Form Tc-20 - Utah Corporation Franchise Or Income Tax Return Instructions - 2011 Page 18
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25Schedule C – Subtractions from
Unadjusted Income Instructions
Line 1 – Intercompany Dividend Elimination
Line 7 – Fifty percent Exclusion for Dividends
Enter dividends received from U.S. corporations owned
from Unitary Foreign Subsidiaries
greater than 50 percent whose income is included on
Enter 50 percent of the dividends received or deemed
this return and whose dividend has not been previously
received from subsidiaries that are members of the
eliminated.
unitary group and are organized or incorporated out-
side of the United States, unless those subsidiaries
Line 2 – Foreign Dividend Gross-up
are included in a combined report. In that case, the
Enter the foreign dividend gross-up included in gross in-
dividends are eliminated as an intercompany transac-
come for federal income tax purposes under IRC §78.
tion on line 1.
For corporations fi ling a water’s edge combined report,
Line 3 – Net Capital Loss
the 50-percent exclusion includes dividends from unitary
The corporation must enter its capital losses if an elec-
foreign corporations and subpart F income.
tion is being made to take a deduction for capital losses
incurred in the taxable year. If a current year deduction is
Line 8 – Fifty percent Exclusion of Foreign
not taken, the loss must be carried forward as provided
Operating Company Income (Loss)
in IRC §1212(a)(1)(B) and (C).
If you are fi ling a water’s edge combined report, enter
50 percent of the adjusted income or loss of a foreign
Line 4a – Federal Jobs Credit Salary Reduction
operating company. The exclusion is determined after:
Enter the amount of any salary expense reduction due
to claiming the federal jobs credit under IRC §51.
1. the removal of all intercompany transactions be-
tween the foreign operating company and any other
Line 4b – Federal Research and Development
entity within the water’s edge group,
Credit Expense Reduction
2. the exclusion of all income generated from intangible
Enter any qualifi ed research and basic research
property, and
expense reduction due to claiming the research and
development credit under IRC §41.
3. the exclusion of all income from assets held for
investment and not from a regular business trading
Line 4c – Federal Orphan Drug Credit Clinical
activity.
Testing Expense Reduction
A foreign operating company is a corporation (other
Enter any qualifi ed clinical testing expense reduction
than an IRC §936 corporation) incorporated in the
due to claiming the federal orphan drug credit under
United States with 80 percent or more of its business
IRC §45C.
activity, based on the average of the property and
payroll factors, conducted outside the United States,
Line 4d – Expense Reduction for Other
and which has at least:
Federal Credits
Enter any expense reduction attributable to claiming any
1. $1,000,000 of payroll (as included in the payroll
other federal credit. Attach applicable federal form.
factor) located outside of the United States, and
2. $2,000,000 of property (as included in the property
Line 5 – Safe Harbor Lease (SHL) Adjustments
factor) located outside of the United States.
The effects of any remaining SHL adjustments must be
reversed for Utah purposes. For general SHL informa-
Line 9 – Gain (Loss) on Certain Stock Sales
tion, see the instructions for Schedule B, line 3.
Enter the gain or loss on the sales of stock included in
Subtract from income:
taxable income, yet not taxable for federal purposes
SHL Purchaser/Lessor
because the transaction is considered to be a deemed
sale of assets under IRC §§338(h)(10) or 336(e).
1. Rental income
The purpose of this subtraction is to avoid the double
2. Amortization of the purchase price of tax benefi ts
taxation that would occur if both the gain on the stock
(purchase price of tax benefi ts must be capitalized)
sale and the gain on the deemed sale of assets were
SHL Seller/Lessee
included in income. Utah law follows the federal statute
that taxes the gain on the deemed sale of assets.
1. Interest income
2. Depreciation on SHL property
Line 10 – Adjustments Due to Basis Difference
Enter adjustments to gains, losses, depreciation ex-
Line 6 – Federal Income Previously
pense, amortization expense and similar items due to a
Taxed by Utah
difference between basis for federal and Utah purposes
Enter any income on the federal corporate return, form
as explained in instructions for Schedule B, line 8.
1120, that was previously taxed by Utah. Attach sup-
porting schedules and documentation.
Page 16
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