2004 Form Tc-20 Utah Corporation Franchise Or Income Tax Return And Instructions (Page 16 of 19) in pdf

Instructions for Schedule H –

Nonbusiness Income Schedule

Determine nonbusiness income allocated to Utah and

Lines 3(a)-3(d) – Direct Related Expenses

outside Utah by completing this schedule. All income

Describe and enter amounts of direct expenses on the

that arises from the conduct of the trade or business

same letter line as the corresponding nonbusiness

operations of a corporation is business income.

income is listed on lines 1(a) through 1(d). Direct related

expenses include wages, interest, depreciation, etc.

Nonbusiness income means all income other than

(Reference: UCA §59-7-101(19))

business income and will be narrowly construed. Intan-

gible income must be properly classified and based

Line 4 – Total Direct Related Expenses

upon factual evidence. The burden of proof is on the

Enter the sum of direct related expenses by adding

corporation to justify the manner in which the income is

lines 3(a) through 3(d).

claimed on the return.

Line 5 – Utah Nonbusiness Income Net of

Interest income is business income where the intan-

Direct Related Expenses

gible with respect to which the interest was received

arises out of or was created in the regular course of the

Subtract line 4 from line 2.

taxpayer’s trade or business operations. (Tax Commis-

Line 6 – Beginning-of-Year Assets

sion Rule R865-6F-8(A)(3)(c))

Enter the beginning-of-year value of assets used to

Dividends are business income where the stock, with

produce Utah nonbusiness income in column A. Enter

respect to which the dividends are received, arises out

the beginning-of-year value of the corporation’s total

of or was acquired in the regular course of the taxpayer’s

assets in column B. All assets, including Utah assets,

trade or business operations. Because of the regularity

should be included in column B.

with which most corporate taxpayers engage in invest-

ment activities, income arising from the ownership, sale

Line 7 – End-of-Year Assets

or other disposition of investments is presumptively

Enter the end-of-year value of assets used to produce

business

income.

(Tax

Commission

Rule

Utah nonbusiness income in column A. Enter the

R865-6F-8(A)(3)(d))

end-of-year value of the corporation’s total assets in

column B. All assets, including Utah assets, should be

Gain or loss from the sale, exchange or other disposi-

included in column B.

tion of real or tangible or intangible personal property

constitutes business income if the property, while owned

Line 8 – Sum of Beginning- and End-of-Year

by the taxpayer, was used in the taxpayer’s trade or

Asset Values

business. (Tax Commission Rule R865-6F-8(A)(3)(b))

Add lines 6 and 7 for each respective column.

Rental income from real and tangible property is busi-

ness income if the property, with respect to which the

Line 9 – Average Asset Values

rental income was received, is used in the taxpayer’s

Line 8 divided by 2 for each column.

trade or business or includable in the property factor.

(Tax Commission Rule R865-6F-8(A)(3)(a))

Line 10 – Nonbusiness Asset Ratio

Line 9, column A, divided by line 9, column B.

If the corporation is claiming only Utah nonbusiness

income, lines 1(a) through 13 must be completed. If the

Line 11 – Interest Expense

corporation is claiming only non-Utah nonbusiness

Enter the total amount of interest deducted in comput-

income, lines 14(a) through 26 must be completed. If

ing Utah taxable income.

the corporation is claiming both Utah and non-Utah

nonbusiness income, lines 1(a) through 26 must be

Line 12 – Indirect Related Expenses for

completed. Use additional pages, if necessary, to pro-

Utah Nonbusiness Income

vide complete information, including a description of

Multiply line 10 by line 11.

the business purpose for making the investment, the

transactions creating the non-business income, and

Line 13 – Total Utah Nonbusiness Income

the use of revenues generated by the non-business

Net of Expenses

investment.

Subtract line 12 from line 5. Enter amount here and on

Schedule A, line 5a.

Utah Nonbusiness Income

Non-Utah Nonbusiness Income

Lines 1(a)-1(d) – Utah Nonbusiness Income

Complete each column with the information required

Lines 14(a)-14(d) – Non-Utah Nonbusiness

and show the gross nonbusiness income from each

Income

class of income being specifically allocated. Use addi-

Complete each column with the information required

tional pages, if necessary, to provide complete informa-

and show the gross nonbusiness income from each

tion about additional sources of nonbusiness income.

class of income being specifically allocated. Use addi-

Line 2 – Total Utah Nonbusiness Income

tional pages, if necessary, to provide complete informa-

Add lines 1(a) through 1(d).

tion about additional sources of nonbusiness income.

Page 15

2004 Form Tc-20 Utah Corporation Franchise Or Income Tax Return And Instructions Page 16

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