident individual that files an individual
3644 income tax return under this chapter may designate on the resident or nonresident individual's
3645 individual income tax return a contribution as provided in this section to be:
3646 (a) deposited into the Wolf Depredation and Management Restricted Account created
3647 by Section 23-14-14.1 ; and
3648 (b) used for the purposes described in Section 23-14-14.1 .
3649 [(2) (a) A resident or nonresident individual may designate as a contribution under this
3650 section any whole dollar amount of $1 or more.]
3651 [(b) If a resident or nonresident individual designating a contribution under this
3652 section:]

3653 [(i) is owed an individual income tax refund for the taxable year, the amount of the
3654 contribution under this section shall be deducted from the resident or nonresident individual's
3655 individual income tax refund; or]
3656 [(ii) is not owed an individual income tax refund for the taxable year, the resident or
3657 nonresident individual may remit a contribution under this section with the resident or
3658 nonresident individual's individual income tax return.]
3659 [(c) If a husband and wife file a single individual income tax return jointly, a
3660 contribution under this section shall be a joint contribution.]
3661 [(d) A contribution under this section is irrevocable for the taxable year for which the
3662 resident or nonresident individual makes the contribution.]
3663 [(3)] (2) The commission shall:
3664 (a) determine annually the total amount of contributions designated in accordance with
3665 this section; and
3666 (b) credit the amount described in Subsection [(3)] (2)(a) to the Wolf Depredation and
3667 Management Restricted Account created by Section 23-14-14.1 .
3668 Section 70. Section 59-10-1310 , which is renumbered from Section 59-10-550.2 is
3669 renumbered and amended to read:
3670 [59-10-550.2]. 59-10-1310. Contribution to Cat and Dog Community Spay
3671 and Neuter Program Restricted Account.
3672 (1) Except as provided in Section [59-10-551 , for taxable years beginning on or after
3673 January 1, 2006] 59-10-1304 , a resident or nonresident individual that files an individual
3674 income tax return under this chapter may designate on the resident or nonresident individual's
3675 individual income tax return a contribution as provided in this section to be:
3676 (a) deposited into the Cat and Dog Community Spay and Neuter Program Restricted
3677 Account created by Section 26-48-102 ; and
3678 (b) distributed by the Department of Health as provided in Section 26-48-102 .
3679 [(2) (a) A resident or nonresident individual may designate as a contribution under this
3680 section any whole dollar amount of $1 or more.]
3681 [(b) If a resident or nonresident individual designating a contribution under this
3682 section:]
3683 [(i) is owed an individual income tax refund for the taxable year, the amount of the

3684 contribution under this section shall be deducted from the resident or nonresident individual's
3685 individual income tax refund; or]
3686 [(ii) is not owed an individual income tax refund for the taxable year, the resident or
3687 nonresident individual may remit a contribution under this section with the resident or
3688 nonresident individual's individual income tax return.]
3689 [(c) If a husband and wife file a single individual income tax return jointly, a
3690 contribution under this section shall be a joint contribution.]
3691 [(d) A contribution under this section is irrevocable for the taxable year for which the
3692 resident or nonresident individual makes the contribution.]
3693 [(3)] (2) The commission shall:
3694 (a) determine annually the total amount of contributions designated in accordance with
3695 this section; and
3696 (b) credit the amount described in Subsection [(3)] (2)(a) to the Cat and Dog
3697 Community Spay and Neuter Program Restricted Account created by Section 26-48-102 .
3698 Section 71. Section 59-10-1311 , which is renumbered from Section 59-10-547 is
3699 renumbered and amended to read:
3700 [59-10-547]. 59-10-1311. Election Campaign Fund contribution --
3701 Transfer from General Fund -- Form and procedure.
3702 [(1) (a) Every individual other than a nonresident alien whose income tax liability, less
3703 any credit allowed by this chapter, for any taxable year is $2 or more may designate that $2 be
3704 paid into the Election Campaign Fund established under Section 59-10-548 .]
3705 (1) (a) A resident or nonresident individual, other than a nonresident alien, may
3706 designate on the resident or nonresident individual's individual income tax return a contribution
3707 of $2 to the Election Campaign Fund created by Section 59-10-1312 , if the resident or
3708 nonresident individual:
3709 (i) has a liability under this chapter for a taxable year of $2 or more; and
3710 (ii) files a return under this chapter.
3711 (b) The commission shall transfer $2 from the General Fund to the Election Campaign
3712 Fund for each [campaign designation] contribution made on an individual income tax return
3713 under this Subsection (1).
3714 (c) The transfer described in Subsection (1)(b) shall [come] be made from revenue

3715 generated from [the] state sales and use tax revenues collected in accordance with Chapter 12,
3716 Sales and Use Tax Act.
3717 (2) (a) A [designation] contribution under Subsection (1) may be made with respect to
3718 any taxable year at the time [of filing the] a resident or nonresident individual files a return for
3719 that taxable year.
3720 (b) The [form for the return shall be prepared by the] commission [to include provision
3721 for a campaign] shall include the contribution [designation] allowed by this section:
3722 (i) on a return under this chapter; and
3723 (ii) for any political party as defined by Section 20A-1-102 that has qualified as a
3724 political party in the first six months of the calendar year for which the return is prepared.
3725 [(c) The political parties shall be placed on the form in alphabetical order.]
3726 [(d) Any individual who chooses to designate funds to the Election Campaign Fund
3727 shall place a check mark opposite the name of the political party on the form provided by the
3728 commission.]
3729 [(e) The form shall also contain a box in which the taxpayer can]
3730 (c) The commission shall place a political party described in Subsection (2)(b) on a
3731 return described in Subsection (2)(b) in alphabetical order.
3732 (d) The commission shall include on a return described in Subsection (2)(b):
3733 (i) the option for a resident or nonresident individual to indicate that no contribution is
3734 to be made to any political party[.]; and
3735 (ii) a statement that a contribution a resident or nonresident individual, other than a
3736 nonresident alien, makes under this section may not:
3737 (A) increase the resident or nonresident individual's tax liability under this chapter; or
3738 (B) reduce the resident or nonresident individual's refund under this chapter.
3739 Section 72. Section 59-10-1312 , which is renumbered from Section 59-10-548 is
3740 renumbered and amended to read:
3741 [59-10-548]. 59-10-1312. Election Campaign Fund -- Creation -- Funding
3742 for account -- Disbursement and distribution -- State treasurer requirement to provide a
3743 list of contributions designated to each political party.
3744 (1) (a) As used in this section, "fund" means the Election Campaign Fund created by
3745 this section.

3746 [(1) (a)] (b) There is [established] created an agency fund [to be] known as the
3747 "Election Campaign Fund."
3748 [(b)] (c) The fund shall consist of all amounts deposited to [it as provided in] the fund
3749 in accordance with Section [ 59-10-547 ] 59-10-1311 .
3750 (2) On or before four months after the due date [of the returns] for filing a return
3751 required by this chapter in which [designations of payment to the fund have been made] a
3752 contribution is made in accordance with Section 59-10-1311 , the state treasurer shall:
3753 (a) disburse that portion of the amounts deposited in the fund since the last
3754 disbursement:
3755 (i) that [were] are designated for a political party; and
3756 (ii) to the political party to which [they were] the amounts are designated; and
3757 (b) provide to the political party described in Subsection (2)(a)(ii) a list disclosing, for
3758 each county, the total amount designated by [taxpayers] resident or nonresident individuals,
3759 other than nonresident aliens, in that county.
3760 Section 73. Section 59-10-1401 is enacted to read:
3761 Part 14. Income Tax Treatment of Pass-Through Entities Act
3762 59-10-1401. Title.
3763 This part is known as the "Income Tax Treatment of Pass-Through Entities Act."
3764 Section 74. Section 59-10-1402 is enacted to read:
3765 59-10-1402. Definitions.
3766 As used in this part:
3767 (1) "Limited liability company" includes a foreign limited liability company.
3768 (2) (a) "Pass-through entity" means a business entity that is:
3769 (i) a general partnership;
3770 (ii) a limited liability company;
3771 (iii) a limited liability partnership;
3772 (iv) a limited partnership; or
3773 (v) a business entity similar to Subsections (2)(a)(i) through (iv):
3774 (A) with respect to which the business entity's income or losses are divided among and
3775 passed through to taxpayers; and
3776 (B) as defined by the commission by rule made in accordance with Title 63, Chapter

3777 46a, Utah Administrative Rulemaking Act.
3778 (b) "Pass-through entity" does not include a trust.
3779 (3) "Taxpayer" means:
3780 (a) for a general partnership, a partner;
3781 (b) for a limited liability company, a member;
3782 (c) for a limited liability partnership, a partner;
3783 (d) for a limited partnership, a partner; or
3784 (e) for a business entity described in Subsection (2)(a)(v), a member, partner,
3785 shareholder, or other title designated by the commission by rule made in accordance with Title
3786 63, Chapter 46a, Utah Administrative Rulemaking Act.
3787 Section 75. Section 59-10-1403 , which is renumbered from Section 59-10-301 is
3788 renumbered and amended to read:
3789 [59-10-301]. 59-10-1403. Pass-through entities -- Income tax treatment --
3790 Returns -- Limited liability companies.
3791 [A partnership] (1) Subject to Subsection (3), a pass-through entity is not subject to
3792 [the] a tax imposed by this chapter. [Persons carrying on business as partners are liable for the
3793 tax imposed by this chapter only in their separate or individual capacities.]
3794 (2) The income or losses of a pass-through entity shall be divided among and passed
3795 through to taxpayers.
3796 (3) A pass-through entity is subject to the return filing requirements of Section
3797 59-10-507 .
3798 (4) A pass-through entity that is a limited liability company that transacts business in
3799 the state shall be classified for purposes of taxation under this title in the same manner as the
3800 limited liability company is classified for federal income tax purposes.
3801 Section 76. Section 59-10-1404 , which is renumbered from Section 59-10-302 is
3802 renumbered and amended to read:
3803 [59-10-302]. 59-10-1404. Character of an item of income, gain, loss, or
3804 deduction.
3805 (1) Each item of [partnership] income, gain, loss, or deduction of a pass-through entity
3806 has the same character for a [partner] taxpayer under this chapter as [it] that item of income,
3807 gain, loss, or deduction has for federal income tax purposes. [When an item]

3808 (2) If an item of income, gain, loss, or deduction described in Subsection (1) is not
3809 characterized for federal income tax purposes, [it] that item of income, gain, loss, or deduction
3810 has the same character for a [partner] taxpayer as if the item of income, gain, loss, or deduction
3811 is:
3812 (a) realized directly from the source from which the item of income, gain, loss, or
3813 deduction is realized by the [partnership,] pass-through entity; or
3814 (b) incurred in the same manner as incurred by the [partnership] pass-through entity.
3815 [(2)] (3) In determining state taxable income of a resident [partner any modification]
3816 taxpayer, any addition or subtraction described in Section 59-10-114 [which] that relates to an
3817 item of [partnership] income, gain, loss, or deduction of a pass-through entity shall be made in
3818 accordance with the [partner's] taxpayer's distributive share[, for federal income tax purposes,]:
3819 (a) of the [items] item to which the [modification] addition or subtraction relates[.
3820 Where a partner's]; and
3821 (b) for federal income tax purposes.
3822 (4) If a taxpayer's distributive share of [any such item] an item of income, gain, loss, or
3823 deduction described in Subsection (3) is not required to be taken into account separately for
3824 federal income tax purposes, the [partner's] taxpayer's distributive share of [such] that item of
3825 income, gain, loss, or deduction shall be determined in accordance with [his] that taxpayer's
3826 distributive share[, for federal income tax purposes,]:
3827 (a) of [partnership] income or loss relating to the pass-through entity generally; and
3828 (b) for federal income tax purposes.
3829 Section 77. Section 59-10-1405 , which is renumbered from Section 59-10-303 is
3830 renumbered and amended to read:
3831 [59-10-303]. 59-10-1405. Nonresident taxpayer's share of income, gain,
3832 loss, or deduction of a pass-through entity.
3833 (1) [In determining the] Subject to Subsection (2), the adjusted gross income of a
3834 nonresident [partner of any partnership, there shall be included only that part] taxpayer shall be
3835 adjusted by only that portion of the taxpayer's distributive share of an item of income, gain,
3836 loss, or deduction of a pass-through entity derived from or connected with sources in this state
3837 [of the partner's distributive share of items of partnership income, gain, loss, and deduction
3838 entering into the partner's adjusted gross income, as such part is determined under rules

3839 prescribed by the commission in accordance with the general rules in Section 59-10-116 ].
3840 (2) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
3841 commission may make rules for determining the adjustment required by Subsection (1) if those
3842 rules are consistent with the principles of Section 59-10-116 .
3843 [(2)] (3) In determining the [sources] source of a nonresident [partner's] taxpayer's
3844 income, [no effect shall be given to a provision in the partnership agreement which] the
3845 following provisions in a pass-through entity agreement may not be considered:
3846 (a) a provision that:
3847 [(a)] (i) characterizes [payments] a payment to the [partner] taxpayer as being for
3848 [services or for]:
3849 (A) a service; or
3850 (B) the use of capital[, or];
3851 (b) except as provided in Subsection (5), a provision that allocates to the [partner]
3852 taxpayer, as income or gain from [sources] a source outside this state, a greater proportion of
3853 the [partner's] taxpayer's distributive share of [partnership] income or gain of the pass-through
3854 entity than the ratio of [partnership] income or gain of the pass-through entity from sources
3855 outside this state to [partnership] income or gain of the pass-through entity from all sources[,
3856 except as authorized in Subsection (4)]; or
3857 [(b)] (c) except as provided in Subsection (5), a provision that allocates to the [partner]
3858 taxpayer a greater proportion of [a partnership] an item of loss or deduction of the pass-through
3859 entity connected with sources in this state than the [partner's] taxpayer's proportionate share[,
3860 for federal income tax purposes,] of [partnership] loss or deduction generally[, except as
3861 authorized in Subsection (4).]:
3862 (i) relating to the pass-through entity; and
3863 (ii) for federal income tax purposes.
3864 [(3)] (4) Any [modification] addition or subtraction described in Section 59-10-114
3865 that relates to an item of [partnership] income, gain, loss, or deduction[,] of a pass-through
3866 entity shall be made in accordance with the [partner's] taxpayer's distributive share [for federal
3867 income tax purposes of the item to which the modification relates, but limited to the portion of
3868 such item derived from or connected with sources in this state.]:
3869 (a) of the portion of the item of income, gain, loss, or deduction required to be added or

3870 subtracted under Section 59-10-114 that is derived from or connected with sources in the state;
3871 and
3872 (b) for federal income tax purposes.
3873 [(4) The] (5) (a) Subject to Subsection (5)(b), the commission may[, on application,]
3874 by rule, made in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act,
3875 authorize the use of [such other] one or more methods [of], other than a method described in
3876 Subsections (1) through (4), for determining:
3877 (i) a nonresident [partner's] taxpayer's portion of [partnership items] an item of income,
3878 gain, loss, or deduction of a pass-through entity derived from or connected with sources in
3879 [this] the state[, and the modifications related thereto, as may be appropriate and equitable, on
3880 such terms and conditions as the commission may require.]; and
3881 (ii) the portion of an item of income, gain, loss, or deduction required to be added or
3882 subtracted under Section 59-10-114 that is derived from or connected with sources in the state.
3883 (b) For purposes of Subsection (5)(a), the commission may authorize the use of one or
3884 more methods, other than a method described in Subsections (1) through (4), if:
3885 (i) the commission finds that the use of the method is appropriate and equitable; and
3886 (ii) the taxpayer applies to the commission.
3887 [(5)] (6) (a) A nonresident [partner's] taxpayer's distributive share of [items] an item of
3888 income, gain, loss, or deduction shall be determined [under Subsection 59-10-302 (2)] in
3889 accordance with the principles of Subsections 59-10-1404 (3) and (4).
3890 (b) The character of [partnership items] an item of income, gain, loss, or deduction for
3891 a nonresident [partner] taxpayer shall be determined [under Subsection 59-10-302 (1)] in
3892 accordance with the principles of Subsections 59-10-1404 (1) and (2).
3893 Section 78. Section 59-12-103 is amended to read:
3894 59-12-103. Sales and use tax base -- Rates -- Effective dates -- Use of sales and use
3895 tax revenues.
3896 (1) A tax is imposed on the purchaser as provided in this part for amounts paid or
3897 charged for the following transactions:
3898 (a) retail sales of tangible personal property made within the state;
3899 (b) amounts paid:
3900 (i) to a:

3901 (A) telephone service provider regardless of whether the telephone service provider is
3902 municipally or privately owned; or
3903 (B) telegraph corporation:
3904 (I) as defined in Section 54-2-1 ; and
3905 (II) regardless of whether the telegraph corporation is municipally or privately owned;
3906 and
3907 (ii) for:
3908 (A) telephone service, other than mobile telecommunications service, that originates
3909 and terminates within the boundaries of this state;
3910 (B) mobile telecommunications service that originates and terminates within the
3911 boundaries of one state only to the extent permitted by the Mobile Telecommunications
3912 Sourcing Act, 4 U.S.C. Sec. 116 et seq.; or
3913 (C) telegraph service;
3914 (c) sales of the following for commercial use:
3915 (i) gas;
3916 (ii) electricity;
3917 (iii) heat;
3918 (iv) coal;
3919 (v) fuel oil; or
3920 (vi) other fuels;
3921 (d) sales of the following for residential use:
3922 (i) gas;
3923 (ii) electricity;
3924 (iii) heat;
3925 (iv) coal;
3926 (v) fuel oil; or
3927 (vi) other fuels;
3928 (e) sales of prepared food;
3929 (f) except as provided in Section 59-12-104 , amounts paid or charged as admission or
3930 user fees for theaters, movies, operas, museums, planetariums, shows of any type or nature,
3931 exhibitions, concerts, carnivals, amusement parks, amusement rides, circuses, menageries,

3932 fairs, races, contests, sporting events, dances, boxing matches, wrestling matches, closed circuit
3933 television broadcasts, billiard parlors, pool parlors, bowling lanes, golf, miniature golf, golf
3934 driving ranges, batting cages, skating rinks, ski lifts, ski runs, ski trails, snowmobile trails,
3935 tennis courts, swimming pools, water slides, river runs, jeep tours, boat tours, scenic cruises,
3936 horseback rides, sports activities, or any other amusement, entertainment, recreation,
3937 exhibition, cultural, or athletic activity;
3938 (g) amounts paid or charged for services for repairs or renovations of tangible personal
3939 property, unless Section 59-12-104 provides for an exemption from sales and use tax for:
3940 (i) the tangible personal property; and
3941 (ii) parts used in the repairs or renovations of the tangible personal property described
3942 in Subsection (1)(g)(i), whether or not any parts are actually used in the repairs or renovations
3943 of that tangible personal property;
3944 (h) except as provided in Subsection 59-12-104 (7), amounts paid or charged for
3945 assisted cleaning or washing of tangible personal property;
3946 (i) amounts paid or charged for tourist home, hotel, motel, or trailer court
3947 accommodations and services that are regularly rented for less than 30 consecutive days;
3948 (j) amounts paid or charged for laundry or dry cleaning services;
3949 (k) amounts paid or charged for leases or rentals of tangible personal property if within
3950 this state the tangible personal property is:
3951 (i) stored;
3952 (ii) used; or
3953 (iii) otherwise consumed;
3954 (l) amounts paid or charged for tangible personal property if within this state the
3955 tangible personal property is:
3956 (i) stored;
3957 (ii) used; or
3958 (iii) consumed; and
3959 (m) amounts paid or charged for prepaid telephone calling cards.
3960 (2) (a) Except as provided in Subsections (2)(b) through (e), a state tax and a local tax
3961 is imposed on a transaction described in Subsection (1) equal to the sum of:
3962 (i) a state tax imposed on the transaction at a tax rate of [4.65%] 4.70%; and

3963 (ii) a local tax equal to the sum of the tax rates a county, city, or town imposes on the
3964 transaction under this chapter other than this part.
3965 (b) Except as provided in Subsection (2)(d) or (e), a state tax and a local tax is imposed
3966 on a transaction described in Subsection (1)(d) equal to the sum of:
3967 (i) a state tax imposed on the transaction at a tax rate of 2%; and
3968 (ii) a local tax equal to the sum of the tax rates a county, city, or town imposes on the
3969 transaction under this chapter other than this part.
3970 (c) Except as provided in Subsection (2)(d) or (e), beginning on January 1, 2007, a
3971 state tax and a local tax is imposed on amounts paid or charged for food and food ingredients
3972 equal to the sum of:
3973 (i) a state tax imposed on the amounts paid or charged for food and food ingredients at
3974 a tax rate of 1.75%; and
3975 (ii) a local tax equal to the sum of the tax rates a county, city, or town imposes on the
3976 amounts paid or charged for food and food ingredients under this chapter other than this part.
3977 (d) Except as provided in Subsection (2)(e), if a seller collects a tax in accordance with
3978 Subsection 59-12-107 (1)(b) on a transaction described in Subsection (1), a state tax and a local
3979 tax is imposed on the transaction equal to the sum of:
3980 (i) a state tax imposed on the transaction at a tax rate of:
3981 (A) [4.65%] 4.70% for a transaction other than a transaction described in Subsection
3982 (2)(d)(i)(B) or (2)(d)(i)(C);
3983 (B) 2% for a transaction described in Subsection (1)(d); or
3984 (C) beginning on January 1, 2007, 1.75% on the amounts paid or charged for food and
3985 food ingredients; and
3986 (ii) a local tax imposed on the transaction at a tax rate equal to the sum of the following
3987 tax rates:
3988 (A) the tax rate authorized by Section 59-12-204 , but only if all of the counties, cities,
3989 and towns in the state impose the tax authorized by Section 59-12-204 ; and
3990 (B) the tax rate authorized by Section 59-12-1102 , but only if all of the counties in the
3991 state impose the tax authorized by Section 59-12-1102 .
3992 (e) (i) A state tax and a local tax is imposed on an entire bundled transaction as
3993 provided in this Subsection (2)(e) if the bundled transaction is attributable to food and food

3994 ingredients and tangible personal property other than food and food ingredients.
3995 (ii) If the tax on a bundled transaction described in Subsection (2)(e)(i) is collected by a
3996 seller other than a seller that collects a tax in accordance with Subsection 59-12-107 (1)(b),
3997 beginning on January 1, 2007, a state tax and a local tax is imposed on the entire bundled
3998 transaction equal to the sum of:
3999 (A) a state tax imposed on the entire bundled transaction at the tax rate described in
4000 Subsection (2)(a)(i); and
4001 (B) a local tax imposed on the entire bundled transaction at the sum of the tax rates
4002 described in Subsection (2)(a)(ii).
4003 (iii) If the tax on a bundled transaction described in Subsection (2)(e)(i) is collected by
4004 a seller in accordance with Subsection 59-12-107 (1)(b), beginning on January 1, 2007, a state
4005 tax and a local tax is imposed on the entire bundled transaction equal to the sum of:
4006 (A) a state tax imposed on the entire bundled transaction at the tax rate described in
4007 Subsection (2)(d)(i)(A); and
4008 (B) a local tax imposed on the entire bundled transaction at a tax rate equal to the sum
4009 of the following tax rates:
4010 (I) the tax rate authorized by Section 59-12-204 , but only if all of the counties, cities,
4011 and towns in the state impose the tax authorized by Section 59-12-204 ; and
4012 (II) the tax rate authorized by Section 59-12-1102 , but only if all of the counties in the
4013 state impose the tax authorized by Section 59-12-1102 .
4014 (f) Subject to Subsections (2)(g) and (h), a tax rate repeal or tax rate change for a tax
4015 rate imposed under the following shall take effect on the first day of a calendar quarter:
4016 (i) Subsection (2)(a)(i);
4017 (ii) Subsection (2)(b)(i);
4018 (iii) Subsection (2)(c)(i);
4019 (iv) Subsection (2)(d)(i);
4020 (v) Subsection (2)(e)(ii)(A); or
4021 (vi) Subsection (2)(e)(iii)(A).
4022 (g) (i) For a transaction described in Subsection (2)(g)(iii), a tax rate increase shall take
4023 effect on the first day of the first billing period that begins after the effective date of the tax rate
4024 increase if the billing period for the transaction begins before the effective date of a tax rate

4025 increase imposed under:
4026 (A) Subsection (2)(a)(i);
4027 (B) Subsection (2)(b)(i);
4028 (C) Subsection (2)(c)(i);
4029 (D) Subsection (2)(d)(i);
4030 (E) Subsection (2)(e)(ii)(A); or
4031 (F) Subsection (2)(e)(iii)(A).
4032 (ii) For a transaction described in Subsection (2)(g)(iii), the repeal of a tax or a tax rate
4033 decrease shall take effect on the first day of the last billing period that began before the
4034 effective date of the repeal of the tax or the tax rate decrease if the billing period for the
4035 transaction begins before the effective date of the repeal of the tax or the tax rate decrease
4036 imposed under:
4037 (A) Subsection (2)(a)(i);
4038 (B) Subsection (2)(b)(i);
4039 (C) Subsection (2)(c)(i);
4040 (D) Subsection (2)(d)(i);
4041 (E) Subsection (2)(e)(ii)(A); or
4042 (F) Subsection (2)(e)(iii)(A).
4043 (iii) Subsections (2)(g)(i) and (ii) apply to transactions subject to a tax under:
4044 (A) Subsection (1)(b);
4045 (B) Subsection (1)(c);
4046 (C) Subsection (1)(d);
4047 (D) Subsection (1)(e);
4048 (E) Subsection (1)(f);
4049 (F) Subsection (1)(g);
4050 (G) Subsection (1)(h);
4051 (H) Subsection (1)(i);
4052 (I) Subsection (1)(j); or
4053 (J) Subsection (1)(k).
4054 (h) (i) For a tax rate described in Subsection (2)(h)(ii), if a tax due on a catalogue sale
4055 is computed on the basis of sales and use tax rates published in the catalogue, a tax rate repeal

4056 or change in a tax rate takes effect:
4057 (A) on the first day of a calendar quarter; and
4058 (B) beginning 60 days after the effective date of the tax rate repeal or tax rate change.
4059 (ii) Subsection (2)(h)(i) applies to the tax rates described in the following:
4060 (A) Subsection (2)(a)(i);
4061 (B) Subsection (2)(b)(i);
4062 (C) Subsection (2)(c)(i);
4063 (D) Subsection (2)(d)(i);
4064 (E) Subsection (2)(e)(ii)(A); or
4065 (F) Subsection (2)(e)(iii)(A).
4066 (iii) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act,
4067 the commission may by rule define the term "catalogue sale."
4068 (3) (a) [Except as provided in Subsections (4) through (10), the] The following state
4069 taxes shall be deposited into the General Fund:
4070 (i) the tax imposed by Subsection (2)(a)(i);
4071 (ii) the tax imposed by Subsection (2)(b)(i);
4072 (iii) the tax imposed by Subsection (2)(c)(i);
4073 (iv) the tax imposed by Subsection (2) (d)(i);
4074 (v) the tax imposed by Subsection (2)(e)(ii)(A); and
4075 (vi) the tax imposed by Subsection (2)(e)(iii)(A).
4076 (b) The following local taxes shall be distributed to a county, city, or town as provided
4077 in this chapter:
4078 (i) the tax imposed by Subsection (2)(a)(ii);
4079 (ii) the tax imposed by Subsection (2)(b)(ii);
4080 (iii) the tax imposed by Subsection (2)(c)(ii); and
4081 (iv) the tax imposed by Subsection (2)(e)(ii)(B).
4082 (c) (i) Notwithstanding any provision of this chapter, each county, city, or town in the
4083 state shall receive the county's, city's, or town's proportionate share of the revenues generated
4084 by the following local taxes as provided in Subsection (3)(c)(ii):
4085 (A) the local tax described in Subsection (2)(d)(ii); and
4086 (B) the local tax described in Subsection (2)(e)(iii)(B).

4087 (ii) For revenues generated by a tax described in Subsection (3)(c)(i), the commission
4088 shall determine a county's, city's, or town's proportionate share of the revenues by:
4089 (A) calculating an amount equal to the population of the unincorporated area of the
4090 county, city, or town divided by the total population of the state; and
4091 (B) multiplying the amount determined under Subsection (3)(c)(ii)(A) by the total
4092 amount of revenues generated by the taxes described in Subsection (3)(c)(i) for all counties,
4093 cities, and towns.
4094 (iii) (A) Except as provided in Subsection (3)(c)(iii)(B), population figures for
4095 purposes of this section shall be derived from the most recent official census or census estimate
4096 of the United States Census Bureau.
4097 (B) If a needed population estimate is not available from the United States Census
4098 Bureau, population figures shall be derived from the estimate from the Utah Population
4099 Estimates Committee created by executive order of the governor.
4100 (4) (a) Notwithstanding Subsection (3)(a), for a fiscal year beginning on or after July 1,
4101 2003, the lesser of the following amounts shall be used as provided in Subsections (4)(b)
4102 through (g):
4103 (i) for taxes listed under Subsection (3)(a), the amount of tax revenue generated:
4104 (A) by a 1/16% tax rate on the transactions described in Subsection (1); and
4105 (B) for the fiscal year; or
4106 (ii) $17,500,000.
4107 (b) (i) For a fiscal year beginning on or after July 1, 2003, 14% of the amount
4108 described in Subsection (4)(a) shall be transferred each year as dedicated credits to the
4109 Department of Natural Resources to:
4110 (A) implement the measures described in Subsections 63-34-14 (4)(a) through (d) to
4111 protect sensitive plant and animal species; or
4112 (B) award grants, up to the amount authorized by the Legislature in an appropriations
4113 act, to political subdivisions of the state to implement the measures described in Subsections
4114 63-34-14 (4)(a) through (d) to protect sensitive plant and animal species.
4115 (ii) Money transferred to the Department of Natural Resources under Subsection
4116 (4)(b)(i) may not be used to assist the United States Fish and Wildlife Service or any other
4117 person to list or attempt to have listed a species as threatened or endangered under the

4118 Endangered Species Act of 1973, 16 U.S.C. Sec. 1531 et seq.
4119 (iii) At the end of each fiscal year:
4120 (A) 50% of any unexpended dedicated credits shall lapse to the Water Resources
4121 Conservation and Development Fund created in Section 73-10-24 ;
4122 (B) 25% of any unexpended dedicated credits shall lapse to the Utah Wastewater Loan
4123 Program Subaccount created in Section 73-10c-5 ; and
4124 (C) 25% of any unexpended dedicated credits shall lapse to the Drinking Water Loan
4125 Program Subaccount created in Section 73-10c-5 .
4126 (c) For a fiscal year beginning on or after July 1, 2003, 3% of the amount described in
4127 Subsection (4)(a) shall be deposited each year in the Agriculture Resource Development Fund
4128 created in Section 4-18-6 .
4129 (d) (i) For a fiscal year beginning on or after July 1, 2003, 1% of the amount described
4130 in Subsection (4)(a) shall be transferred each year as dedicated credits to the Division of Water
4131 Rights to cover the costs incurred in hiring legal and technical staff for the adjudication of
4132 water rights.
4133 (ii) At the end of each fiscal year:
4134 (A) 50% of any unexpended dedicated credits shall lapse to the Water Resources
4135 Conservation and Development Fund created in Section 73-10-24 ;
4136 (B) 25% of any unexpended dedicated credits shall lapse to the Utah Wastewater Loan
4137 Program Subaccount created in Section 73-10c-5 ; and
4138 (C) 25% of any unexpended dedicated credits shall lapse to the Drinking Water Loan
4139 Program Subaccount created in Section 73-10c-5 .
4140 (e) (i) For a fiscal year beginning on or after July 1, 2003, 41% of the amount described
4141 in Subsection (4)(a) shall be deposited in the Water Resources Conservation and Development
4142 Fund created in Section 73-10-24 for use by the Division of Water Resources.
4143 (ii) In addition to the uses allowed of the Water Resources Conservation and
4144 Development Fund under Section 73-10-24 , the Water Resources Conservation and
4145 Development Fund may also be used to:
4146 (A) conduct hydrologic and geotechnical investigations by the Division of Water
4147 Resources in a cooperative effort with other state, federal, or local entities, for the purpose of
4148 quantifying surface and ground water resources and describing the hydrologic systems of an

4149 area in sufficient detail so as to enable local and state resource managers to plan for and
4150 accommodate growth in water use without jeopardizing the resource;
4151 (B) fund state required dam safety improvements; and
4152 (C) protect the state's interest in interstate water compact allocations, including the
4153 hiring of technical and legal staff.
4154 (f) For a fiscal year beginning on or after July 1, 2003, 20.5% of the amount described
4155 in Subsection (4)(a) shall be deposited in the Utah Wastewater Loan Program Subaccount
4156 created in Section 73-10c-5 for use by the Water Quality Board to fund wastewater projects.
4157 (g) For a fiscal year beginning on or after July 1, 2003, 20.5% of the amount described
4158 in Subsection (4)(a) shall be deposited in the Drinking Water Loan Program Subaccount
4159 created in Section 73-10c-5 for use by the Division of Drinking Water to:
4160 (i) provide for the installation and repair of collection, treatment, storage, and
4161 distribution facilities for any public water system, as defined in Section 19-4-102 ;
4162 (ii) develop underground sources of water, including springs and wells; and
4163 (iii) develop surface water sources.
4164 (5) (a) Notwithstanding Subsection (3)(a), for a fiscal year beginning on or after July 1,
4165 2006, the difference between the following amounts shall be expended as provided in this
4166 Subsection (5), if that difference is greater than $1:
4167 (i) for taxes listed under Subsection (3)(a), the amount of tax revenue generated for the
4168 fiscal year by a 1/16% tax rate on the transactions described in Subsection (1); and
4169 (ii) $17,500,000.
4170 (b) (i) The first $500,000 of the difference described in Subsection (5)(a) shall be:
4171 (A) transferred each fiscal year to the Department of Natural Resources as dedicated
4172 credits; and
4173 (B) expended by the Department of Natural Resources for watershed rehabilitation or
4174 restoration.
4175 (ii) At the end of each fiscal year, 100% of any unexpended dedicated credits described
4176 in Subsection (5)(b)(i) shall lapse to the Water Resources Conservation and Development Fund
4177 created in Section 73-10-24 .
4178 (c) (i) After making the transfer required by Subsection (5)(b)(i), $150,000 of the
4179 remaining difference described in Subsection (5)(a) shall be:

4180 (A) transferred each fiscal year to the Division of Water Resources as dedicated
4181 credits; and
4182 (B) expended by the Division of Water Resources for cloud-seeding projects
4183 authorized by Title 73, Chapter 15, Modification of Weather.
4184 (ii) At the end of each fiscal year, 100% of any unexpended dedicated credits described
4185 in Subsection (5)(c)(i) shall lapse to the Water Resources Conservation and Development Fund
4186 created in Section 73-10-24 .
4187 (d) After making the transfers required by Subsections (5)(b) and (c), 94% of the
4188 remaining difference described in Subsection (5)(a) shall be deposited into the Water
4189 Resources Conservation and Development Fund created in Section 73-10-24 for use by the
4190 Division of Water Resources for:
4191 (i) preconstruction costs:
4192 (A) as defined in Subsection 73-26-103 (6) for projects authorized by Title 73, Chapter
4193 26, Bear River Development Act; and
4194 (B) as defined in Subsection 73-28-103 (8) for the Lake Powell Pipeline project
4195 authorized by Title 73, Chapter 28, Lake Powell Pipeline Development Act;
4196 (ii) the cost of employing a civil engineer to oversee any project authorized by Title 73,
4197 Chapter 26, Bear River Development Act;
4198 (iii) the cost of employing a civil engineer to oversee the Lake Powell Pipeline project
4199 authorized by Title 73, Chapter 28, Lake Powell Pipeline Development Act; and
4200 (iv) other uses authorized under Sections 73-10-24 , 73-10-25.1 , 73-10-30 , and
4201 Subsection (4)(e)(ii) after funding the uses specified in Subsections (5)(d)(i) through (iii).
4202 (e) Any unexpended monies described in Subsection (5)(d) that remain in the Water
4203 Resources Conservation and Development Fund at the end of the fiscal year are nonlapsing.
4204 (f) After making the transfers required by Subsections (5)(b) and (c) and subject to
4205 Subsection (5)(g), 6% of the remaining difference described in Subsection (5)(a) shall be
4206 transferred each year as dedicated credits to the Division of Water Rights to cover the costs
4207 incurred for employing additional technical staff for the administration of water rights.
4208 (g) At the end of each fiscal year, any unexpended dedicated credits described in
4209 Subsection (5)(f) over $150,000 lapse to the Water Resources Conservation and Development
4210 Fund created in Section 73-10-24 .

4211 (6) Notwithstanding Subsection (3)(a), for a fiscal year beginning on or after July 1,
4212 2003, and for taxes listed under Subsection (3)(a), the amount of revenue generated by a 1/16%
4213 tax rate on the transactions described in Subsection (1) for the fiscal year shall be deposited in
4214 the Transportation Fund created by Section 72-2-102 .
4215 (7) (a) Notwithstanding Subsection (3)(a) and until Subsection (7)(b) applies,
4216 beginning on January 1, 2000, the Division of Finance shall deposit into the Centennial
4217 Highway Fund Restricted Account created in Section 72-2-118 a portion of the taxes listed
4218 under Subsection (3)(a) equal to the revenues generated by a 1/64% tax rate on the taxable
4219 transactions under Subsection (1).
4220 (b) Notwithstanding Subsection (3)(a), when the highway general obligation bonds
4221 have been paid off and the highway projects completed that are intended to be paid from
4222 revenues deposited in the Centennial Highway Fund Restricted Account as determined by the
4223 Executive Appropriations Committee under Subsection 72-2-118 (6)(d), the Division of
4224 Finance shall deposit into the Transportation Investment Fund of 2005 created by Section
4225 72-2-124 a portion of the taxes listed under Subsection (3)(a) equal to the revenues generated
4226 by a 1/64% tax rate on the taxable transactions under Subsection (1).
4227 (8) (a) Notwithstanding Subsection (3)(a), for fiscal years beginning on or after fiscal
4228 year 2004-05, the commission shall each year on or before the September 30 immediately
4229 following the last day of the fiscal year deposit the difference described in Subsection (8)(b)
4230 into the Remote Sales Restricted Account created in Section 59-12-103.2 if that difference is
4231 greater than $0.
4232 (b) The difference described in Subsection (8)(a) is equal to the difference between:
4233 (i) the total amount of the revenues the commission received from sellers collecting the
4234 taxes described in Subsections (2)(d)(i) and (2)(e)(iii)(A) for the fiscal year immediately
4235 preceding the September 30 described in Subsection (8)(a); and
4236 (ii) $7,279,673.
4237 (9) (a) Notwithstanding Subsection (3)(a), in addition to the amount deposited in
4238 Subsection (7)(a), and until Subsection (9)(b) applies, for a fiscal year beginning on or after
4239 July 1, 2007, the Division of Finance shall deposit into the Centennial Highway Fund
4240 Restricted Account created by Section 72-2-118 a portion of the taxes listed under Subsection
4241 (3)(a) equal to 8.3% of the revenues collected from the following taxes, which represents a

4242 portion of the approximately 17% of sales and use tax revenues generated annually by the sales
4243 and use tax on vehicles and vehicle-related products:
4244 (i) the tax imposed by Subsection (2)(a)(i);
4245 (ii) the tax imposed by Subsection (2)(b)(i);
4246 (iii) the tax imposed by Subsection (2)(c)(i); and
4247 (iv) the tax imposed by Subsection (2)(e)(ii)(A).
4248 (b) Notwithstanding Subsection (3)(a) and in addition to the amounts deposited under
4249 Subsection (7)(b), when the highway general obligation bonds have been paid off and the
4250 highway projects completed that are intended to be paid from revenues deposited in the
4251 Centennial Highway Fund Restricted Account as determined by the Executive Appropriations
4252 Committee under Subsection 72-2-118 (6)(d), the Division of Finance shall deposit into the
4253 Transportation Investment Fund of 2005 created by Section 72-2-124 a portion of the taxes
4254 listed under Subsection (3)(a) equal to 8.3% of the revenues collected from the following taxes,
4255 which represents a portion of the approximately 17% of sales and use tax revenues generated
4256 annually by the sales and use tax on vehicles and vehicle-related products:
4257 (i) the tax imposed by Subsection (2)(a)(i);
4258 (ii) the tax imposed by Subsection (2)(b)(i);
4259 (iii) the tax imposed by Subsection (2)(c)(i); and
4260 (iv) the tax imposed by Subsection (2)(e)(ii)(A).
4261 (10) (a) Notwithstanding Subsection (3)(a) and until Subsection (10)(b) applies, the
4262 Division of Finance shall annually deposit $90,000,000 of the revenues generated by the taxes
4263 listed under Subsection (3)(a) into the Critical Highway Needs Fund created by Section
4264 72-2-125 .
4265 (b) Notwithstanding Subsection (3)(a) and in addition to any amounts deposited under
4266 Subsections (7) and (9), when the general obligation bonds authorized by Section 63B-16-101
4267 have been paid off and the highway projects completed that are included in the prioritized
4268 project list under Subsection 72-2-125 (4) as determined in accordance with Subsection
4269 72-2-125 (6), the Division of Finance shall annually deposit $90,000,000 of the revenues
4270 generated by the taxes listed under Subsection (3)(a) into the Transportation Investment Fund
4271 of 2005 created by Section 72-2-124 .
4272 (11) (a) (i) Notwithstanding Subsection (3)(a), except as provided in Subsection

4273 (11)(a)(ii), and until Subsection (11)(b) applies, beginning on January 1, 2009, the Division of
4274 Finance shall deposit into the Critical Highway Needs Fund created by Section 72-2-125 the
4275 amount of tax revenue generated by a .025% tax rate on the transactions described in
4276 Subsection (1).
4277 (ii) For purposes of Subsection (11)(a)(i), the Division of Finance may not deposit into
4278 the Critical Highway Needs Fund any tax revenue generated by amounts paid or charged for
4279 food and food ingredients, except for tax revenue generated by a bundled transaction
4280 attributable to food and food ingredients and tangible personal property other than food and
4281 food ingredients described in Subsection (2)(e).
4282 (b) (i) Notwithstanding Subsection (3)(a), except as provided in Subsection (11)(b)(ii),
4283 and in addition to any amounts deposited under Subsections (7), (9), and (10), when the general
4284 obligation bonds authorized by Section 63B-16-101 have been paid off and the highway
4285 projects completed that are included in the prioritized project list under Subsection 72-2-125 (4)
4286 as determined in accordance with Subsection 72-2-125 (6), the Division of Finance shall
4287 deposit into the Transportation Investment Fund of 2005 created by Section 72-2-124 the
4288 amount of tax revenue generated by a .025% tax rate on the transactions described in
4289 Subsection (1).
4290 (ii) For purposes of Subsection (11)(b)(i), the Division of Finance may not deposit into
4291 the Transportation Investment Fund of 2005 any tax revenue generated by amounts paid or
4292 charged for food and food ingredients, except for tax revenue generated by a bundled
4293 transaction attributable to food and food ingredients and tangible personal property other than
4294 food and food ingredients described in Subsection (2)(e).
4295 (12) (a) Notwithstanding Subsection (3)(a), and except as provided in Subsection
4296 (12)(b), beginning on January 1, 2009, the Division of Finance shall deposit into the
4297 Transportation Fund created by Section 72-2-102 the amount of tax revenue generated by a
4298 .025% tax rate on the transactions described in Subsection (1) to be expended to address
4299 chokepoints in construction management.
4300 (b) For purposes of Subsection (12)(a), the Division of Finance may not deposit into
4301 the Transportation Fund any tax revenue generated by amounts paid or charged for food
4302 ingredients, except for tax revenue generated by a bundled transaction attributable to food and
4303 food ingredients and tangible personal property other than food and food ingredients described

4304 in Subsection (2)(e).
4305 Section 79. Section 59-12-104 is amended to read:
4306 59-12-104. Exemptions.
4307 The following sales and uses are exempt from the taxes imposed by this chapter:
4308 (1) sales of aviation fuel, motor fuel, and special fuel subject to a Utah state excise tax
4309 under Chapter 13, Motor and Special Fuel Tax Act;
4310 (2) sales to the state, its institutions, and its political subdivisions; however, this
4311 exemption does not apply to sales of:
4312 (a) construction materials except:
4313 (i) construction materials purchased by or on behalf of institutions of the public
4314 education system as defined in Utah Constitution Article X, Section 2, provided the
4315 construction materials are clearly identified and segregated and installed or converted to real
4316 property which is owned by institutions of the public education system; and
4317 (ii) construction materials purchased by the state, its institutions, or its political
4318 subdivisions which are installed or converted to real property by employees of the state, its
4319 institutions, or its political subdivisions; or
4320 (b) tangible personal property in connection with the construction, operation,
4321 maintenance, repair, or replacement of a project, as defined in Section 11-13-103 , or facilities
4322 providing additional project capacity, as defined in Section 11-13-103 ;
4323 (3) (a) sales of an item described in Subsection (3)(b) from a vending machine if:
4324 (i) the proceeds of each sale do not exceed $1; and
4325 (ii) the seller or operator of the vending machine reports an amount equal to 150% of
4326 the cost of the item described in Subsection (3)(b) as goods consumed; and
4327 (b) Subsection (3)(a) applies to:
4328 (i) food and food ingredients; or
4329 (ii) prepared food;
4330 (4) sales of the following to a commercial airline carrier for in-flight consumption:
4331 (a) food and food ingredients;
4332 (b) prepared food; or
4333 (c) services related to Subsection (4)(a) or (b);
4334 (5) sales of parts and equipment for installation in aircraft operated by common carriers

4335 in interstate or foreign commerce;
4336 (6) sales of commercials, motion picture films, prerecorded audio program tapes or
4337 records, and prerecorded video tapes by a producer, distributor, or studio to a motion picture
4338 exhibitor, distributor, or commercial television or radio broadcaster;
4339 (7) (a) subject to Subsection (7)(b), sales of cleaning or washing of tangible personal
4340 property if the cleaning or washing of the tangible personal property is not assisted cleaning or
4341 washing of tangible personal property;
4342 (b) if a seller that sells at the same business location assisted cleaning or washing of
4343 tangible personal property and cleaning or washing of tangible personal property that is not
4344 assisted cleaning or washing of tangible personal property, the exemption described in
4345 Subsection (7)(a) applies if the seller separately accounts for the sales of the assisted cleaning
4346 or washing of the tangible personal property; and
4347 (c) for purposes of Subsection (7)(b) and in accordance with Title 63, Chapter 46a,
4348 Utah Administrative Rulemaking Act, the commission may make rules:
4349 (i) governing the circumstances under which sales are at the same business location;
4350 and
4351 (ii) establishing the procedures and requirements for a seller to separately account for
4352 sales of assisted cleaning or washing of tangible personal property;
4353 (8) sales made to or by religious or charitable institutions in the conduct of their regular
4354 religious or charitable functions and activities, if the requirements of Section 59-12-104.1 are
4355 fulfilled;
4356 (9) sales of a vehicle of a type required to be registered under the motor vehicle laws of
4357 this state if the vehicle is:
4358 (a) not registered in this state; and
4359 (b) (i) not used in this state; or
4360 (ii) used in this state:
4361 (A) if the vehicle is not used to conduct business, for a time period that does not
4362 exceed the longer of:
4363 (I) 30 days in any calendar year; or
4364 (II) the time period necessary to transport the vehicle to the borders of this state; or
4365 (B) if the vehicle is used to conduct business, for the time period necessary to transport

4366 the vehicle to the borders of this state;
4367 (10) (a) amounts paid for an item described in Subsection (10)(b) if:
4368 (i) the item is intended for human use; and
4369 (ii) (A) a prescription was issued for the item; or
4370 (B) the item was purchased by a hospital or other medical facility; and
4371 (b) (i) Subsection (10)(a) applies to:
4372 (A) a drug;
4373 (B) a syringe; or
4374 (C) a stoma supply; and
4375 (ii) in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
4376 commission may by rule define the terms:
4377 (A) "syringe"; or
4378 (B) "stoma supply";
4379 (11) sales or use of property, materials, or services used in the construction of or
4380 incorporated in pollution control facilities allowed by Sections 19-2-123 through 19-2-127 ;
4381 (12) (a) sales of an item described in Subsection (12)(c) served by:
4382 (i) the following if the item described in Subsection (12)(c) is not available to the
4383 general public:
4384 (A) a church; or
4385 (B) a charitable institution;
4386 (ii) an institution of higher education if:
4387 (A) the item described in Subsection (12)(c) is not available to the general public; or
4388 (B) the item described in Subsection (12)(c) is prepaid as part of a student meal plan
4389 offered by the institution of higher education; or
4390 (b) sales of an item described in Subsection (12)(c) provided for a patient by:
4391 (i) a medical facility; or
4392 (ii) a nursing facility; and
4393 (c) Subsections (12)(a) and (b) apply to:
4394 (i) food and food ingredients;
4395 (ii) prepared food; or
4396 (iii) alcoholic beverages;

4397 (13) (a) except as provided in Subsection (13)(b), the sale of tangible personal property
4398 by a person:
4399 (i) regardless of the number of transactions involving the sale of that tangible personal
4400 property by that person; and
4401 (ii) not regularly engaged in the business of selling that type of tangible personal
4402 property;
4403 (b) this Subsection (13) does not apply if:
4404 (i) the sale is one of a series of sales of a character to indicate that the person is
4405 regularly engaged in the business of selling that type of tangible personal property;
4406 (ii) the person holds that person out as regularly engaged in the business of selling that
4407 type of tangible personal property;
4408 (iii) the person sells an item of tangible personal property that the person purchased as
4409 a sale that is exempt under Subsection (25); or
4410 (iv) the sale is of a vehicle or vessel required to be titled or registered under the laws of
4411 this state in which case the tax is based upon:
4412 (A) the bill of sale or other written evidence of value of the vehicle or vessel being
4413 sold; or
4414 (B) in the absence of a bill of sale or other written evidence of value, the fair market
4415 value of the vehicle or vessel being sold at the time of the sale as determined by the
4416 commission; and
4417 (c) in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
4418 commission shall make rules establishing the circumstances under which:
4419 (i) a person is regularly engaged in the business of selling a type of tangible personal
4420 property;
4421 (ii) a sale of tangible personal property is one of a series of sales of a character to
4422 indicate that a person is regularly engaged in the business of selling that type of tangible
4423 personal property; or
4424 (iii) a person holds that person out as regularly engaged in the business of selling a type
4425 of tangible personal property;
4426 (14) (a) except as provided in Subsection (14)(b), amounts paid or charged on or after
4427 July 1, 2006, for a purchase or lease by a manufacturing facility other than a cogeneration

4428 facility, for the following:
4429 (i) machinery and equipment that:
4430 (A) is used:
4431 (I) for a manufacturing facility other than a manufacturing facility that is a scrap
4432 recycler described in Subsection 59-12-102 (48)(b):
4433 (Aa) in the manufacturing process; and
4434 (Bb) to manufacture an item sold as tangible personal property; or
4435 (II) for a manufacturing facility that is a scrap recycler described in Subsection
4436 59-12-102 (48)(b), to process an item sold as tangible personal property; and
4437 (B) has an economic life of three or more years; and
4438 (ii) normal operating repair or replacement parts that:
4439 (A) have an economic life of three or more years; and
4440 (B) are used:
4441 (I) for a manufacturing facility in the state other than a manufacturing facility that is a
4442 scrap recycler described in Subsection 59-12-102 (48)(b), in the manufacturing process; or
4443 (II) for a manufacturing facility in the state that is a scrap recycler described in
4444 Subsection 59-12-102 (48)(b), to process an item sold as tangible personal property;
4445 (b) (i) amounts paid or charged on or after July 1, 2005, for a purchase or lease by a
4446 manufacturing facility that is a cogeneration facility placed in service on or after May 1, 2006,
4447 for the following:
4448 (A) machinery and equipment that:
4449 (I) is used:
4450 (Aa) in the manufacturing process; and
4451 (Bb) to manufacture an item sold as tangible personal property; and
4452 (II) has an economic life of three or more years; and
4453 (B) normal operating repair or replacement parts that:
4454 (I) are used in the manufacturing process in a manufacturing facility in the state; and
4455 (II) have an economic life of three or more years; and
4456 (ii) for amounts paid or charged on or after July 1, 2005, but on or before June 30,
4457 2006, for a purchase or lease described in Subsection (14)(b)(i), a cogeneration facility may
4458 claim the exemption allowed by Subsection (14)(b)(i) by filing for a refund:

4459 (A) for sales and use taxes paid under this chapter on the purchase or lease payment;
4460 and
4461 (B) in accordance with Section 59-12-110 ;
4462 (c) amounts paid or charged for a purchase or lease made on or after January 1, 2008,
4463 by an establishment described in NAICS Subsector 212, Mining (except Oil and Gas), or
4464 NAICS Code 213113, Support Activities for Coal Mining, 213114, Support Activities for
4465 Metal Mining, or 213115, Support Activities for Nonmetallic Minerals (except Fuels) Mining,
4466 of the 2002 North American Industry Classification System of the federal Executive Office of
4467 the President, Office of Management and Budget:
4468 (i) machinery and equipment that:
4469 (A) are used in:
4470 (I) the production process, other than the production of real property; or
4471 (II) research and development; and
4472 (B) have an economic life of three or more years; and
4473 (ii) normal operating repair or replacement parts that:
4474 (A) have an economic life of three or more years; and
4475 (B) are used in:
4476 (I) the production process, other than the production of real property, in an
4477 establishment described in this Subsection (14)(c) in the state; or
4478 (II) research and development in an establishment described in this Subsection (14)(c)
4479 in the state;
4480 (d) for purposes of this Subsection (14) and in accordance with Title 63, Chapter 46a,
4481 Utah Administrative Rulemaking Act, the commission:
4482 (i) shall by rule define the term "establishment"; and
4483 (ii) may by rule define what constitutes:
4484 (A) processing an item sold as tangible personal property;
4485 (B) the production process, other than the production of real property; or
4486 (C) research and development; and
4487 (e) on or before October 1, 2011, and every five years after October 1, 2011, the
4488 commission shall:
4489 (i) review the exemptions described in this Subsection (14) and make

4490 recommendations to the Revenue and Taxation Interim Committee concerning whether the
4491 exemptions should be continued, modified, or repealed; and
4492 (ii) include in its report:
4493 (A) the cost of the exemptions;
4494 (B) the purpose and effectiveness of the exemptions; and
4495 (C) the benefits of the exemptions to the state;
4496 (15) (a) sales of the following if the requirements of Subsection (15)(b) are met:
4497 (i) tooling;
4498 (ii) special tooling;
4499 (iii) support equipment;
4500 (iv) special test equipment; or
4501 (v) parts used in the repairs or renovations of tooling or equipment described in
4502 Subsections (15)(a)(i) through (iv); and
4503 (b) sales of tooling, equipment, or parts described in Subsection (15)(a) are exempt if:
4504 (i) the tooling, equipment, or parts are used or consumed exclusively in the
4505 performance of any aerospace or electronics industry contract with the United States
4506 government or any subcontract under that contract; and
4507 (ii) under the terms of the contract or subcontract described in Subsection (15)(b)(i),
4508 title to the tooling, equipment, or parts is vested in the United States government as evidenced
4509 by:
4510 (A) a government identification tag placed on the tooling, equipment, or parts; or
4511 (B) listing on a government-approved property record if placing a government
4512 identification tag on the tooling, equipment, or parts is impractical;
4513 (16) sales of newspapers or newspaper subscriptions;
4514 (17) (a) except as provided in Subsection (17)(b), tangible personal property traded in
4515 as full or part payment of the purchase price, except that for purposes of calculating sales or use
4516 tax upon vehicles not sold by a vehicle dealer, trade-ins are limited to other vehicles only, and
4517 the tax is based upon:
4518 (i) the bill of sale or other written evidence of value of the vehicle being sold and the
4519 vehicle being traded in; or
4520 (ii) in the absence of a bill of sale or other written evidence of value, the then existing

4521 fair market value of the vehicle being sold and the vehicle being traded in, as determined by the
4522 commission; and
4523 (b) notwithstanding Subsection (17)(a), Subsection (17)(a) does not apply to the
4524 following items of tangible personal property traded in as full or part payment of the purchase
4525 price:
4526 (i) money;
4527 (ii) electricity;
4528 (iii) water;
4529 (iv) gas; or
4530 (v) steam;
4531 (18) (a) (i) except as provided in Subsection (18)(b), sales of tangible personal property
4532 used or consumed primarily and directly in farming operations, regardless of whether the
4533 tangible personal property:
4534 (A) becomes part of real estate; or
4535 (B) is installed by a:
4536 (I) farmer;
4537 (II) contractor; or
4538 (III) subcontractor; or
4539 (ii) sales of parts used in the repairs or renovations of tangible personal property if the
4540 tangible personal property is exempt under Subsection (18)(a)(i); and
4541 (b) notwithstanding Subsection (18)(a), amounts paid or charged for the following
4542 tangible personal property are subject to the taxes imposed by this chapter:
4543 (i) (A) subject to Subsection (18)(b)(i)(B), the following tangible personal property if
4544 the tangible personal property is used in a manner that is incidental to farming:
4545 (I) machinery;
4546 (II) equipment;
4547 (III) materials; or
4548 (IV) supplies; and
4549 (B) tangible personal property that is considered to be used in a manner that is
4550 incidental to farming includes:
4551 (I) hand tools; or

4552 (II) maintenance and janitorial equipment and supplies;
4553 (ii) (A) subject to Subsection (18)(b)(ii)(B), tangible personal property if the tangible
4554 personal property is used in an activity other than farming; and
4555 (B) tangible personal property that is considered to be used in an activity other than
4556 farming includes:
4557 (I) office equipment and supplies; or
4558 (II) equipment and supplies used in:
4559 (Aa) the sale or distribution of farm products;
4560 (Bb) research; or
4561 (Cc) transportation; or
4562 (iii) a vehicle required to be registered by the laws of this state during the period
4563 ending two years after the date of the vehicle's purchase;
4564 (19) sales of hay;
4565 (20) exclusive sale during the harvest season of seasonal crops, seedling plants, or
4566 garden, farm, or other agricultural produce if the seasonal crops are, seedling plants are, or
4567 garden, farm, or other agricultural produce is sold by:
4568 (a) the producer of the seasonal crops, seedling plants, or garden, farm, or other
4569 agricultural produce;
4570 (b) an employee of the producer described in Subsection (20)(a); or
4571 (c) a member of the immediate family of the producer described in Subsection (20)(a);
4572 (21) purchases made using a coupon as defined in 7 U.S.C. Sec. 2012 that is issued
4573 under the Food Stamp Program, 7 U.S.C. Sec. 2011 et seq.;
4574 (22) sales of nonreturnable containers, nonreturnable labels, nonreturnable bags,
4575 nonreturnable shipping cases, and nonreturnable casings to a manufacturer, processor,
4576 wholesaler, or retailer for use in packaging tangible personal property to be sold by that
4577 manufacturer, processor, wholesaler, or retailer;
4578 (23) property stored in the state for resale;
4579 (24) (a) purchases of property if:
4580 (i) the property is:
4581 (A) purchased outside of this state;
4582 (B) brought into this state:

4583 (I) at any time after the purchase described in Subsection (24)(a)(i)(A); and
4584 (II) by a nonresident person who is not living or working in this state at the time of the
4585 purchase;
4586 (C) used for the personal use or enjoyment of the nonresident person described in
4587 Subsection (24)(a)(i)(B)(II) while that nonresident person is within the state; and
4588 (D) not used in conducting business in this state; and
4589 (ii) for:
4590 (A) property other than the property described in Subsection (24)(a)(ii)(B), the first use
4591 of the property for a purpose for which the property is designed occurs outside of this state;
4592 (B) a boat, the boat is registered outside of this state; or
4593 (C) a vehicle other than a vehicle sold to an authorized carrier, the vehicle is registered
4594 outside of this state;
4595 (b) the exemption provided for in Subsection (24)(a) does not apply to:
4596 (i) a lease or rental of property; or
4597 (ii) a sale of a vehicle exempt under Subsection (33); and
4598 (c) in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, for
4599 purposes of Subsection (24)(a), the commission may by rule define what constitutes the
4600 following:
4601 (i) conducting business in this state if that phrase has the same meaning in this
4602 Subsection (24) as in Subsection (66);
4603 (ii) the first use of property if that phrase has the same meaning in this Subsection (24)
4604 as in Subsection (66); or
4605 (iii) a purpose for which property is designed if that phrase has the same meaning in
4606 this Subsection (24) as in Subsection (66);
4607 (25) property purchased for resale in this state, in the regular course of business, either
4608 in its original form or as an ingredient or component part of a manufactured or compounded
4609 product;
4610 (26) property upon which a sales or use tax was paid to some other state, or one of its
4611 subdivisions, except that the state shall be paid any difference between the tax paid and the tax
4612 imposed by this part and Part 2, Local Sales and Use Tax Act, and no adjustment is allowed if
4613 the tax paid was greater than the tax imposed by this part and Part 2, Local Sales and Use Tax

4614 Act;
4615 (27) any sale of a service described in Subsections 59-12-103 (1)(b), (c), and (d) to a
4616 person for use in compounding a service taxable under the subsections;
4617 (28) purchases made in accordance with the special supplemental nutrition program for
4618 women, infants, and children established in 42 U.S.C. Sec. 1786;
4619 (29) beginning on July 1, 1999, through June 30, 2014, sales or leases of rolls, rollers,
4620 refractory brick, electric motors, or other replacement parts used in the furnaces, mills, or ovens
4621 of a steel mill described in SIC Code 3312 of the 1987 Standard Industrial Classification
4622 Manual of the federal Executive Office of the President, Office of Management and Budget;
4623 (30) sales of a boat of a type required to be registered under Title 73, Chapter 18, State
4624 Boating Act, a boat trailer, or an outboard motor if the boat, boat trailer, or outboard motor is:
4625 (a) not registered in this state; and
4626 (b) (i) not used in this state; or
4627 (ii) used in this state:
4628 (A) if the boat, boat trailer, or outboard motor is not used to conduct business, for a
4629 time period that does not exceed the longer of:
4630 (I) 30 days in any calendar year; or
4631 (II) the time period necessary to transport the boat, boat trailer, or outboard motor to
4632 the borders of this state; or
4633 (B) if the boat, boat trailer, or outboard motor is used to conduct business, for the time
4634 period necessary to transport the boat, boat trailer, or outboard motor to the borders of this
4635 state;
4636 (31) sales of aircraft manufactured in Utah if sold for delivery and use outside Utah
4637 where a sales or use tax is not imposed, even if the title is passed in Utah;
4638 (32) amounts paid for the purchase of telephone service for purposes of providing
4639 telephone service;
4640 (33) sales, leases, or uses of the following:
4641 (a) a vehicle by an authorized carrier; or
4642 (b) tangible personal property that is installed on a vehicle:
4643 (i) sold or leased to or used by an authorized carrier; and
4644 (ii) before the vehicle is placed in service for the first time;

4645 (34) (a) 45% of the sales price of any new manufactured home; and
4646 (b) 100% of the sales price of any used manufactured home;
4647 (35) sales relating to schools and fundraising sales;
4648 (36) sales or rentals of durable medical equipment if:
4649 (a) a person presents a prescription for the durable medical equipment; and
4650 (b) the durable medical equipment is used for home use only;
4651 (37) (a) sales to a ski resort of electricity to operate a passenger ropeway as defined in
4652 Section 72-11-102 ; and
4653 (b) the commission shall by rule determine the method for calculating sales exempt
4654 under Subsection (37)(a) that are not separately metered and accounted for in utility billings;
4655 (38) sales to a ski resort of:
4656 (a) snowmaking equipment;
4657 (b) ski slope grooming equipment;
4658 (c) passenger ropeways as defined in Section 72-11-102 ; or
4659 (d) parts used in the repairs or renovations of equipment or passenger ropeways
4660 described in Subsections (38)(a) through (c);
4661 (39) sales of natural gas, electricity, heat, coal, fuel oil, or other fuels for industrial use;
4662 (40) (a) subject to Subsection (40)(b), sales or rentals of the right to use or operate for
4663 amusement, entertainment, or recreation an unassisted amusement device as defined in Section
4664 59-12-102 ;
4665 (b) if a seller that sells or rents at the same business location the right to use or operate
4666 for amusement, entertainment, or recreation one or more unassisted amusement devices and
4667 one or more assisted amusement devices, the exemption described in Subsection (40)(a)
4668 applies if the seller separately accounts for the sales or rentals of the right to use or operate for
4669 amusement, entertainment, or recreation for the assisted amusement devices; and
4670 (c) for purposes of Subsection (40)(b) and in accordance with Title 63, Chapter 46a,
4671 Utah Administrative Rulemaking Act, the commission may make rules:
4672 (i) governing the circumstances under which sales are at the same business location;
4673 and
4674 (ii) establishing the procedures and requirements for a seller to separately account for
4675 the sales or rentals of the right to use or operate for amusement, entertainment, or recreation for

4676 assisted amusement devices;
4677 (41) (a) sales of photocopies by:
4678 (i) a governmental entity; or
4679 (ii) an entity within the state system of public education, including:
4680 (A) a school; or
4681 (B) the State Board of Education; or
4682 (b) sales of publications by a governmental entity;
4683 (42) amounts paid for admission to an athletic event at an institution of higher
4684 education that is subject to the provisions of Title IX of the Education Amendments of 1972,
4685 20 U.S.C. Sec. 1681 et seq.;
4686 (43) sales of telephone service charged to a prepaid telephone calling card;
4687 (44) (a) sales of:
4688 (i) hearing aids;
4689 (ii) hearing aid accessories; or
4690 (iii) except as provided in Subsection (44)(b), parts used in the repairs or renovations
4691 of hearing aids or hearing aid accessories; and
4692 (b) for purposes of this Subsection (44), notwithstanding Subsection (44)(a)(iii),
4693 "parts" does not include batteries;
4694 (45) (a) sales made to or by:
4695 (i) an area agency on aging; or
4696 (ii) a senior citizen center owned by a county, city, or town; or
4697 (b) sales made by a senior citizen center that contracts with an area agency on aging;
4698 (46) sales or leases of semiconductor fabricating, processing, research, or development
4699 materials regardless of whether the semiconductor fabricating, processing, research, or
4700 development materials:
4701 (a) actually come into contact with a semiconductor; or
4702 (b) ultimately become incorporated into real property;
4703 (47) an amount paid by or charged to a purchaser for accommodations and services
4704 described in Subsection 59-12-103 (1)(i) to the extent the amount is exempt under Section
4705 59-12-104.2 ;
4706 (48) beginning on September 1, 2001, the lease or use of a vehicle issued a temporary

4707 sports event registration certificate in accordance with Section 41-3-306 for the event period
4708 specified on the temporary sports event registration certificate;
4709 (49) sales or uses of electricity, if the sales or uses are:
4710 (a) made under a tariff adopted by the Public Service Commission of Utah only for
4711 purchase of electricity produced from a new wind, geothermal, biomass, or solar power energy
4712 source, as designated in the tariff by the Public Service Commission of Utah; and
4713 (b) for an amount of electricity that is:
4714 (i) unrelated to the amount of electricity used by the person purchasing the electricity
4715 under the tariff described in Subsection (49)(a); and
4716 (ii) equivalent to the number of kilowatthours specified in the tariff described in
4717 Subsection (49)(a) that may be purchased under the tariff described in Subsection (49)(a);
4718 (50) sales or rentals of mobility enhancing equipment if a person presents a
4719 prescription for the mobility enhancing equipment;
4720 (51) sales of water in a:
4721 (a) pipe;
4722 (b) conduit;
4723 (c) ditch; or
4724 (d) reservoir;
4725 (52) sales of currency or coinage that constitute legal tender of the United States or of a
4726 foreign nation;
4727 (53) (a) sales of an item described in Subsection (53)(b) if the item:
4728 (i) does not constitute legal tender of any nation; and
4729 (ii) has a gold, silver, or platinum content of 80% or more; and
4730 (b) Subsection (53)(a) applies to a gold, silver, or platinum:
4731 (i) ingot;
4732 (ii) bar;
4733 (iii) medallion; or
4734 (iv) decorative coin;
4735 (54) amounts paid on a sale-leaseback transaction;
4736 (55) sales of a prosthetic device:
4737 (a) for use on or in a human;

4738 (b) for which a prescription is issued; and
4739 (c) to a person that presents a prescription for the prosthetic device;
4740 (56) (a) except as provided in Subsection (56)(b), purchases, leases, or rentals of
4741 machinery or equipment by an establishment described in Subsection (56)(c) if the machinery
4742 or equipment is primarily used in the production or postproduction of the following media for
4743 commercial distribution:
4744 (i) a motion picture;
4745 (ii) a television program;
4746 (iii) a movie made for television;
4747 (iv) a music video;
4748 (v) a commercial;
4749 (vi) a documentary; or
4750 (vii) a medium similar to Subsections (56)(a)(i) through (vi) as determined by the
4751 commission by administrative rule made in accordance with Subsection (56)(d); or
4752 (b) notwithstanding Subsection (56)(a), purchases, leases, or rentals of machinery or
4753 equipment by an establishment described in Subsection (56)(c) that is used for the production
4754 or postproduction of the following are subject to the taxes imposed by this chapter:
4755 (i) a live musical performance;
4756 (ii) a live news program; or
4757 (iii) a live sporting event;
4758 (c) the following establishments listed in the 1997 North American Industry
4759 Classification System of the federal Executive Office of the President, Office of Management
4760 and Budget, apply to Subsections (56)(a) and (b):
4761 (i) NAICS Code 512110; or
4762 (ii) NAICS Code 51219; and
4763 (d) in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
4764 commission may by rule:
4765 (i) prescribe what constitutes a medium similar to Subsections (56)(a)(i) through (vi);
4766 or
4767 (ii) define:
4768 (A) "commercial distribution";

4769 (B) "live musical performance";
4770 (C) "live news program"; or
4771 (D) "live sporting event";
4772 (57) (a) leases of seven or more years or purchases made on or after July 1, 2004 but on
4773 or before June 30, [2009] 2019, of machinery or equipment that:
4774 (i) is leased or purchased for or by a facility that:
4775 (A) is a renewable energy production facility;
4776 (B) is located in the state; and
4777 (C) (I) becomes operational on or after July 1, 2004; or
4778 (II) has its generation capacity increased by one or more megawatts on or after July 1,
4779 2004 as a result of the use of the machinery or equipment;
4780 (ii) has an economic life of five or more years; and
4781 (iii) is used to make the facility or the increase in capacity of the facility described in
4782 Subsection (57)(a)(i) operational up to the point of interconnection with an existing
4783 transmission grid including:
4784 (A) a wind turbine;
4785 (B) generating equipment;
4786 (C) a control and monitoring system;
4787 (D) a power line;
4788 (E) substation equipment;
4789 (F) lighting;
4790 (G) fencing;
4791 (H) pipes; or
4792 (I) other equipment used for locating a power line or pole; and
4793 (b) this Subsection (57) does not apply to:
4794 (i) machinery or equipment used in construction of:
4795 (A) a new renewable energy production facility; or
4796 (B) the increase in the capacity of a renewable energy production facility;
4797 (ii) contracted services required for construction and routine maintenance activities;
4798 and
4799 (iii) unless the machinery or equipment is used or acquired for an increase in capacity

4800 of the facility described in Subsection (57)(a)(i)(C)(II), machinery or equipment used or
4801 acquired after:
4802 (A) the renewable energy production facility described in Subsection (57)(a)(i) is
4803 operational as described in Subsection (57)(a)(iii); or
4804 (B) the increased capacity described in Subsection (57)(a)(i) is operational as described
4805 in Subsection (57)(a)(iii);
4806 (58) (a) leases of seven or more years or purchases made on or after July 1, 2004 but on
4807 or before June 30, [2009] 2019, of machinery or equipment that:
4808 (i) is leased or purchased for or by a facility that:
4809 (A) is a waste energy production facility;
4810 (B) is located in the state; and
4811 (C) (I) becomes operational on or after July 1, 2004; or
4812 (II) has its generation capacity increased by one or more megawatts on or after July 1,
4813 2004 as a result of the use of the machinery or equipment;
4814 (ii) has an economic life of five or more years; and
4815 (iii) is used to make the facility or the increase in capacity of the facility described in
4816 Subsection (58)(a)(i) operational up to the point of interconnection with an existing
4817 transmission grid including:
4818 (A) generating equipment;
4819 (B) a control and monitoring system;
4820 (C) a power line;
4821 (D) substation equipment;
4822 (E) lighting;
4823 (F) fencing;
4824 (G) pipes; or
4825 (H) other equipment used for locating a power line or pole; and
4826 (b) this Subsection (58) does not apply to:
4827 (i) machinery or equipment used in construction of:
4828 (A) a new waste energy facility; or
4829 (B) the increase in the capacity of a waste energy facility;
4830 (ii) contracted services required for construction and routine maintenance activities;

4831 and
4832 (iii) unless the machinery or equipment is used or acquired for an increase in capacity
4833 described in Subsection (58)(a)(i)(C)(II), machinery or equipment used or acquired after:
4834 (A) the waste energy facility described in Subsection (58)(a)(i) is operational as
4835 described in Subsection (58)(a)(iii); or
4836 (B) the increased capacity described in Subsection (58)(a)(i) is operational as described
4837 in Subsection (58)(a)(iii);
4838 (59) (a) leases of five or more years or purchases made on or after July 1, 2004 but on
4839 or before June 30, [2009] 2019, of machinery or equipment that:
4840 (i) is leased or purchased for or by a facility that:
4841 (A) is located in the state;
4842 (B) produces fuel from biomass energy including:
4843 (I) methanol; or
4844 (II) ethanol; and
4845 (C) (I) becomes operational on or after July 1, 2004; or
4846 (II) has its capacity to produce fuel increase by 25% or more on or after July 1, 2004 as
4847 a result of the installation of the machinery or equipment;
4848 (ii) has an economic life of five or more years; and
4849 (iii) is installed on the facility described in Subsection (59)(a)(i);
4850 (b) this Subsection (59) does not apply to:
4851 (i) machinery or equipment used in construction of:
4852 (A) a new facility described in Subsection (59)(a)(i); or
4853 (B) the increase in capacity of the facility described in Subsection (59)(a)(i); or
4854 (ii) contracted services required for construction and routine maintenance activities;
4855 and
4856 (iii) unless the machinery or equipment is used or acquired for an increase in capacity
4857 described in Subsection (59)(a)(i)(C)(II), machinery or equipment used or acquired after:
4858 (A) the facility described in Subsection (59)(a)(i) is operational; or
4859 (B) the increased capacity described in Subsection (59)(a)(i) is operational;
4860 (60) amounts paid to a purchaser as a rebate from the manufacturer of a new vehicle
4861 for purchasing the new vehicle;

4862 (61) (a) subject to Subsection (61)(b), sales of tangible personal property to persons
4863 within this state that is subsequently shipped outside the state and incorporated pursuant to
4864 contract into and becomes a part of real property located outside of this state, except to the
4865 extent that the other state or political entity imposes a sales, use, gross receipts, or other similar
4866 transaction excise tax on it against which the other state or political entity allows a credit for
4867 taxes imposed by this chapter; and
4868 (b) the exemption provided for in Subsection (61)(a):
4869 (i) is allowed only if the exemption is applied:
4870 (A) in calculating the purchase price of the tangible personal property; and
4871 (B) to a written contract that is in effect on July 1, 2004; and
4872 (ii) (A) does not apply beginning on the day on which the contract described in
4873 Subsection (61)(b)(i):
4874 (I) is substantially modified; or
4875 (II) terminates; and
4876 (B) in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act,
4877 the commission may by rule prescribe the circumstances under which a contract is substantially
4878 modified;
4879 (62) purchases:
4880 (a) of one or more of the following items in printed or electronic format:
4881 (i) a list containing information that includes one or more:
4882 (A) names; or
4883 (B) addresses; or
4884 (ii) a database containing information that includes one or more:
4885 (A) names; or
4886 (B) addresses; and
4887 (b) used to send direct mail;
4888 (63) redemptions or repurchases of property by a person if that property was:
4889 (a) delivered to a pawnbroker as part of a pawn transaction; and
4890 (b) redeemed or repurchased within the time period established in a written agreement
4891 between the person and the pawnbroker for redeeming or repurchasing the property;
4892 (64) (a) purchases or leases of an item described in Subsection (64)(b) if the item:

4893 (i) is purchased or leased by, or on behalf of, a telephone service provider; and
4894 (ii) has a useful economic life of one or more years; and
4895 (b) the following apply to Subsection (64)(a):
4896 (i) telecommunications enabling or facilitating equipment, machinery, or software;
4897 (ii) telecommunications equipment, machinery, or software required for 911 service;
4898 (iii) telecommunications maintenance or repair equipment, machinery, or software;
4899 (iv) telecommunications switching or routing equipment, machinery, or software; or
4900 (v) telecommunications transmission equipment, machinery, or software;
4901 (65) (a) beginning on July 1, 2006, and ending on June 30, 2016, purchases of tangible
4902 personal property used in the research and development of coal-to-liquids, oil shale, or tar
4903 sands technology; and
4904 (b) in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
4905 commission may, for purposes of Subsection (65)(a), make rules defining what constitutes
4906 tangible personal property used in the research and development of coal-to-liquids, oil shale,
4907 and tar sands technology;
4908 (66) (a) purchases of property if:
4909 (i) the property is:
4910 (A) purchased outside of this state;
4911 (B) brought into this state at any time after the purchase described in Subsection
4912 (66)(a)(i)(A); and
4913 (C) used in conducting business in this state; and
4914 (ii) for:
4915 (A) property other than the property described in Subsection (66)(a)(ii)(B), the first use
4916 of the property for a purpose for which the property is designed occurs outside of this state; or
4917 (B) a vehicle other than a vehicle sold to an authorized carrier, the vehicle is registered
4918 outside of this state;
4919 (b) the exemption provided for in Subsection (66)(a) does not apply to:
4920 (i) a lease or rental of property; or
4921 (ii) a sale of a vehicle exempt under Subsection (33); and
4922 (c) in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, for
4923 purposes of Subsection (66)(a), the commission may by rule define what constitutes the

4924 following:
4925 (i) conducting business in this state if that phrase has the same meaning in this
4926 Subsection (66) as in Subsection (24);
4927 (ii) the first use of property if that phrase has the same meaning in this Subsection (66)
4928 as in Subsection (24); or
4929 (iii) a purpose for which property is designed if that phrase has the same meaning in
4930 this Subsection (66) as in Subsection (24);
4931 (67) sales of disposable home medical equipment or supplies if:
4932 (a) a person presents a prescription for the disposable home medical equipment or
4933 supplies;
4934 (b) the disposable home medical equipment or supplies are used exclusively by the
4935 person to whom the prescription described in Subsection (67)(a) is issued; and
4936 (c) the disposable home medical equipment and supplies are listed as eligible for
4937 payment under:
4938 (i) Title XVIII, federal Social Security Act; or
4939 (ii) the state plan for medical assistance under Title XIX, federal Social Security Act;
4940 [and]
4941 (68) sales to a public transit district under Title 17B, Chapter 2a, Part 8, Public Transit
4942 District Act, or to a subcontractor of a public transit district, including sales of construction
4943 materials that are to be installed or converted to real property owned by the public transit
4944 district[.]; and
4945 (69) sales of fuel to a common carrier that is a railroad for use in a locomotive engine.
4946 Section 80. Section 72-2-107 is amended to read:
4947 72-2-107. Appropriation from Transportation Fund -- Deposit in class B and
4948 class C roads account.
4949 (1) There is appropriated to the department from the Transportation Fund annually an
4950 amount equal to 30% of an amount which the director of finance shall compute in the
4951 following manner: The total revenue deposited into the Transportation Fund during the fiscal
4952 year from state highway-user taxes and fees, minus:
4953 (a) those amounts appropriated or transferred from the Transportation Fund during the
4954 same fiscal year to:

4955 (i) the Department of Public Safety;
4956 (ii) the State Tax Commission;
4957 (iii) the Division of Finance;
4958 (iv) the Utah Travel Council; and
4959 (v) any other amounts appropriated or transferred for any other state agencies not a part
4960 of the department; and
4961 (b) the amount of sales and use tax revenue deposited in the Transportation Fund in
4962 accordance with [Subsection] Section 59-12-103 [(6)].
4963 (2) All of this money shall be placed in an account to be known as the class B and class
4964 C roads account to be used as provided in this title.
4965 (3) Each quarter of every year the director of finance shall make the necessary
4966 accounting entries to transfer the money appropriated under this section to the class B and class
4967 C roads account.
4968 (4) The funds in the class B and class C roads account shall be expended under the
4969 direction of the department as the Legislature shall provide.
4970 Section 81. Section 72-2-124 is amended to read:
4971 72-2-124. Transportation Investment Fund of 2005.
4972 (1) There is created a special revenue fund entitled the Transportation Investment Fund
4973 of 2005.
4974 (2) The fund consists of monies generated from the following sources:
4975 (a) any voluntary contributions received for the maintenance, construction,
4976 reconstruction, or renovation of state and federal highways; [and]
4977 (b) appropriations made to the fund by the Legislature[.]; and
4978 (c) the sales and use tax revenues deposited into the fund in accordance with Section
4979 59-12-103 .
4980 (3) When the highway general obligation bonds have been paid off and the highway
4981 projects completed that are intended to be paid from revenues deposited in the Centennial
4982 Highway Fund Restricted Account as determined by the Executive Appropriations Committee
4983 under Subsection 72-2-118 (6)(d), the fund shall also consist of monies generated from the
4984 following sources:
4985 (a) registration fees designated under Subsection 41-1a-1201 (6)(a);

4986 (b) the clean special fuel tax certificate surcharge under Subsection 59-13-304 (3); and
4987 (c) the sales and use tax amounts provided for in Section 59-12-103 .
4988 (4) (a) The fund shall earn interest.
4989 (b) All interest earned on fund monies shall be deposited into the fund.
4990 (5) (a) Except as provided in Subsections (5)(b) and (c), the executive director may use
4991 fund monies only to pay the costs of maintenance, construction, reconstruction, or renovation
4992 to state and federal highways prioritized by the Transportation Commission through the
4993 prioritization process for new transportation capacity projects adopted under Section 72-1-304 .
4994 (b) The executive director may use fund monies deposited into the fund in fiscal year
4995 2006 only to pay the costs of maintenance, construction, reconstruction, or renovation to state
4996 and federal highways prioritized by the Transportation Commission.
4997 (c) The executive director may use fund monies to exchange for an equal or greater
4998 amount of federal transportation funds to be used as provided in Subsection (5)(a).
4999 Section 82. Section 72-2-125 is amended to read:
5000 72-2-125. Critical Highway Needs Fund.
5001 (1) There is created a restricted special revenue fund entitled the Critical Highway
5002 Needs Fund.
5003 (2) The fund consists of monies generated from the following sources:
5004 (a) any voluntary contributions received for the maintenance, construction,
5005 reconstruction, or renovation of state and federal highways;
5006 (b) appropriations made to the fund by the Legislature; and
5007 (c) the sales and use tax revenues deposited into the fund in accordance with
5008 [Subsection] Section 59-12-103 [(10)].
5009 (3) (a) The fund shall earn interest.
5010 (b) All interest earned on fund monies shall be deposited into the fund.
5011 (4) (a) The executive director shall use monies deposited into the fund to pay:
5012 (i) the costs of right-of-way acquisition, maintenance, construction, reconstruction, or
5013 renovation to state and federal highways identified by the department and prioritized by the
5014 commission in accordance with this Subsection (4); and
5015 (ii) principal, interest, and issuance costs of bonds authorized by Section 63B-16-101 .
5016 (b) (i) The department shall:

5017 (A) establish a complete list of projects to be maintained, constructed, reconstructed, or
5018 renovated using the funding described in Subsection (4)(a) based on the following criteria:
5019 (I) the highway construction project is a high priority project due to high growth in the
5020 surrounding area;
5021 (II) the highway construction project addresses critical access needs that have a high
5022 impact due to commercial and energy development;
5023 (III) the highway construction project mitigates congestion;
5024 (IV) whether local matching funds are available for the highway construction project;
5025 and
5026 (V) the highway construction project is a critical alternative route for priority Interstate
5027 15 reconstruction projects; and
5028 (B) submit the list of projects to the commission for prioritization in accordance with
5029 Subsection (4)(c).
5030 (ii) A project that is included in the list under this Subsection (4):
5031 (A) is not required to be currently listed in the statewide long-range plan; and
5032 (B) is not required to be prioritized through the prioritization process for new
5033 transportation capacity projects adopted under Section 72-1-304 .
5034 (c) The commission shall prioritize the project list submitted by the department in
5035 accordance with Subsection (4)(b).
5036 (d) (i) Expenditures by the department for the construction of highway projects
5037 prioritized under this Subsection (4) may not exceed $1,000,000,000.
5038 (ii) Monies expended from the fund for principal, interest, and issuance costs of bonds
5039 issued under Section 63B-16-101 are not considered expenditures for purposes of the
5040 $1,000,000,000 cap under Subsection (4)(d)(i).
5041 (e) (i) Before bonds authorized by Section 63B-16-101 may be issued in any fiscal
5042 year, the department and the commission shall appear before the Executive Appropriations
5043 Committee of the Legislature and present:
5044 (A) the commission's current list of projects established and prioritized in accordance
5045 with this Subsection (4); and
5046 (B) the amount of bond proceeds that the department needs to provide funding for
5047 projects on the project list prioritized in accordance with this Subsection (4) for the next fiscal

5048 year.
5049 (ii) The Executive Appropriations Committee of the Legislature shall review and
5050 comment on the prioritized project list and the amount of bond proceeds needed to fund the
5051 projects on the prioritized list.
5052 (f) The Division of Finance shall, from monies deposited into the fund, transfer the
5053 amount of funds necessary to pay principal, interest, and issuance costs of bonds authorized by
5054 Section 63B-16-101 in the current fiscal year to the appropriate debt service or sinking fund.
5055 (5) When the general obligation bonds authorized by Section 63B-16-101 have been
5056 paid off and the highway projects completed that are included in the prioritized project list
5057 under Subsection (4), the Division of Finance shall transfer any existing balance in the fund
5058 into the Transportation Investment Fund of 2005 created by Section 72-2-124 .
5059 (6) (a) The Division of Finance shall monitor the general obligation bonds authorized
5060 by Section 63B-16-101 .
5061 (b) The department shall monitor the highway construction or reconstruction projects
5062 that are included in the prioritized project list under Subsection (4).
5063 (c) Upon request by the Executive Appropriations Committee of the Legislature:
5064 (i) the Division of Finance shall report to the committee the status of all general
5065 obligation bonds issued under Section 63B-16-101 ; and
5066 (ii) the department shall report to the committee the status of all highway construction
5067 or reconstruction projects that are included in the prioritized project list under Subsection (4).
5068 (d) When the Division of Finance has reported that the general obligation bonds issued
5069 by Section 63B-16-101 have been paid off and the department has reported that projects
5070 included in the prioritized project list are complete to the Executive Appropriations Committee
5071 of the Legislature, the Division of Finance shall transfer any existing fund balance in
5072 accordance with Subsection (5).
5073 Section 83. Repealer.
5074 This bill repeals:
5075 Section 59-10-206, Character of state taxable income of nonresident estate or trust.
5076 Section 59-10-801, Taxation of limited liability companies.
5077 Section 59-10-1201, Title.
5078 Section 59-10-1202, Definitions.

5079 Section 59-10-1203, Single rate tax for resident or nonresident individual -- Tax
5080 rate -- Contributions -- Exemption -- Amended returns.
5081 Section 59-10-1204, Additions to and subtractions from adjusted gross income of a
5082 resident or nonresident individual.
5083 Section 59-10-1205, Adjustments to adjusted gross income of a resident or
5084 nonresident individual.
5085 Section 59-10-1206, Tax credits.
5086 Section 59-10-1207, Administration, collection, and enforcement of tax.
5087 Section 84. Retrospective operation -- Effective date.
5088 (1) Except as provided in Subsection (2), this bill has retrospective operation for
5089 taxable years beginning on or after January 1, 2008.
5090 (2) The amendments to the following sections take effect on January 1, 2009:
5091 (a) Section 59-12-103 ;
5092 (b) Section 59-12-104 ;
5093 (c) Section 59-12-902 ;
5094 (d) Section 72-2-107 ;
5095 (e) Section 72-2-124 ; and
5096 (f) Section 72-2-125 .
5097 Section 85. Coordinating H.B. 359 with H.B. 158 -- Modifying substantive
5098 language.
5099 If this H.B. 359 and H.B. 158, Tax Credit for Military Retired Pay, both pass, it is the
5100 intent of the Legislature that the Office of Legislative Research and General Counsel, in
5101 preparing the Utah Code database for publication, modify Section 59-10-1002.2 , which is
5102 renumbered and amended in this H.B. 359, so that a citation to the statutory section enacted in
5103 Section 1 in H.B. 158 is included in the list of sections in:
5104 (1) Subsection 59-10-1002.2 (1); and
5105 (2) Subsection 59-10-1002.2 (2).
5106 Section 86. Coordinating H.B. 359 with H.B. 199 -- Modifying substantive
5107 language.
5108 If this H.B. 359 and H.B. 199, Tax Credits for Energy Efficient Residences, both pass,
5109 it is the intent of the Legislature that the Office of Legislative Research and General Counsel,

5110 in preparing the Utah Code database for publication, modify Section 59-10-1002.2 , which is
5111 renumbered and amended in this H.B. 359, so that citations to the statutory sections enacted in
5112 Sections 3 and 4 in H.B. 199 are included in the list of sections in:
5113 (1) Subsection 59-10-1002.2 (1); and
5114 (2) Subsection 59-10-1002.2 (2).
5115 Section 87. Coordinating H.B. 359 with H.B. 279 -- Modifying substantive
5116 language.
5117 If this H.B. 359 and H.B. 279, Tax Incentives for Military Members, both pass, it is the
5118 intent of the Legislature that the Office of Legislative Research and General Counsel, in
5119 preparing the Utah Code database for publication, modify Section 59-10-1002.2 , which is
5120 renumbered and amended in this H.B. 359, so that a citation to the statutory section enacted in
5121 Section 4 in H.B. 279 is included in the list of sections in:
5122 (1) Subsection 59-10-1002.2 (1); and
5123 (2) Subsection 59-10-1002.2 (2).
5124 Section 88. Coordinating H.B. 359 with H.B. 351 -- Modifying substantive
5125 language.
5126 If this H.B. 359 and H.B. 351, Individual Income Tax - Health Insurance, both pass, it
5127 is the intent of the Legislature that the Office of Legislative Research and General Counsel, in
5128 preparing the Utah Code database for publication, modify Section 59-10-1002.2 , which is
5129 renumbered and amended in this H.B. 359, so that a citation to the statutory section enacted in
5130 Section 3 in H.B. 351 is included in the list of sections in Subsection 59-10-1002.2 (1).
5131 Section 89. Coordinating H.B. 359 with H.B. 360 -- Modifying substantive
5132 language.
5133 If this H.B. 359 and H.B. 360, Individual Income Tax - Long-term Care Insurance
5134 Premiums, both pass, it is the intent of the Legislature that the Office of Legislative Research
5135 and General Counsel, in preparing the Utah Code database for publication, modify Section
5136 59-10-1002.2 , which is renumbered and amended in this H.B. 359, so that a citation to the
5137 statutory section enacted in Section 3 in H.B. 360 is included in the list of sections in
5138 Subsection 59-10-1002.2 (1).