No. 33384 (Amendment): Section R865-9I-7. Change of Status as Resident or Nonresident Pursuant to Utah Code Ann. Section 59-10-120

(Amendment)

DAR File No.: 33384
Filed: 02/11/2010 03:24:36 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

This section is updated to reflect changes in statutory terminology and to clarify the taxable income of a part-year resident.

Summary of the rule or change:

The proposed amendment provides that income received, as well as income earned, while a part-year resident is subject to tax in Utah; updates statutory terminology.

State statutory or constitutional authorization for this rule:

• Section 59-10-120

Anticipated cost or savings to:

the state budget:

None--This amendment clarifies a statutory change from H.B. 359 (2008). (DAR NOTE: H.B. 359 (2008) is found at Chapter 389, Laws of Utah 2008, and was effective 05/05/2008.)

local governments:

None--All income tax goes into the Education Fund.

small businesses:

None--This amendment clarifies a statutory change from H.B. 359 (2008).

persons other than small businesses, businesses, or local governmental entities:

None--This amendment clarifies a statutory change from H.B. 359 (2008).

Compliance costs for affected persons:

None--Taxpayers in Utah, whether part-year or full-time residents, must file a Utah tax return. The amendment will impact what the taxpayer would include in income.

Comments by the department head on the fiscal impact the rule may have on businesses:

None--This rule clarifies statutory changes.

Michael Cragun, Commissioner

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Tax Commission
Auditing
210 N 1950 W
SALT LAKE CITY, UT 84134

Direct questions regarding this rule to:

• Michael Cragun at the above address, by phone at 801-297-3907, by FAX at 801-297-3919, or by Internet E-mail at [e-mail]

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

03/31/2010

This rule may become effective on:

04/07/2010

Authorized by:

R. Bruce Johnson, Tax Commission Chair

RULE TEXT

R865. Tax Commission, Auditing.

R865-9I. Income Tax.

R865-9I-7. Change of Status As Resident or Nonresident Pursuant to Utah Code Ann. Section 59-10-120.

[A.](1) Definitions.

(a) "AGI" means adjusted gross income, as defined by Section 59-10-103.

[1.](b) "Part-year resident" means an individual that changes status during the taxable year from resident to nonresident or from nonresident to resident.

[2. "FAGI" means federal adjusted gross income, as defined by Section 62, Internal Revenue Code.

B.](2) The state taxable income of a part-year resident shall be a percentage of the amount that would have been state taxable income if the taxpayer had been a full-year resident as [determined]defined under Section [59-10-112]59-10-103. This percentage is the Utah portion of [FAGI]AGI divided by the total [FAGI]AGI, not to exceed 100 percent.

[C.](3) The Utah portion of a part-year resident's [FAGI]AGI shall be determined as follows:

[1.](a) Income from wages, salaries, tips and other compensation earned or received while in a resident status and included in the total [FAGI]AGI shall be included in the Utah portion of the [FAGI]AGI.

[2.](b) Dividends actually or constructively received while in resident status shall be included in the Utah portion of [FAGI]AGI. Any dividend exclusion shall be deducted from the Utah portion of [FAGI]AGI using the percentage of excludable dividends received while in resident status, compared to the total excludable dividends.

[3.](c) All interest actually or constructively received while in resident status shall be included in the Utah portion of the [FAGI]AGI.

[4.](d) All [FAGI]AGI derived from Utah sources while in a nonresident status, as determined under Section 59-10-117, shall be included in the Utah portion of [FAGI]AGI.

[D.](4)(a) Income or loss from businesses, rents, royalties, partnerships, estates or trusts, small business corporations as defined by Internal Revenue Code Section 1371(b), and farming shall be included in the Utah portion of [FAGI]AGI:

[1.](i) if the activities involved were concluded, or the taxpayer's connection with them terminated before or at the time of change from resident to nonresident status; or

[2.](ii) if the activities were commenced or the taxpayer joined them at the time or after the change from nonresident to resident status.

(b) [Otherwise, such income]Income or loss that does not meet Subsection (4)(a) shall be included in the Utah portion of [FAGI]AGI only to the extent the income or loss is derived from Utah sources as determined under Section 59-10-117.

[E.](5) Moving expenses deducted on the federal return may be deducted from the Utah portion of [FAGI]AGI only to the extent that they are for moving into Utah and within Utah.

[F.](6) Employee business expenses may be deducted from the Utah portion of [FAGI]AGI only to the extent that they pertain to the production of income included in the Utah portion of [FAGI]AGI.

[G.](7) Payments by a self-employed person to a retirement plan that reduce the total [FAGI]AGI may be deducted from the Utah portion of [FAGI]AGI in the same proportion that the related self- employment income is included in the Utah portion of FAGI.

[H.](8) Other income, losses or adjustments applicable in determining total [FAGI]AGI may be allowed or included in the Utah portion of [his FAGI]AGI only when the allowance or inclusion is fair, equitable, and would be consistent with other requirements of [the act]Title 59, Chapter 10, Individual Income Tax Act, or these rules as determined by the [Tax Commission]commission.

 

KEY: historic preservation, income tax, tax returns, enterprise zones

Date of Enactment or Last Substantive Amendment: [September 17, 2009] 2010

Notice of Continuation: March 20, 2007

Authorizing, and Implemented or Interpreted Law: 59-10-108 through 59-10-122

 

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