Utah Admin. Code R865-6F-15 - Installment Basis of Reporting Income in Year of Termination Pursuant to Utah Code Ann. Section 59-7-112
A. The
Corporation Franchise Tax Act allows a corporation, under certain conditions
and under rules prescribed by the Tax Commission, to report income arising from
the sale or other disposition of property on a deferred or so-called
installment basis. Thus, a gain technically realized at the time the sale is
made may, at the election of the taxpayer, be reported on a deferred basis in
accordance with the law and the following sections of this rule. The rule
allowing deferment of reporting such income is only one of postponement of the
tax, and not one of exemption from a tax otherwise lawfully due. Thus, the
privilege of deferment is terminated if the taxpayer ceases to be subject to
tax prior to the reporting of the entire amount of installment income. When a
taxpayer elects to report income arising from the sale or other disposition of
property as provided in Section
59-7-112, and
the entire income therefrom has not been reported prior to the year that the
taxpayer ceases to be subject to the tax imposed under the Utah Corporation
Income and Franchise Tax Acts, the unreported income is included in the return
for the last year in which the taxpayer is subject to the tax. This rule
applies to all corporations which elect to report on the installment basis. If
a corporation on this basis desires to dissolve or to withdraw, it must comply
with the provisions hereof prior to issuance of the tax clearance
certificate.
B. Income reported
under the provisions of Section
59-7-112 and
this rule shall be subject to the same treatment in the allocation of income;
i.e., specific allocation or apportionment, as would have been accorded the
original income from the sale under the provisions of the Uniform Division of
Income for Tax Purposes Act. In case such income is subject to apportionment,
the apportionment fraction for the year in which the income is reported applies
rather than the year in which the sale was made.
Notes
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