59-7-106 (Superseded 01/01/11) - Subtractions from unadjusted income. - Utah Statutes

59-7-106 (Superseded 01/01/11). Subtractions from unadjusted income.
In computing adjusted income the following amounts shall be subtracted from unadjustedincome:
(1) the foreign dividend gross-up included in gross income for federal income taxpurposes under Section 78, Internal Revenue Code;
(2) the net capital loss, as defined for federal purposes, if the taxpayer elects to deductthe loss on the current Utah return. The deduction shall be made by claiming the deduction onthe current Utah return which shall be filed by the due date of the return, including extensions. For the purposes of this Subsection (2) all capital losses in a given year must be:
(a) deducted in the year incurred; or
(b) carried forward as provided in Sections 1212(a)(1)(B) and (C), Internal RevenueCode;
(3) the decrease in salary expense deduction for federal income tax purposes due toclaiming the federal jobs credit under Section 51, Internal Revenue Code;
(4) the decrease in qualified research and basic research expense deduction for federalincome tax purposes due to claiming the federal research and development credit under Section41, Internal Revenue Code;
(5) the decrease in qualified clinical testing expense deduction for federal income taxpurposes due to claiming the federal orphan drug credit under Section 28, Internal RevenueCode;
(6) any decrease in any expense deduction for federal income tax purposes due toclaiming any other federal credit;
(7) the safe harbor lease adjustment required under Subsections 59-7-111(1)(b) and(2)(b);
(8) any income on the federal corporate return that has been previously taxed by Utah;
(9) amounts included in federal taxable income that are due to refunds of taxes imposedfor the privilege of doing business, or exercising a corporate franchise, including income,franchise, corporate stock and business and occupation taxes paid by the corporation to Utah,another state of the United States, a foreign country, a United States possession, or theCommonwealth of Puerto Rico to the extent that the taxes were added to unadjusted incomeunder Section 59-7-105;
(10) charitable contributions, to the extent allowed as a subtraction under Section59-7-109;
(11) (a) 50% of the dividends deemed received or received from subsidiaries which aremembers of the unitary group and are organized or incorporated outside of the United Statesunless such subsidiaries are included in a combined report under Section 59-7-402 or 59-7-403. In arriving at the amount of the dividend exclusion, the taxpayer shall first deduct from thedividends deemed received or received, the expense directly attributable to those dividends. Interest expense attributable to excluded dividends shall be determined by multiplying interestexpense by a fraction, the numerator of which is the taxpayer's average investment in suchdividend paying subsidiaries, and the denominator of which is the taxpayer's average totalinvestment in assets;
(b) in determining income apportionable to this state, a portion of the factors of a foreignsubsidiary whose dividends are partially excluded under Subsection (11)(a) shall be included inthe combined report factors. The portion to be included shall be determined by multiplying each

factor of the foreign subsidiary by a fraction, but not to exceed 100%, the numerator of which isthe amount of the dividend paid by the foreign subsidiary which is included in adjusted income,and the denominator of which is the current year earnings and profits of the foreign subsidiary asdetermined under the Internal Revenue Code;
(12) (a) 50% of the adjusted income of a foreign operating company unless the taxpayerhas elected to file a worldwide combined report as provided in Section 59-7-403. For purposesof this Subsection (12), when calculating the adjusted income of a foreign operating company, aforeign operating company may not deduct the subtractions allowable under this Subsection (12)and Subsection (11);
(b) in determining income apportionable to this state, the factors for a foreign operatingcompany shall be included in the combined report factors in the same percentage its adjustedincome is included in the combined adjusted income;
(13) the amount of gain or loss which is included in unadjusted income but notrecognized for federal purposes on stock sold or exchanged by a member of a sellingconsolidated group as defined in Section 338, Internal Revenue Code, if an election has beenmade pursuant to Section 338(h)(10), Internal Revenue Code;
(14) the amount of gain or loss which is included in unadjusted income but notrecognized for federal purposes on stock sold, exchanged, or distributed by a corporationpursuant to Section 336(e), Internal Revenue Code, if an election under Section 336(e), InternalRevenue Code, has been made for federal purposes;
(15) (a) adjustments to gains, losses, depreciation expense, amortization expense, andsimilar items due to a difference between basis for federal purposes and basis as computed underSection 59-7-107; and
(b) if there has been a reduction in federal basis for a federal tax credit where there is nocorresponding Utah tax credit, the amount of the reduction in basis shall be allowed as anexpense in the year of the federal credit;
(16) any interest expense not deducted on the federal corporate return under Section265(b) or 291(e), Internal Revenue Code;
(17) 100% of the dividends received from subsidiaries which are insurance companiesexempt from this chapter under Subsection 59-7-102(1)(c) and are under common ownership;
(18) subject to Subsection 59-7-105(12), the amount of a qualified investment as definedin Section 53B-8a-102 that:
(a) a corporation that is an account owner as defined in Section 53B-8a-102 makesduring the taxable year;
(b) the corporation described in Subsection (18)(a) does not deduct on a federalcorporation income tax return; and
(c) does not exceed the maximum amount of the qualified investment that may besubtracted from unadjusted income for a taxable year in accordance with Subsection53B-8a-106(1); and
(19) for purposes of income included in a combined report under Part 4, CombinedReporting, the entire amount of the dividends a member of a unitary group receives or isconsidered to receive from a captive real estate investment trust.

Amended by Chapter 6, 2010 General Session