| (1) |
Terms Used In Utah Code 59-5-103.1- Contract: A legal written agreement that becomes binding when signed.
- Fair market value: The price at which an asset would change hands in a transaction between a willing, informed buyer and a willing, informed seller.
- Gas: means :
| (ii) | natural gas liquids; or |
| (iii) | any mixture of natural gas and natural gas liquids. See Utah Code 59-5-101- Oil: means :
| (iii) | any mixture of crude oil and condensate. See Utah Code 59-5-101- Person: means :Utah Code 68-3-12.5
- processing costs: means the reasonable actual costs of processing oil or gas to remove:
| (i) | natural gas liquids; or |
| (ii) | contaminants. See Utah Code 59-5-101- transportation costs: means the reasonable actual costs of transporting oil or gas products from the well to the point of sale. See Utah Code 59-5-101
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| (a) |
For purposes of the tax imposed under Section 59-5-102 and subject to Subsection (2), the value of oil or gas shall be determined at the first point closest to the well at which the fair market value for the oil or gas may be determined by:
| (i) |
a sale pursuant to an arm’s-length contract; or |
| (ii) |
for a sale other than a sale described in Subsection (1)(a)(i), comparison to other sales of oil or gas. |
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| (b) |
For purposes of determining the fair market value of oil or gas under this Subsection (1), a person subject to a tax under Section 59-5-102 may deduct:
| (i) |
all processing costs from the value of oil or gas, including processing costs attributable to the value of oil and gas that is exempt from taxation under Section 59-5-102; and |
| (ii) |
except as provided in Subsection (1)(c), all transportation costs from the value of oil or gas, including transportation costs attributable to the value of oil and gas that is exempt from taxation under Section 59-5-102. |
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| (c) |
The deduction for transportation costs may not exceed 50% of the value of the oil or gas. |
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| (2) |
Subsection (1)(a)(ii) applies to a sale of oil or gas between:
| (a) |
a parent company and a subsidiary company; |
| (b) |
companies wholly owned or partially owned by a common parent company; or |
| (c) |
companies otherwise affiliated. |
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Amended by Chapter 324, 2016 General Session
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