BEFORE THE UTAH STATE TAX COMMISSION
Petitioners, ) FINDINGS OF FACT,
: CONCLUSIONS OF LAW,
v. ) AND FINAL DECISION
AUDITING DIVISION OF THE ) Appeal No. 91‑1790
UTAH STATE TAX COMMISSION, :
Account No. XXXXX )
STATEMENT OF CASE
After submitting briefs on the subject matter of this case, both Petitioners and Respondent waived the right to a formal hearing. This decision is based on the entire contents of the file as presently constituted as of XXXXX.
Based upon the evidence and information contained in the file, the Tax Commission hereby makes its:
FINDINGS OF FACT
1. The tax in question is individual income tax.
2. The period in question is the year XXXXX.
3. Petitioners are shareholders in XXXXX, a Utah corporation.
4. This corporation elected to be taxed as an S‑corporation in XXXXX.
5. The corporation had meals and entertainment expenses for the period in question.
6. Pursuant to federal provisions, Petitioners took an 80% deduction on their federal return for their total portion of meals and entertainment expenses.
7. Petitioners then deducted the remaining 20% disallowance in the amount of $$$$$ on their state tax return.
8. The issue is whether or not the deduction taken on the state income tax return is permissible.
CONCLUSIONS OF LAW
Under Utah law, a small business corporation having in effect a valid election under subchapter S of the Internal Revenue Code beginning on or after January 1, 1973 is exempt from the corporate taxation statutes located at Utah Code Ann. '59‑7‑101 et seq.
As such, subchapter S corporate shareholders are obligated to follow the personal income tax statutes found at Utah Code Ann. '59‑10‑101 et seq.
The personal income tax statutes do not provide for the deduction Petitioners seek; therefore, the deduction is not allowed.
DECISION AND ORDER
Petitioners correctly point out that the Tax Commission has taken the position that the remaining 20% not included in the federal return is a permissible deduction for corporations. This policy has not been extended to subchapter S corporations.
Based upon the foregoing, the Tax Commission finds that the Auditing Division correctly disallowed the deduction in question. It is so ordered.
DATED this 2 day of October, 1992.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
R. H. Hansen Roger O. Tew
Joe B. Pacheco S. Blaine Willes
NOTICE: You have twenty (20) days after the date of the final order to file a request for reconsideration or thirty (30) days after the date of final order to file in Supreme Court a petition for judicial review. Utah Code Ann, ''63‑46b‑13(1), 63‑46b‑14(2)(a).