BEFORE THE STATE TAX
COMMISSION OF UTAH
_____________________________________
XXXXX
:
Petitioner, )
: FINDINGS
OF FACT,
v. ) CONCLUSIONS OF LAW,
: AND FINAL
DECISION
AUDITING
DIVISION OF THE )
UTAH STATE TAX
COMMISSION, : Appeal No. 86-0131
) Account
No. XXXXX
:
Respondent. )
_____________________________________
STATEMENT OF CASE
This
matter came before the Utah State Tax Commission for a formal hearing on the
XXXXX. James E. Harward, Hearing
Officer, heard the matter for and in behalf of the Tax Commission. XXXXX appeared representing the
Respondent. XXXXX appeared representing
the Petitioners. Based upon the evidence and arguments presented at the
hearing, the adoption of the informal proceedings, and the file before the Tax
Commission; the Tax Commission makes its
FINDINGS OF FACT
1. The tax year in question is XXXXX.
2. Petitioners submitted a Utah long form
individual income tax return for the tax year XXXXX. In that long form they included as ordinary income the lump sum
distribution.
3. Thereafter, the Petitioners filed an amended
return for the tax year XXXXX and deducted from ordinary income the lump sum
distribution which was reported on their federal income tax ten-year averaging
form.
4. The Respondent picked the matter up on a
routine audit, adjusted the amended return to include the lump sum distribution
as ordinary income.
5. Petitioners have appealed, citing that where
there is a conflict of law between Utah Code Ann. § 59-14a-13(a)(2) and Utah Code Ann. § 59-14a-13(b)(4)(a) that the conflict must be liberally construed
in favor of the Petitioner.
CONCLUSIONS OF LAW
1. Utah Code Ann. § 59-14a-13(a)(2) provides "(a) there shall be added to
federal taxable income other resident or nonresident individual. . . to the
ordinary income portion of a lump sum distribution allowable as a deduction
under section 402E3 of the Internal Revenue Code to the extent deductible under
Section 6211 of the Internal Revenue Code in determining federal adjusted gross
income. . . ."
2. For Utah state tax purposes, the ordinary
income portion of a lump sum distribution is added to the adjusted gross income
of the federal tax purposes.
3. There is no provision in the Utah state code
which requires a lump sum distribution appear on an IRS form 1040 before it can
be added to the federal taxable income.
4. 59-14a-13(b)(4)(a) requires that pensions
and annuities meeting the requirements of section 404(a)(2) of the Internal
Revenue Code may be subtracted from federal taxable income. Subsection G limits the deductions to $4,800
for individuals under the age of 65 and $6,000 for individuals over the age of
65. A lump sum distribution is added to
federal taxable income for state tax purposes, but a limited deduction is
allowed if it is retirement income.
5. No conflict between subsection 13(a)(2) and
13(b)(4a) appears.
DECISION AND ORDER
Based
upon the foregoing, it is the decision and order of the Utah State Tax
Commission that the Respondent properly disallowed Petitioners' request to
exclude the ordinary income portion of the lump sum distribution from federal
taxable income for the tax year XXXXX.
Although the laws of the state of Utah follow to a great extent the
Internal Revenue Code, some of the provisions are not followed. One of the provisions is that lump sum
distributions that are listed on ordinary income form 4972 (federal ten-year
averaging form) will be added back to the adjusted gross income for Utah state
tax purposes. This requirement,
however, does not conflict with the provisions which allow a limited deduction
for lump sum distributions under the Utah Code Ann. Therefore, the Tax Commission declines to grant the request of
the Petitioner and finds that the action taken by the Respondent in disallowing
a request to exclude from ordinary income the portion of lump sum distribution
from the federal taxable income be sustained.
DATED
this 4 day of October, 1988.
BY ORDER OF THE STATE TAX COMMISSION OF UTAH.
R. H. Hansen Roger
O. Tew
Chairman Commissioner
Joe B.
Pacheco G.
Blaine Davis
Commissioner Commissioner