96-1957, ET AL
SALES
Signed 3/3/98
BEFORE
THE UTAH STATE TAX COMMISSION
____________________________________
PETITIONERS )
: ORDER
)
:
Petitioners, ) Appeal Nos. 93-1957, 94-1274,
: 95-0644, 95-1125, 94-0616, 94-0617,
v. ) 94-0619,
94-0626, 94-0647,
: 94-0651, 94-1241, 94-1244, 94-1245,
AUDITING DIVISION OF THE ) 94-1248, 94-1269, 94-1271, 94-1487
UTAH STATE TAX COMMISSION, : 95-0049, 95-0215, 95-0642, 95-0643,
STATE OF UTAH, ) 94-1242, 95-0385, 95-0867
: Audit
Periods: January 1, 1985
Respondent. )
through December 31, 1988
_____________________________________
Due to a clerical error, the Joint Proposed
Order signed by the Tax Commission on February 10, 1998, is hereby
rescinded. In its place the following
Order is issued:
STATEMENT
OF CASE
An Initial Hearing was held in the above
captioned matter on February 28, 1996.
Chairman W. Val Oveson, and Jane Phan, Administrative Law Judge,
presided. Present and representing
Petitioners were PETITIONERS REP. and PETITIONERS REP.2, CPA. Also present was PETITIONERS REP.3 on behalf
of the Petitioners. Present and
representing Respondent was RESPONDENT REP., Assistant Attorney General. Also present were Mr. Frank Hales, Mr. Dan
Engh, and Mr. Brent Taylor, on behalf of the Auditing Division.
DECISION
AND ORDER
Based on the evidence, proffers of evidence,
and testimony presented, the Commission orders, adjudges and decrees as
follows:
1.
Based on the court rulings in Ute Distribution Corporation et al. v.
Utah State, 721 F.Supp 1202 (D. Utah 1989) and Ute Distribution
Corporation et al. V. United States, 938 F. 2d 1157 (10th Cir. 1991)
distributions from Ute Distribution corporation to its stockholders represent
taxable income to the stockholders.
Also based on said court decisions, the distributions are not taxable
dividends but, instead, represent a pass-through of each stockholder=s pro rata share of all items of income,
deduction and credit collected by Ute Distribution Corporation.
2. An
oil depletion allowance shall be allowed in accordance with applicable federal
tax law with respect to all oil royalties received by each stockholder through
Ute Distribution Corporation. Each Petitioner
agrees to file a form TC40, or other appropriate tax form, for each year in
question, and prospectively from the date of this Order, properly reporting
distribution through Ute Distribution Corporation to that stockholder.
3.
The Petitioners= arguments
relating to the statute of limitations as described in Utah Code Ann. '59-10-536 (1987) are rejected.
4.
The Commission orders that all interest and all penalties assessed
against Petitioners for all open years, calculated based on additional taxes
resulting from the receipt of distributions from Ute Distribution Corporation,
are waived in full, if the tax is paid within 180 days of the execution of this
Order. After that date, statutory
interest shall begin to accrue.
5.
Based on a showing of reasonable cause, the Utah State Tax Commission
recommends that all interest and all penalties assessed against stockholders of
Ute Distribution Corporation for all open years, calculated based on additional
taxes resulting from the receipt of distributions from Ute Distribution
Corporation, be waived in full, if the tax is paid within 180 days of the
execution of this Order. After that
date, statutory interest shall begin to accrue.
6.
The Auditing Division is ordered to provide to Petitioners and those
individuals listed in paragraph 7, all reasonable assistance in the preparation
of appropriate tax filing for the years in question. Petitioners herein are ordered to provide to the Auditing
Division all reasonable assistance to assist it in preparing the revised
calculations and recomputations. 7.
This decision regarding these Petitioners will be binding with respect
to all open years for the following persons:
XXXXX, appeal #93-1957; XXXXX, appeal #94-1274; XXXXX, appeal #95-0644;
XXXXX, appeal #95-1125; XXXXX, appeal #94-0616; XXXXX, appeal #94-0617;XXXXX,
appeal #94-0619; XXXXX, appeal #94-0626; XXXXX, appeal #94-0647; XXXXX, appeal
#94-0651; XXXXX, appeal #94-1241; XXXXX, appeal #94-1244; XXXXX, appeal
#94-1245; XXXXX, appeal #94-1248;XXXXX, appeal #94-1269; XXXXX, appeal
#94-1271; XXXXX, appeal #94-1487; XXXXX, appeal #95-0049; XXXXX, appeal
#95-0215; XXXXX, appeal #95-0642; XXXXX, appeal #95-0643, XXXXX, appeal
#94-1242; XXXXX, appeal #95-0385; and XXXXX, appeal #95-0867.
8.
Petitioners are ordered to pay Utah State income tax in accordance with
the terms and conditions of this Order for all tax periods subsequent to this
Order.
This decision does not limit a party=s right to a Formal Hearing. However, this Decision and Order will become
the Final Decision and Order of the Commission unless any party to this case
files a written request within thirty (30) days of the date of this decision to
proceed to a Formal Hearing. Such a
request shall be mailed to the address listed below and must include the
Petitioner=s name, address, and appeal number:
Utah
State Tax Commission
Appeals
Division
210
North 1950 West
Salt
Lake City, Utah 84134
Failure to request a Formal Hearing will
preclude any further appeal rights in this matter.
DATED this 3 day of March, 1998.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
JANE PHAN
Administrative Law Judge
The agency has reviewed this case and the
undersigned concur in this decision.
DATED this 3 day of March, 1998.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
W. Val Oveson Richard
B. McKeown
Chairman Commissioner
Joe B. Pacheco Pam Hendrickson
Commissioner Commissioner
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