59-10-1405 - Nonresident pass-through entity taxpayer's share of an addition, subtraction, or adjustment that relates to an item of income, gain, loss, deduction, or credit of a pass-through entit
59-10-1405. Nonresident pass-through entity taxpayer's share of an addition,subtraction, or adjustment that relates to an item of income, gain, loss, deduction, or credit ofa pass-through entity -- In determining source of nonresident pass-through entity taxpayer'sincome certain provisions of pass-through entity agreement may not be considered --Rulemaking authority.
(1) (a) Except as provided in Subsection (3), in determining the taxable income of anonresident pass-through entity taxpayer, an addition, subtraction, or adjustment that relates to an itemof income, gain, loss, deduction, or credit of a pass-through entity shall be made in accordance with thisSubsection (1).
(b) For a nonresident pass-through entity taxpayer of a pass-through entity except for apass-through entity that is an S corporation, the nonresident pass-through entity taxpayer's share of anaddition, subtraction, or adjustment that relates to an item of income, gain, loss, deduction, or credit is:
(i) if the item of income, gain, loss, deduction, or credit is required to be taken into accountseparately for federal income tax purposes, the nonresident pass-through entity taxpayer's distributiveshare of the item of income, gain, loss, deduction, or credit:
(A) for federal income tax purposes;
(B) determined under Section 704 et seq., Internal Revenue Code; and
(C) derived from or connected with Utah sources; or
(ii) if the item of income, gain, loss, deduction, or credit is not required to be taken into accountseparately for federal income tax purposes, determined in accordance with the nonresidentpass-through entity taxpayer's distributive share of income, gain, loss, deduction, or credit:
(A) relating to the pass-through entity generally;
(B) for federal income tax purposes;
(C) under Section 704 et seq., Internal Revenue Code; and
(D) derived from or connected with Utah sources.
(c) For a nonresident pass-through entity taxpayer of a pass-through entity that is an Scorporation, the nonresident pass-through entity taxpayer's share of an addition, subtraction, oradjustment that relates to an item of income, gain, loss, deduction, or credit is:
(i) if the item of income, gain, loss, deduction, or credit is required to be taken into accountseparately for federal income tax purposes, the nonresident pass-through entity taxpayer's pro ratashare of the item of income, gain, loss, deduction, or credit:
(A) for federal income tax purposes;
(B) determined under Section 1366 et seq., Internal Revenue Code; and
(C) derived from or connected with Utah sources; or
(ii) if the item of income, gain, loss, deduction, or credit is not required to be taken into accountseparately for federal income tax purposes, determined in accordance with the nonresidentpass-through entity taxpayer's pro rata share of the item of income, gain, loss, deduction, or credit:
(A) relating to the pass-through entity generally;
(B) for federal income tax purposes;
(C) under Section 1366 et seq., Internal Revenue Code; and
(D) derived from or connected with Utah sources.
(2) In determining the source of a nonresident pass-through entity taxpayer's income, thefollowing provisions in a pass-through entity agreement may not be considered:
(a) a provision that allocates to the nonresident pass-through entity taxpayer, as income, gain,or credit from a source outside this state, a greater proportion of the nonresident pass-through entitytaxpayer's share of income, gain, or credit of the pass-through entity than the ratio of income, gain, orcredit of the pass-through entity from sources outside this state to income, gain, or credit of thepass-through entity from all sources; or
(b) a provision that allocates to the nonresident pass-through entity taxpayer a greaterproportion of an item of loss or deduction of the pass-through entity derived from or connected withUtah sources than the taxpayer's share of loss or deduction generally:
(i) relating to the pass-through entity; and
(ii) for federal income tax purposes.
(3) The commission may by rule, made in accordance with Title 63G, Chapter 3, UtahAdministrative Rulemaking Act, authorize the use of a calculation other than the calculation provided inSubsection (1), for determining a nonresident pass-through entity taxpayer's share of an addition,subtraction, or adjustment that relates to an item of income, gain, loss, deduction, or credit of apass-through entity derived from or connected with Utah sources if:
(a) the nonresident pass-through entity taxpayer applies to the commission; and
(b) the commission finds that the use of the calculation is appropriate and equitable.
Amended by Chapter 312, 2009 General Session