Form Tc-20 - Utah Corporation Franchise Or Income Tax Return Instructions - 2011 Page 7
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25Corporations that fi le either a water’s edge or worldwide
2. If the target corporation is not a member of a unitary
combined report must eliminate all intercompany sales
group immediately preceding the acquisition date,
or other intercompany transactions between corpora-
the target corporation must fi le a short-period return
tions included in the combined report in determining
for the period ending on the acquisition date and
the sales factor on TC-20, Schedule J. Similarly, corpo-
must include the gain or loss on the deemed sale
rations fi ling a Utah combined report may not include
of assets in its adjusted income.
intercompany rents or other intercompany transactions
3. Any gain or loss on stock sold or exchanged by a
between those corporations in determining the property
member of a selling consolidated group (as defi ned
factor. See UC §59-7-404.5.
in IRC §338) which is not recognized for federal pur-
poses may not be included in the adjusted income
A unitary group of corporations is considered a single
of the selling corporation.
taxpayer for purposes of the assignment of sales in the
4. The target corporation is treated as a new corpora-
sales factor of the apportionment calculation. Therefore,
tion as of the day after the acquisition date.
sales of tangible personal property by any member of
the unitary group delivered or shipped into Utah are
IRC Section 336(e)
includable in the Utah sales numerator. Conversely,
such sales originating in Utah, which are delivered or
If an election is made under IRC §336(e), the transac-
shipped to another state, will not be included in the
tion must be treated as follows:
Utah sales numerator if any member of the unitary
1. If the corporation is treated for federal purposes as
group has a taxable presence (nexus) in that state.
having disposed of all of its assets and is a member
See Tax Commission Rule R865-6F-24.
of a unitary group immediately preceding the date of
sale, the corporation must be included in a combined
IRC Sections 338,
return to the extent of its income through the date
of sale. The gain or loss on the deemed disposal of
338(h)(10) and 336(e)
assets is included in the combined income of the
An election made or considered to be made under IRC
unitary group.
Sections 338, 338(h)(10) and 336(e) is also followed
2. If the corporation is treated for federal purposes
for Utah purposes.
as having disposed of all of its assets and is not a
member of a unitary group immediately preceding
IRC Section 338
the date of sale, the corporation must fi le a short-
period return for the period ending on the date of
If a federal election is made under IRC §338, the target
sale and must include the gain or loss on the deemed
corporation must fi le a separate entity one-day tax return
disposal of assets in its adjusted income.
for Utah purposes, as required for federal purposes.
The target corporation must include the gain or loss
3. Any gain or loss not recognized for federal pur-
on the deemed sale of assets in its adjusted income.
poses on stock sold, exchanged or distributed by
See UC §59-7-114 for further details.
a corporation pursuant to IRC §336(e) may not be
included in adjusted income.
Form TC-20MC, a one-day corporation tax return for a tar-
4. The new basis of assets of the corporation treated
get corporation, is available at tax.utah.gov/forms.
as having disposed of its assets is the same as
determined for federal purposes.
IRC Section 338(h)(10)
5. The corporation treated as having disposed of its
If an election is made for federal purposes under
assets is treated as a new corporation as of the day
IRC §338(h)(10), the following apply:
after the date of sale.
1. If the target corporation is a member of a unitary
group immediately preceding the acquisition date,
Installment Sales
the target corporation must be included in a com-
bined report to the extent of its income through the
If a corporation is no longer required to fi le a Utah
acquisition date. The gain or loss on the deemed
corporate return, any taxes owed by that corporation
sale of assets is included in the combined income
on installment sales entered into by that corporation
of the unitary group.
shall accelerate and be due on the corporation’s last
return fi led in Utah.
Page 5
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