No. 32795 (Amendment): R865-9I-55. Qualified Subchapter S Subsidiaries Pursuant to Utah Code Ann. Section 59-10-1403

DAR File No.: 32795
Filed: 07/06/2009, 03:09
Received by: NL

RULE ANALYSIS

Purpose of the rule or reason for the change:

S.B. 23 (2009 General Session) moves S Corporations from the corporate tax chapter of Title 59 to the individual income tax chapter of Title 59. (DAR NOTE: S.B. 23 (2009) is found at Chapter 312, Laws of Utah 2009, and was effective 03/25/2009.)

Summary of the rule or change:

The proposed section takes the language of Section R865-6F-34, which is removed, and brings it into the individual income tax rule, Rule R865-9I, since an S Corporation is now treated as a pass-through entity under the individual income tax chapter of Title 59. (DAR NOTE: The proposed amendment to Section R865-6F-34 is under DAR No. 32792 in this issue, August 1, 2009, of the Bulletin.)

State statutory or constitutional authorization for this rule:

Section 59-10-1403

Anticipated cost or savings to:

the state budget:

None--Any impact was considered in S.B. 23 (2009).

local governments:

None--Any impact was considered in S.B. 23 (2009).

small businesses and persons other than businesses:

None--Any impact was considered in S.B. 23 (2009).

Compliance costs for affected persons:

None--The rule has been moved from the corporate tax rule to the individual income tax rule.

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

There are no anticipated costs. D'Arcy Dixon, 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:

Cheryl Lee at the above address, by phone at 801-297-3900, 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:

08/31/2009

This rule may become effective on:

09/07/2009

Authorized by:

D'Arcy Dixon, Commissioner

RULE TEXT

R865. Tax Commission, Auditing.

R865-9I. Income Tax.

R865-9I-55. Qualified Subchapter S Subsidiaries Pursuant to Utah Code Ann. Section 59-10-1403.

(1) "Qualified subchapter S subsidiary" is as defined in Section 1361(b), Internal Revenue Code.

(2) For purposes of Title 59, Chapter 10, Part 14, a pass-through entity that is a qualified subchapter S subsidiary shall be treated in the same manner as it is treated for federal tax purposes under Section 1361(b), Internal Revenue Code.

(3) A pass-through entity that is an S corporation that owns one or more qualified subchapter S subsidiaries must take into account the activities of each qualified subchapter S subsidiary in determining whether the S corporation parent is doing business in Utah. For purposes of this determination, all of a subsidiary's activities will be attributed to the S corporation parent.

(4) For purposes of Title 59, Chapter 10, Part 14:

(a) the Utah property, payroll, and sales of each qualified subchapter S subsidiary shall be added, respectively, to the Utah property, payroll, and sales of the S corporation parent to determine the numerators of the property, payroll, and sales factors; and

(b) the total property, payroll, and sales of each qualified subchapter S subsidiary shall be added, respectively, to the total property, payroll, and sales of the S corporation parent to determine the denominators of the property, payroll, and sales factors.

(5) Except as provided in Subsection (4), the apportionment fraction for a pass-through entity that is an S corporation shall be calculated based on Sections 59-7-311 through 59-7-321 and as provided in Tax Commission rule R865-6F-8.

 

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

Date of Enactment or Last Substantive Amendment: [August 18, 2008]2009

Notice of Continuation: March 20, 2007

Authorizing, and Implemented or Interpreted Law: 59-10-1403