59-7-101 (Effective 01/01/11) - Definitions. - Utah Statutes

59-7-101 (Effective 01/01/11). Definitions.
As used in this chapter:
(1) "Adjusted income" means unadjusted income as modified by Sections 59-7-105 and59-7-106.
(2) (a) "Affiliated group" means one or more chains of corporations that are connectedthrough stock ownership with a common parent corporation that meet the followingrequirements:
(i) at least 80% of the stock of each of the corporations in the group, excluding thecommon parent corporation, is owned by one or more of the other corporations in the group; and
(ii) the common parent directly owns at least 80% of the stock of at least one of thecorporations in the group.
(b) "Affiliated group" does not include corporations that are qualified to do business butare not otherwise doing business in this state.
(c) For purposes of this Subsection (2), "stock" does not include nonvoting stock whichis limited and preferred as to dividends.
(3) "Apportionable income" means adjusted income less nonbusiness income net ofrelated expenses, to the extent included in adjusted income.
(4) "Apportioned income" means apportionable income multiplied by the apportionmentfraction as determined in Section 59-7-311.
(5) "Business income" is as defined in Section 59-7-302.
(6) (a) "Captive real estate investment trust" means a real estate investment trust if:
(i) the shares or beneficial interests of the real estate investment trust are not regularlytraded on an established securities market; and
(ii) more than 50% of the voting power or value of the shares or beneficial interests ofthe real estate investment trust are directly, indirectly, or constructively:
(A) owned by a controlling entity of the real estate investment trust; or
(B) controlled by a controlling entity of the real estate investment trust.
(b) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, thecommission may make rules defining "established securities market."
(7) (a) "Common ownership" means the direct or indirect control or ownership of morethan 50% of the outstanding voting stock of:
(i) a parent-subsidiary controlled group as defined in Section 1563, Internal RevenueCode, except that 50% shall be substituted for 80%;
(ii) a brother-sister controlled group as defined in Section 1563, Internal Revenue Code,except that 50% shall be substituted for 80%; or
(iii) three or more corporations each of which is a member of a group of corporationsdescribed in Subsection (2)(a)(i) or(ii), and one of which is:
(A) a common parent corporation included in a group of corporations described inSubsection (2)(a)(i); and
(B) included in a group of corporations described in Subsection (2)(a)(ii).
(b) Ownership of outstanding voting stock shall be determined by Section 1563, InternalRevenue Code.
(8) (a) "Controlling entity of a captive real estate investment trust" means an entity that:
(i) is treated as an association taxable as a corporation under the Internal Revenue Code;
(ii) is not exempt from federal income taxation under Section 501(a), Internal Revenue

Code; and
(iii) directly, indirectly, or constructively holds more than 50% of:
(A) the voting power of a captive real estate investment trust; or
(B) the value of the shares or beneficial interests of a captive real estate investment trust.
(b) "Controlling entity of a captive real estate investment trust" does not include:
(i) a real estate investment trust, except for a captive real estate investment trust;
(ii) a qualified real estate investment subsidiary described in Section 856(i), InternalRevenue Code, except for a qualified real estate investment trust subsidiary of a captive realestate investment trust; or
(iii) a foreign real estate investment trust.
(c) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, thecommission may make rules defining "established securities market."
(9) "Corporate return" or "return" includes a combined report.
(10) "Corporation" includes:
(a) entities defined as corporations under Sections 7701(a) and 7704, Internal RevenueCode; and
(b) other organizations that are taxed as corporations for federal income tax purposesunder the Internal Revenue Code.
(11) "Dividend" means any distribution, including money or other type of property, madeby a corporation to its shareholders out of its earnings or profits accumulated after December 31,1930.
(12) (a) "Doing business" includes any transaction in the course of its business by adomestic corporation, or by a foreign corporation qualified to do or doing intrastate business inthis state.
(b) Except as provided in Subsection 59-7-102(2), "doing business" includes:
(i) the right to do business through incorporation or qualification;
(ii) the owning, renting, or leasing of real or personal property within this state; and
(iii) the participation in joint ventures, working and operating agreements, theperformance of which takes place in this state.
(13) "Domestic corporation" means a corporation that is incorporated or organized underthe laws of this state.
(14) (a) "Farmers' cooperative" means an association, corporation, or other organizationthat is:
(i) (A) an association, corporation, or other organization of:
(I) farmers; or
(II) fruit growers; or
(B) an association, corporation, or other organization that is similar to an association,corporation, or organization described in Subsection (14)(a)(i)(A); and
(ii) organized and operated on a cooperative basis to:
(A) (I) market the products of members of the cooperative or the products of otherproducers; and
(II) return to the members of the cooperative or other producers the proceeds of sales lessnecessary marketing expenses on the basis of the quantity of the products of a member orproducer or the value of the products of a member or producer; or
(B) (I) purchase supplies and equipment for the use of members of the cooperative or

other persons; and
(II) turn over the supplies and equipment described in Subsection (14)(a)(ii)(B)(I) atactual costs plus necessary expenses to the members of the cooperative or other persons.
(b) (i) Subject to Subsection (14)(b)(ii), for purposes of this Subsection (14), thecommission by rule, made in accordance with Title 63G, Chapter 3, Utah AdministrativeRulemaking Act, shall define:
(A) the terms:
(I) "member"; and
(II) "producer"; and
(B) what constitutes an association, corporation, or other organization that is similar toan association, corporation, or organization described in Subsection (14)(a)(i)(A).
(ii) The rules made under this Subsection (14)(b) shall be consistent with the filingrequirements under federal law for a farmers' cooperative.
(15) "Foreign corporation" means a corporation that is not incorporated or organizedunder the laws of this state.
(16) (a) "Foreign operating company" means a corporation if:
(i) the corporation is incorporated in the United States;
(ii) at least 80% of the corporation's business activity, as determined under Section59-7-401, is conducted outside the United States; and
(iii) as calculated in accordance with Part 3, Allocation and Apportionment of Income -Utah UDITPA Provisions, the corporation has:
(A) at least $1,000,000 of payroll located outside the United States; and
(B) at least $2,000,000 of property located outside the United States.
(b) "Foreign operating company" does not include a corporation that qualifies for thePuerto Rico and possession tax credit as provided in Section 936, Internal Revenue Code.
(17) (a) "Foreign real estate investment trust" means:
(i) a business entity organized outside the laws of the United States if:
(A) at least 75% of the business entity's total asset value at the close of the businessentity's taxable year is represented by:
(I) real estate assets, as defined in Section 856(c)(5)(B), Internal Revenue Code;
(II) cash or cash equivalents; or
(III) one or more securities issued or guaranteed by the United States;
(B) the business entity is:
(I) not subject to income taxation:
(Aa) on amounts distributed to the business entity's beneficial owners; and
(Bb) in the jurisdiction in which the business entity is organized; or
(II) exempt from income taxation on an entity level in the jurisdiction in which thebusiness entity is organized;
(C) the business entity distributes at least 85% of the business entity's taxable income, ascomputed in the jurisdiction in which the business entity is organized, to the holders of thebusiness entity's:
(I) shares or beneficial interests; and
(II) on an annual basis;
(D) (I) not more than 10% of the following is held directly, indirectly, or constructivelyby a single person:

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(Aa) the voting power of the business entity; or
(Bb) the value of the shares or beneficial interests of the business entity; or
(II) the shares of the business entity are regularly traded on an established securitiesmarket; and
(E) the business entity is organized in a country that has a tax treaty with the UnitedStates; or
(ii) a listed Australian property trust.
(b) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, thecommission may make rules defining:
(i) "cash or cash equivalents";
(ii) "established securities market"; or
(iii) "listed Australian property trust."
(18) "Income" includes losses.
(19) "Internal Revenue Code" means Title 26 of the United States Code as effectiveduring the year in which Utah taxable income is determined.
(20) "Nonbusiness income" is as defined in Section 59-7-302.
(21) "Real estate investment trust" is as defined in Section 856, Internal Revenue Code.
(22) "Related expenses" means:
(a) expenses directly attributable to nonbusiness income; and
(b) the portion of interest or other expense indirectly attributable to both nonbusiness andbusiness income which bears the same ratio to the aggregate amount of such interest or otherexpense, determined without regard to this Subsection (22), as the average amount of the assetproducing the nonbusiness income bears to the average amount of all assets of the taxpayerwithin the taxable year.
(23) "Safe harbor lease" means a lease that qualified as a safe harbor lease under Section168, Internal Revenue Code.
(24) "S corporation" means an S corporation as defined in Section 1361, InternalRevenue Code.
(25) "State of the United States" includes any of the 50 states or the District of Columbia.
(26) (a) "Taxable year" means the calendar year or the fiscal year ending during suchcalendar year upon the basis of which the adjusted income is computed.
(b) In the case of a return made for a fractional part of a year under this chapter or underrules prescribed by the commission, "taxable year" includes the period for which such return ismade.
(27) "Taxpayer" means any corporation subject to the tax imposed by this chapter.
(28) "Threshold level of business activity" means business activity in the United Statesequal to or greater than 20% of the corporation's total business activity as determined underSection 59-7-401.
(29) "Unadjusted income" means federal taxable income as determined on a separatereturn basis before intercompany eliminations as determined by the Internal Revenue Code,before the net operating loss deduction and special deductions for dividends received.
(30) (a) "Unitary group" means a group of corporations that:
(i) are related through common ownership; and
(ii) by a preponderance of the evidence as determined by a court of competentjurisdiction or the commission, are economically interdependent with one another as

demonstrated by the following factors:
(A) centralized management;
(B) functional integration; and
(C) economies of scale.
(b) "Unitary group" includes a captive real estate investment trust.
(c) "Unitary group" does not include an S corporation.
(31) "United States" includes the 50 states and the District of Columbia.
(32) "Utah net loss" means the current year Utah taxable income before Utah net lossdeduction, if determined to be less than zero.
(33) "Utah net loss deduction" means the amount of Utah net losses from other taxableyears that may be carried back or carried forward to the current taxable year in accordance withSection 59-7-110.
(34) (a) "Utah taxable income" means Utah taxable income before net loss deduction lessUtah net loss deduction.
(b) "Utah taxable income" includes income from tangible or intangible property locatedor having situs in this state, regardless of whether carried on in intrastate, interstate, or foreigncommerce.
(35) "Utah taxable income before net loss deduction" means apportioned income plusnonbusiness income allocable to Utah net of related expenses.
(36) (a) "Water's edge combined report" means a report combining the income andactivities of:
(i) all members of a unitary group that are:
(A) corporations organized or incorporated in the United States, including thosecorporations qualifying for the Puerto Rico and Possession Tax Credit as provided in Section936, Internal Revenue Code, in accordance with Subsection (36)(b); and
(B) corporations organized or incorporated outside of the United States meeting thethreshold level of business activity; and
(ii) an affiliated group electing to file a water's edge combined report under Subsection59-7-402(2).
(b) There is a rebuttable presumption that a corporation which qualifies for the PuertoRico and possession tax credit provided in Section 936, Internal Revenue Code, is part of aunitary group.
(37) "Worldwide combined report" means the combination of the income and activitiesof all members of a unitary group irrespective of the country in which the corporations areincorporated or conduct business activity.

Amended by Chapter 198, 2010 General Session