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7 LONG TITLE
8 General Description:
9 This bill amends corporate franchise and income tax provisions related to Utah net loss.
10 Highlighted Provisions:
11 This bill:
12 ▸ removes the 80% limitation on a Utah net loss carry forward for the 2018 through
13 2020 income tax years.
14 Money Appropriated in this Bill:
15 None
16 Other Special Clauses:
17 This bill provides a special effective date.
18 This bill provides retrospective operation.
19 Utah Code Sections Affected:
20 AMENDS:
21 59-7-110, as last amended by Laws of Utah 2018, Second Special Session, Chapter 3
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23 Be it enacted by the Legislature of the state of Utah:
24 Section 1. Section 59-7-110 is amended to read:
25 59-7-110. Utah net loss -- Carryforward -- Deduction.
26 (1) A taxpayer shall determine the amount of Utah net loss that the taxpayer may carry
27 forward to offset income of another taxable year as provided in this section.
28 (2) Subject to the other provisions of this section, a taxpayer:
29 (a) may carry forward a Utah net loss from a taxable year to a future taxable year; and
30 (b) may not carry back a Utah net loss from a taxable year.
31 (3) A taxpayer that carries forward a Utah net loss shall carry forward the Utah net loss
32 to the earliest eligible year for which the Utah taxable income before net loss deduction, minus
33 Utah net losses from previous years that a taxpayer applied or was required to apply to offset
34 income, is not less than zero.
35 (4) (a) Subject to Subsection (4)(b), the amount of Utah net loss that a taxpayer may
36 carry to the year identified in Subsection (3) is the lesser of:
37 (i) the remaining Utah net loss after deduction of any amounts of the Utah net loss that
38 a taxpayer carried to previous years; or
39 (ii) the remaining Utah taxable income before net loss deduction of the year identified
40 in Subsection (3) after deduction of Utah net losses from previous years that a taxpayer carried
41 or was required to carry to the year identified in Subsection (3).
42 (b) (i) [
43 Utah net loss that a taxpayer may carry forward to a taxable year may not exceed 80% of Utah
44 taxable income computed without regard to the deduction allowable under this section.
45 (ii) A taxpayer may carry a remaining Utah net loss to one or more taxable years in
46 accordance with this section.
47 (5) (a) (i) Subject to Subsection (5)(a)(ii), a corporation acquiring the assets or stock of
48 another corporation may not deduct any net loss incurred by the acquired corporation prior to
49 the date of acquisition.
50 (ii) Subsection (5)(a)(i) does not apply if the only change in the corporation is that of
51 the state of incorporation.
52 (b) An acquired corporation may deduct the acquired corporation's net losses incurred
53 before the date of acquisition against the acquired corporation's separate income as calculated
54 under Subsections (6) and (7) if the acquired corporation has continued to carry on a trade or
55 business substantially the same as that conducted before the acquisition.
56 (6) For purposes of Subsection (5)(b), the amount of net loss an acquired corporation
57 that is acquired by a unitary group may deduct is calculated by:
58 (a) subject to Subsection (7):
59 (i) except as provided in Subsection (6)(a)(ii), calculating the sum of:
60 (A) an amount determined by dividing the average value of the acquired corporation's
61 real and tangible personal property owned or rented and used in this state during the taxable
62 year by the average value of all of the unitary group's real and tangible personal property owned
63 or rented and used during the taxable year;
64 (B) an amount determined by dividing the total amount paid in this state during the
65 taxable year by the acquired corporation for compensation by the total compensation paid
66 everywhere by the unitary group during the taxable year; and
67 (C) an amount determined by:
68 (I) dividing the total sales of the acquired corporation in this state during the taxable
69 year by the total sales of the unitary group everywhere during the taxable year; and
70 (II) if the unitary group elects or is required to calculate the fraction for apportioning
71 business income to this state using the method described in Subsection 59-7-311(4) in taxable
72 year 2019 or taxable year 2020, multiplying the amount calculated under Subsection
73 (6)(a)(i)(C)(I) by , for the taxable year 2019, four, or, for the taxable year 2020, eight ; or
74 (ii) if the unitary group is required or elects to calculate the fraction for apportioning
75 business income to this state using the method described in Subsection 59-7-311(2), calculating
76 an amount determined by dividing the total sales of the acquired corporation in this state during
77 the taxable year by the total sales of the unitary group everywhere during the taxable year;
78 (b) dividing the amount calculated under Subsection (6)(a) by the same denominator of
79 the fraction the unitary group uses to apportion business income to this state for that taxable
80 year in accordance with Section 59-7-311;
81 (c) multiplying the amount calculated under Subsection (6)(b) by the business income
82 of the unitary group for the taxable year that is subject to apportionment under Section
83 59-7-311; and
84 (d) calculating the sum of:
85 (i) the amount calculated under Subsection (6)(c); and
86 (ii) the following amounts allocable to the acquired corporation for the taxable year:
87 (A) nonbusiness income allocable to this state; or
88 (B) nonbusiness loss allocable to this state.
89 (7) The amounts calculated under Subsection (6)(a) shall be derived in the same
90 manner as those amounts are derived for purposes of apportioning the unitary group's business
91 income before deducting the net loss, including a modification made in accordance with
92 Section 59-7-320.
93 Section 2. Effective date.
94 If approved by two-thirds of all the members elected to each house, this bill takes effect
95 upon approval by the governor, or the day following the constitutional time limit of Utah
96 Constitution, Article VII, Section 8, without the governor's signature, or in the case of a veto,
97 the date of veto override.
98 Section 3. Retrospective operation.
99 This bill has retrospective operation for a taxable year beginning on or after January 1,
100 2018.