Rep. Norm Thurston — Voting Record

Bill

Number

S.B. 25 Second Substitute (2021GS)

Sponsor

Sen. Bramble, C.

Final action

Governor Signed 3/22/2021

Outcome

Became law — signed by Gov. Spencer J. Cox

Summary

What it does

• This bill:
• clarifies the calculation of the 80% limitation on carrying forward a Utah net loss.

Every vote on this bill

Bill text

CORPORATE TAX AMENDMENTS
GENERAL SESSION
STATE OF UTAH
Chief Sponsor: Curtis S. Bramble
House Sponsor: 
Robert M. Spendlove
LONG TITLE
General Description:
This bill amends corporate franchise and income tax provisions related to Utah net loss.
Highlighted Provisions:
This bill:
▸ clarifies the calculation of the 80% limitation on carrying forward a Utah net loss.
Money Appropriated in this Bill:
None
Other Special Clauses:
This bill provides retrospective operation.
Utah Code Sections Affected:
AMENDS:
59-7-110
, as last amended by Laws of Utah 2020, Sixth Special Session, Chapter 10
Be it enacted by the Legislature of the state of Utah:
Section 1. Section 
59-7-110
 is amended to read:
59-7-110.
Utah net loss -- Carry forward -- Deduction.
(1) A taxpayer shall determine the amount of Utah net loss that the taxpayer may carry
forward to offset income of another taxable year as provided in this section.
(2) Subject to the other provisions of this section, a taxpayer:
(a) may carry forward a Utah net loss from a taxable year to a future taxable year; and
(b) may not carry back a Utah net loss from a taxable year.
(3) A taxpayer that carries forward a Utah net loss shall carry forward the Utah net loss
to the earliest eligible year for which the Utah taxable income before net loss deduction, minus
Utah net losses from previous years that a taxpayer applied or was required to apply to offset
income, is not less than zero.
(4) (a) Subject to Subsection (4)(b), the amount of Utah net loss that a taxpayer may
carry to the year identified in Subsection (3) is the lesser of:
(i) the remaining Utah net loss after deduction of any amounts of the Utah net loss that
a taxpayer carried to previous years; or
(ii) the remaining Utah taxable income before net loss deduction of the year identified
in Subsection (3) after deduction of Utah net losses from previous years that a taxpayer carried
or was required to carry to the year identified in Subsection (3).
(b) (i) For a taxable year beginning on or after January 1, 2021, the amount of Utah net
loss that a taxpayer may carry forward to a taxable year may not exceed 80% of Utah taxable
income computed without regard to the deduction [
allowable under this section
] 
of any Utah
net loss
.
(ii) A taxpayer may carry a remaining Utah net loss to one or more taxable years in
accordance with this section.
(c) If the only Utah net loss that a taxpayer carries forward is from a taxable year that
began before January 1, 2018, the commission:
(i) shall instruct the taxpayer to calculate the 80% limitation described in Subsection
(4)(b) by following federal guidance for calculating the 80% taxable income limitation for
federal income tax purposes; or
(ii) if the commission determines that adequate federal corporate guidance on how to
calculate the 80% limitation is unavailable, may not apply the 80% limitation to the Utah net
loss.
(d) If a taxpayer carries forward a Utah net loss from a taxable year beginning before
January 1, 2018, and a Utah net loss from a taxable year beginning on or after January 1, 2018,
the commission shall instruct the taxpayer to calculate the 80% limitation described in
Subsection (4)(b) by:
(i) following federal guidance for calculating the 80% of taxable income limitation for
federal income tax purposes; or
(ii) if the commission determines that adequate federal corporate guidance on how to
calculate the 80% limitation is unavailable, by:
(A) calculating 80% of Utah taxable income before deducting any Utah net losses from
Utah taxable income; and
(B) applying the limitation that the Utah net loss that a taxpayer carries forward may
not exceed 80% of Utah taxable income to Utah net losses incurred on or after January 1, 2018,
without regard to Utah net losses from a previous taxable year that the taxpayer carries
forward.
(e) The commission shall:
(i) make a determination annually, on or before April 15 of the year after the taxable
year ends, about whether adequate federal corporate guidance on how to calculate the 80%
limitation is available; and
(ii) if the commission determines that adequate federal corporate guidance on how to
calculate the 80% limitation is unavailable, notify the Revenue and Taxation Interim
Committee, electronically before the next interim committee meeting, that the commission
intends to issue instructions in accordance with Subsection (4)(c)(ii) or (d)(ii).
(5) (a) (i) Subject to Subsection (5)(a)(ii), a corporation acquiring the assets or stock of
another corporation may not deduct any net loss incurred by the acquired corporation prior to
the date of acquisition.
(ii) Subsection (5)(a)(i) does not apply if the only change in the corporation is that of
the state of incorporation.
(b) An acquired corporation may deduct the acquired corporation's net losses incurred
before the date of acquisition against the acquired corporation's separate income as calculated
under Subsections (6) and (7) if the acquired corporation has continued to carry on a trade or
business substantially the same as that conducted before the acquisition.
(6) For purposes of Subsection (5)(b), the amount of net loss an acquired corporation
that is acquired by a unitary group may deduct is calculated by:
(a) subject to Subsection (7):
(i) except as provided in Subsection (6)(a)(ii), calculating the sum of:
(A) an amount determined by dividing the average value of the acquired corporation's
real and tangible personal property owned or rented and used in this state during the taxable
year by the average value of all of the unitary group's real and tangible personal property owned
or rented and used during the taxable year;
(B) an amount determined by dividing the total amount paid in this state during the
taxable year by the acquired corporation for compensation by the total compensation paid
everywhere by the unitary group during the taxable year; and
(C) an amount determined by:
(I) dividing the total sales of the acquired corporation in this state during the taxable
year by the total sales of the unitary group everywhere during the taxable year; and
(II) if the unitary group elects or is required to calculate the fraction for apportioning
business income to this state using the method described in Subsection 
59-7-311
(4) in taxable
year 2019 or taxable year 2020, multiplying the amount calculated under Subsection (6)
(a)(i)(C)(I) by , for the taxable year 2019, four, or, for the taxable year 2020, eight ; or
(ii) if the unitary group is required or elects to calculate the fraction for apportioning
business income to this state using the method described in Subsection 
59-7-311
(2), calculating
an amount determined by dividing the total sales of the acquired corporation in this state during
the taxable year by the total sales of the unitary group everywhere during the taxable year;
(b) dividing the amount calculated under Subsection (6)(a) by the same denominator of
the fraction the unitary group uses to apportion business income to this state for that taxable
year in accordance with Section 
59-7-311
;
(c) multiplying the amount calculated under Subsection (6)(b) by the business income
of the unitary group for the taxable year that is subject to apportionment under Section
59-7-311
; and
(d) calculating the sum of:
(i) the amount calculated under Subsection (6)(c); and
(ii) the following amounts allocable to the acquired corporation for the taxable year:
(A) nonbusiness income allocable to this state; or
(B) nonbusiness loss allocable to this state.
(7) The amounts calculated under Subsection (6)(a) shall be derived in the same
manner as those amounts are derived for purposes of apportioning the unitary group's business
income before deducting the net loss, including a modification made in accordance with
Section 
59-7-320
.
Section 2. 
Retrospective operation.
This bill has retrospective operation for a taxable year beginning on or after January 1,
2021.