2004 Form Tc-20 Utah Corporation Franchise Or Income Tax Return And Instructions (Page 13 of 19) in pdf

Instructions for Schedule B –

Additions to Unadjusted Income

Line 5 – Deductions Taken Previously on the

Line 1 – Interest From State Obligations

Utah Return

Enter interest from bonds, notes and other evidences of

indebtedness issued by any state of the United States,

Enter any deduction on the federal return deducted on

including any agency and instrumentality of a state of

a prior year Utah return.

the United States.

Line 6 – Federal Charitable Contributions

Lines 2a - 2e -

Add Taxes That Were Deducted

Enter federal charitable contributions from federal forms

to Determine Unadjusted In-

1120 or 1120-A, line 19.

come.

Line 7 – Gain/Loss on Sections

Amounts included in federal taxable income from re-

338(h)(10) or 336(e)

funds of the following taxes should be netted against

Enter the amount of gain or loss determined under UCA

similar taxes on the appropriate lines.

§59-7-114(3) regarding a target corporation under IRC

Line 2a - Income Taxes Paid to Any State

Section 338, if that gain or loss has not been included

in unadjusted income, and the amount of any gain or

Enter taxes imposed by any state that are measured by

loss determined under UCA §59-7-115 regarding cor-

income.

porations treated for federal purposes as having dis-

Line 2b - Franchise or Privilege Taxes

posed of its assets under IRC Section 336(e), if that

Paid to Any State

gain or loss has not been included in unadjusted

income.

Enter franchise taxes paid by a corporation to any state

for taxes imposed for the privilege of doing business or

The purpose of this addition is to make sure the gain or

exercising its corporate franchise.

loss on IRC Section 338(h)(10) and 336(e) transactions

are treated similarly for Utah and federal purposes as a

Line 2c - Corporate Stock Taxes

deemed sale of assets. The gain or loss is only added if

Paid to Any State

it has not already been included in unadjusted income.

Enter corporate stock taxes paid to any state.

Line 8 – Basis Adjustments

Line 2d - Foreign Taxes Paid

Utah laws generally follow the Internal Revenue Code

Enter any income, franchise, or capital stock taxes

for depreciation, amortization and basis. However,

imposed by a foreign country, a United States posses-

basis differences occasionally arise due to differences

sion or the Commonwealth of Puerto Rico.

between state and federal laws in limited instances.

Some examples include: a) an IRC Section 338 election

Line 2e - Business and Occupation Taxes

tax

year

beginning

prior

Enter business and occupation taxes deducted for

Jan. 1, 1994; and b) adjustments attributed to the

federal purposes.

federal consolidated rules under IRC Section 1502. A

company may not deduct basis differences generated

Line 3 – Safe Harbor Lease (SHL) Adjustments

by errors in prior returns in years when Utah and federal

SHLs originated from adjustments primarily available

depreciation or amortization amounts are required to

to businesses during the years 1981 and 1982 under

be the same.

ERTA. These provisions allowed transfers of certain

tax benefits for federal tax purposes. However, Utah did

Line 9 – Expenses Attributable to 50 percent

not adopt these provisions and the effects of any

Unitary Foreign Dividend Exclusion

remaining SHL adjustments must be reversed for Utah

Enter the expenses directly and indirectly attributable to

purposes.

the dividends from subsidiaries excluded on Schedule

Add to income:

C, line 7 (i.e., 50 percent of the unitary foreign divi-

dends). To calculate indirect interest expense attribut-

SHL Purchaser/Lessor

able to excluded dividends:

1. Interest expense

1. Divide the taxpayer’s average investment in divi-

2. Depreciation claimed on SHL property

dend paying subsidiaries by the taxpayer’s average

SHL Seller/Lessee

investment in total assets.

1. Amount of gain on the sale of federal tax benefits

2. Multiply the result by the total interest expense.

2. Rental expense on SHL property

Line 10 – Installment Sales Income Previously

Line 4 – Capital Loss Carryover

Taxed for Federal But Not for Utah

Enter any capital losses deducted on a Utah corporate

Purposes

return in previous years, but used to offset capital gains

Add installment sales income from installment sales

on this year’s federal return.

made in tax years beginning before Jan. 1, 1994 if the

Utah installment provisions of former UCA §59-7-119

were used. If the Utah installment provisions were used

on the Utah return, then a timing difference was created

between federal and Utah.

Page 12

2004 Form Tc-20 Utah Corporation Franchise Or Income Tax Return And Instructions Page 13

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