S Corporation Franchise Or Income Tax Return And Instructions For Form Tc20s Page 9
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32Utah Nonbusiness Income
Instructions for Schedule H –
Lines 1(a)-(d) – Utah Nonbusiness Income
Nonbusiness Income Schedule
Complete each column with the information re-
quired and show the gross nonbusiness income
from each class of income being specifically allo-
Determine nonbusiness income allocated to Utah and
cated. Use additional pages, if necessary, to pro-
outside Utah by completing this schedule. All income
vide complete information about additional sources
that arises from the conduct of the trade or business
of nonbusiness income.
operations of a corporation is business income.
Line 2 – Total Utah Nonbusiness Income
Nonbusiness income means all income other than
Add lines 1(a) through 1(d).
business income and will be narrowly construed.
Lines 3a-3d – Direct Related Expenses
Intangible income must be properly classified and
based upon factual evidence. The burden of proof
Describe and enter amounts of direct expenses on
is on the corporation to justify the manner in which
the same letter line as the corresponding nonbusi-
the income is claimed on the return.
ness income is listed on lines 1a-1d. Direct related
expenses include wages, interest, depreciation,
Interest income is business income where the
etc. (UCA §59-7-101(19)).
intangible with respect to which the interest was
Line 4 – Total Direct Related Expenses
received arises out of or was created in the regular
course of the taxpayer’s trade or business opera-
Enter the sum of direct related expenses by adding
tions. (Tax Commission Rule R865-6F-8(A)(3)(c))
lines 3(a) through 3(d).
Line 5 – Utah Nonbusiness Income Net of
Dividends are business income where the stock,
Direct Related Expenses
with respect to which the dividends are received,
arises out of or was acquired in the regular course
Subtract line 4 from line 2.
of the taxpayer’s trade or business operations.
Line 6 – Beginning of Year Assets
Because of the regularity with which most corpo-
Enter the beginning of year value of assets used to
rate taxpayers engage in investment activities,
produce Utah nonbusiness income in column A.
income arising from the ownership, sale or other
Enter the beginning of year value of the corporation’s
disposition of investments is presumptively busi-
total assets in column B. Total assets, including
ness income. (Tax Commission Rule R865-6F-
Utah assets, should be included in column B.
8(A)(3)(d))
Line 7 – End of Year Assets
Gain or loss from the sale, exchange, or other
Enter the end of year value of assets used to
disposition of real or tangible or intangible personal
produce Utah nonbusiness income in column A.
property constitutes business income if the prop-
Enter the end of year value of the corporation’s total
erty while owned by the taxpayer was used in the
assets in column B. Total assets, including Utah
taxpayer’s trade or business. (Tax Commission
assets, should be included in column B.
Rule R865-6F-8(A)(3)(b))
Line 8 – Sum of Beginning and End of Year
Rental income from real and tangible property is
Assets Values
business income if the property with respect to
Add lines 6 and 7 for each respective column.
which the rental income was received is used in the
Line 9 – Average Asset Values
taxpayer’s trade or business or . . . includable in the
property
factor.
(Tax
Commission
Rule
Line 8 divided by 2 for each column.
R865-6F-8(A)(3)(a))
Line 10 – Average Assets Used to Produce
Utah Nonbusiness Income
If the corporation is claiming only Utah nonbusiness
income, lines 1a through 13 must be completed. If
Line 9, column A divided by line 9, column B.
the corporation is claiming only non-Utah nonbusi-
Line 11 – Interest Expense
ness income, lines 14a through 26 must be com-
Enter the total amount of interest deducted in
pleted. If the corporation is claiming both Utah and
computing Utah taxable income.
non-Utah nonbusiness income, lines 1a through 26
Line 12 – Indirect Related Expenses for Utah
must be completed. Use additional pages if neces-
Nonbusiness Income
sary to provide complete information including a
Multiply line 10 by line 11.
description of the business purpose for making the
investment, the transactions creating the non-busi-
Line 13 – Total Utah Nonbusiness Income Net
ness income, and the use of revenues generated
of Expenses
by the non-business investment.
Subtract line 12 from line 5. Enter amount here and
on Schedule A, line 5a.
Page 7
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