97-019

Response April 14, 1997

REQUEST LETTER

March 17, 1997

Re: Income/Franchise Tax

Ruling Request

Dear Mr. Oveson:

I respectfully request a ruling regarding the applicability of the Utah corporate income and/or franchise tax to an entity that is a non-profit corporation that qualifies as a tax-exempt business league under Internal Revenue Code Section 501(c)(6). Specifically, I would like to know the following:

1. Is the above described entity subject to corporate income and/or franchise tax?

2. If the entity is subject to tax, what is the tax base (i.e., net income, unrelated business income, capital, etc.)?

Please provide the authority (i.e., statutes, regulations, administrative rulings, etc.) for your conclusions to the above questions.

If you have any questions or require additional information regarding the questions set forth above, please call me or XXXXX.

Very truly yours,

NAME

RESPONSE LETTER

April 14, 1997

NAME

ADDRESS

CITY STATE ZIP

Re: Application of Utah corporate tax on non-profit corporation.

Dear NAME,

We have received your request for information pertaining to the application of Utah corporate tax provisions to a non-profit corporation that qualifies under section 501 (c) (6) of the IRS code. We offer the following guidance:

Organizations that are exempt under section 501 of the IRS code are generally exempt from Utah corporate tax. §59-7-102 Utah Code Ann. However, such organization is subject to tax on its unrelated business income from Utah sources. §59-7-802 Utah Code Ann. "Unrelated business income" means unrelated business income as determined under section 512 of the IRS code. §59-7-801 Utah Code Ann.

To take advantage of the exemption, the Commission requires that the non-profit organization submit a copy of the federal exempt ruling letter along with written request for exemption.

Please let us know if you have other questions.

For the Commission,

Joe B. Pacheco,

Commissioner