R865.  Tax Commission, Auditing.

R865-6F.  Franchise Tax.

[R865-6F-34.  Qualified Subchapter S Subsidiaries Pursuant to Utah Code Ann. Section 59-7-701.

A.  "Qualified subchapter S subsidiary" means a qualified subchapter S subsidiary as defined in Section 1361(b), Internal Revenue Code.

B.  For purposes of Title 59, Chapter 7, Part 7, a qualified subchapter S subsidiary shall be treated in the same manner as it is treated for federal tax purposes under Section 1361(b), Internal Revenue Code.

C.  An S corporation that owns one or more qualified subchapter S subsidiaries must take into account the activities of each qualified subchapter S subsidiary in determining whether the S corporation parent is doing business in Utah.  For purposes of this determination, all of a subsidiary's activities will be attributed to the S corporation parent.

D.  For purposes of Title 59, Chapter 7, Part 7:

1.  the Utah property, payroll, and sales of each qualified subchapter S subsidiary shall be added, respectively, to the Utah property, payroll, and sales of the S corporation parent to determine the numerators of the property, payroll, and sales factors; and

2.  the total property, payroll, and sales of each qualified subchapter S subsidiary shall be added, respectively, to the total property, payroll, and sales of the S corporation parent to determine the denominators of the property, payroll, and sales factors.

E.  Except as provided in D., the apportionment fraction for an S corporation shall be calculated based on Sections 59-7-311 through 59-7-321 and as provided in Tax Commission rule R865-6F-8.]

KEY:  taxation, franchises, historic preservation, trucking industries

Effective:  9/17/2009