DAR File No. 32788

Tax Commission, Auditing

R865-6F-35

S Corporation Determination of Tax Pursuant to Utah Code Ann. Section 59-7-703

NOTICE OF PROPOSED RULE

DAR File No.: 32788
Filed: 07/06/2009, 01:06
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 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:

This section is removed from the corporate tax rule, Rule R865-6F, and moved to the individual income tax rule, Rule R865-9I. (DAR NOTE: The proposed amendments to sections of Rule R865-9I are under DAR No. 32789, DAR No. 32793, and DAR No. 32795 in this issue, August 1, 2009, of the Bulletin.)

State statutory or constitutional authorization for this rule:

Section 59-7-703

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--This corporate tax rule is removed and moved to an 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 clee@utah.gov

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

R865. Tax Commission, Auditing.

R865-6F. Franchise Tax.

[R865-6F-35. S Corporation Determination of Tax Pursuant to Utah Code Ann. Section 59-7-703.

(1) For purposes of Section 59-7-703(2)(b)(i), "items of income or loss from Schedule K of the 1120S federal form" shall be calculated by:

(a) adding back to the line on the Schedule K labeled "Income/loss reconciliation" the amount included on that schedule for:

(i) charitable contributions;

(ii) total foreign taxes paid or accrued; and

(iii) recapture of a benefit derived from a deduction under Section 179, Internal Revenue Code.

(b) If the S corporation was not required to complete the line labeled "Income/loss reconciliation" on the Schedule K, a pro forma calculation of the amounts for charitable contributions and foreign taxes paid or accrued, and of the amount that would have been entered on the "Income/loss reconciliation" line shall be used for purposes of this rule.

(2) An S corporation shall withhold tax on behalf of a nonresident shareholder at the rate in effect in Section 59-10-104.

(3) An S corporation with nonresident shareholders shall complete Schedule N of form TC-20S, and shall provide the following information for each nonresident shareholder:

(a) name;

(b) social security number;

(c) percentage of S corporation held; and

(d) amount of Utah tax paid or withheld on behalf of that shareholder.

]

KEY: taxation, franchises, historic preservation, trucking industries

Date of Enactment or Last Substantive Amendment: [December 4, 2008]2009

Notice of Continuation: March 8, 2007

Authorizing, and Implemented or Interpreted Law: 59-7-703