59-10-1403.1. Income tax treatment of a pass-through entity taxpayer -- Return filing requirements.

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(1)Subject to the other provisions of this part, a pass-through entity taxpayer is subject to taxation:

(a)for a pass-through entity taxpayer that is classified as a C corporation for federal income tax purposes:

(i)if that pass-through entity taxpayer is a resident pass-through entity taxpayer, as a domestic corporation is taxed under Chapter 7, Corporate Franchise and Income Taxes ; or

(ii)if that pass-through entity taxpayer is a nonresident pass-through entity taxpayer, as a foreign corporation is taxed under Chapter 7, Corporate Franchise and Income Taxes ; or

(b)for a pass-through entity taxpayer that is classified as an estate, individual, partnership, S corporation, or a trust for federal income tax purposes:

(i)if that pass-through entity taxpayer is a resident pass-through entity taxpayer, as a resident estate, resident individual, resident partnership, resident S corporation, or resident trust is taxed under this chapter; or

(ii)if that pass-through entity taxpayer is a nonresident pass-through entity taxpayer, as a nonresident estate, nonresident individual, nonresident partnership, nonresident S corporation, or nonresident trust is taxed under this chapter.

(2)A pass-through entity taxpayer is subject to taxation on the pass-through entity taxpayer's share of income, gain, loss, deduction, or credit of the pass-through entity.

(a)Subject to Subsection (3)(b)(iii) , a resident pass-through entity taxpayer shall file a return:

(i)if the resident pass-through entity taxpayer is classified as a C corporation for federal income tax purposes, as a domestic corporation under Chapter 7, Corporate Franchise and Income Taxes ; or

(ii)if the resident pass-through entity taxpayer is classified as an estate, individual, partnership, S corporation, or a trust for federal income tax purposes, as a resident estate, resident individual, resident partnership, resident S corporation, or resident trust under this chapter.

(i)Except as provided in Subsection (3)(b)(ii) and subject to Subsection (3)(b)(iii) or

(iv), a nonresident pass-through entity taxpayer shall file a return:

(A)if the nonresident pass-through entity taxpayer is classified as a C corporation for federal income tax purposes, as a foreign corporation under Chapter 7, Corporate Franchise and Income Taxes ; or

(B)if the nonresident pass-through entity taxpayer is classified as an estate, individual, partnership, S corporation, or a trust for federal income tax purposes, as a nonresident estate, nonresident individual, nonresident partnership, nonresident S corporation, or nonresident trust under this chapter.

(ii)A nonresident pass-through entity taxpayer is not required to file a return if:

(A)the nonresident pass-through entity taxpayer does not have:

(I)for a nonresident pass-through entity taxpayer that is classified as a C corporation for federal income tax purposes, unadjusted income as defined in Section 59-7-101 derived from or connected with Utah sources, except for the nonresident pass-through entity taxpayer's share of income, gain, loss, deduction, or credit of the pass-through entity;

(II)for a nonresident pass-through entity taxpayer that is classified as an individual, partnership, or S corporation for federal income tax purposes, adjusted gross income derived from or connected with Utah sources, except for the nonresident pass-through entity taxpayer's share of income, gain, loss, deduction, or credit of the pass-through entity; or

(III)for a nonresident pass-through entity taxpayer that is classified as an estate or a trust for federal income tax purposes, unadjusted income as defined in Section 59-10-103 derived from or connected with Utah sources, except for the nonresident pass-through entity taxpayer's share of income, gain, loss, deduction, or credit of the pass-through entity;

(B)the nonresident pass-through entity taxpayer does not seek to claim a tax credit allowed against a tax imposed under:

(I)Chapter 7, Corporate Franchise and Income Taxes ; or

(II)this chapter;

(C)the pass-through entity pays or withholds a tax on behalf of the nonresident pass-through entity taxpayer and remits that tax to the commission:

(I)in accordance with Section 59-10-1403.2 ; and

(II)if a nonresident pass-through entity taxpayer is classified as a C corporation for federal income tax purposes, in an amount that is equal to or greater than the minimum tax under Section 59-7-104 ; and

(D)the nonresident pass-through entity taxpayer is not a member of a unitary group as defined in Section 59-7-101 that is required to file a return in this state.

(iii)A nonresident pass-through entity taxpayer that is not otherwise required to file a return under this Subsection

(3)may file a return under:

(A)Chapter 7, Corporate Franchise and Income Taxes ; or

(B)this chapter.

(iv)In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act , the commission may make rules for a pass-through entity taxpayer, except for a pass-through entity taxpayer who is a resident individual, to file a return under this section if two or more pass-through entities pay or withhold a tax in accordance with Section 59-10-1403.2 on behalf of the pass-through entity taxpayer.

Enacted by Chapter 312 , 2009 General Session