Tax Commission, Auditing

Section R865-3C-1

Allocation of Net Income Pursuant to Utah Code Ann. Section 59-7-204

Notice of Proposed Rule

(Amendment)

DAR File No.: 35863
Filed: 02/09/2012 10:22:02 AM

RULE ANALYSIS

Purpose of the rule or reason for the change:

The proposed amendment updates the section to match statutory changes.

Summary of the rule or change:

The proposed amendment updates this section to match statutory changes regarding when an out-of-state corporation with Utah income shall attribute receipts arising from royalties and intangible property to the state.

State statutory or constitutional authorization for this rule:

• Section 59-7-204

Anticipated cost or savings to:

the state budget:

None--The amendments update the rule to match current statute and processes.

local governments:

None--The amendments update the rule to match current statute and processes.

small businesses:

None--The amendments update the rule to match current statute and processes.

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

None--The amendments update the rule to match current statute and processes.

Compliance costs for affected persons:

None--The amendments update the rule to match current statute and processes.

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

Adoption of this amendment will create no new fiscal impact as the rule will then match current statute and practice.

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:

• Christa Johnson at the above address, by phone at 801-297-3901, by FAX at 801-297-3907, or by Internet E-mail at cj@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:

04/02/2012

This rule may become effective on:

04/09/2012

Authorized by:

Michael Cragun, Tax Commissioner

R865. Tax Commission, Auditing.

R865-3C. Corporation Income Tax.

R865-3C-1. Allocation of Net Income Pursuant to Utah Code Ann. Section 59-7-204.

(1) In general, the provisions of Section R865-6F-8 shall be applied to determine net

income attributable to Utah for corporation income tax purposes.

(2) If a corporation derives income from sources within this state, but does not maintain

an office within this state from which sales are negotiated or effected, the gross receipts

attributable to Utah shall include all receipts of the corporation[ for the]:

(a) for the performance of a service if the purchaser of the service receives a greater benefit of the service in this state than in any other state;[ and]

(b) for the sale of goods delivered to this state or shipped to a purchaser within this state,

regardless of the F.O.B. point or other conditions of the sale ;

(c) from a royalty in connection with real property if the real property is in this state;

(d) from other income in connection with real or tangible personal property if the real or tangible personal property is in this state; and

(e) in connection with intangible property if the intangible property is used in this state.

 

KEY: taxation, corporation tax

Date of Enactment or Last Substantive Amendment: [October 13, 2011]2012

Notice of Continuation: March 21, 2007

Authorizing, and Implemented or Interpreted Law: 59-7-204