Utah Code 59-7-311. Method of apportionment of business income

59-7-311. Method of apportionment of business income.

(1)	For a taxable year, a taxpayer shall apportion all business income to this state by multiplying the business income by a fraction calculated as provided in this section.

Terms Used In Utah Code 59-7-311

Business income: means income that:

(i)

is apportionable under the United States Constitution and is not allocated under the laws of this state, including income arising from:

(A)	a transaction or activity in the regular course of the taxpayer's trade or business; and

(B)	tangible and intangible property, if the acquisition, management, employment, development, or disposition of the property is or was related to the operation of the taxpayer's trade or business; or

(ii)

would be allocable to this state under the United States Constitution, but is apportioned rather than allocated in accordance with the laws of this state. See Utah Code 59-7-302

Income: includes losses. See Utah Code 59-7-101

Optional apportionment taxpayer: means a taxpayer described in Subsection (3). See Utah Code 59-7-302

Phased-in sales factor weighted taxpayer: means a taxpayer that:

(i)	is not a sales factor weighted taxpayer;

(ii)	does not meet the definition of an optional apportionment taxpayer; or

(iii)

for a taxable year beginning on or after January 1, 2020:

(A)	meets the definition of an optional apportionment taxpayer; and

(B)

apportioned business income using the method described in Subsection 59-7-311(4) during the previous taxable year. See Utah Code 59-7-302

Property: includes both real and personal property. See Utah Code 68-3-12.5

return: includes a combined report. See Utah Code 59-7-101

Sales: means all gross receipts of the taxpayer not allocated under Sections 59-7-306 through 59-7-310. See Utah Code 59-7-302

Sales factor weighted taxpayer: means a taxpayer described in Subsection (2). See Utah Code 59-7-302

State: means any state of the United States, the District of Columbia, the Commonwealth of Puerto Rico, any territory or possession of the United States, and any foreign country or political subdivision thereof. See Utah Code 59-7-302

taxable year: includes the period for which such return is made. See Utah Code 59-7-101

Taxpayer: means any corporation subject to the tax imposed by this chapter. See Utah Code 59-7-101

(2)

Subject to the other provisions of this part, a sales factor weighted taxpayer shall calculate the fraction for apportioning business income to this state using a fraction where:

(a)	the numerator of the fraction is the sales factor as calculated under Section 59-7-317; and

(b)	the denominator of the fraction is one.

(3)

Subject to the other provisions of this part, an optional apportionment taxpayer that is not a phased-in sales factor weighted taxpayer shall calculate the fraction for apportioning business income to this state using one of the following fractions:

(a)	the fraction described in Subsection (4); or

(b)

the fraction where:

(i)

the numerator of the fraction is the sum of:

(A)	the property factor as calculated under Section 59-7-312;

(B)	the payroll factor as calculated under Section 59-7-315; and

(C)	the sales factor as calculated under Section 59-7-317; and

(ii)	the denominator of the fraction is three.

(4)

(a)	Subject to other provisions of this part, a phased-in sales factor weighted taxpayer shall calculate the fraction for apportioning business income to this state as provided in Subsections (4)(b) through (d).

(b)

For the taxable year that begins on or after January 1, 2019, but begins on or before December 31, 2019:

(i)

the numerator of the fraction is the sum of:

(A)	the property factor as calculated under Section 59-7-312;

(B)	the payroll factor as calculated under Section 59-7-315; and

(C)	the sales factor as calculated under Subsection (4)(e)(i); and

(ii)	the denominator of the fraction is six.

(c)

For the taxable year that begins on or after January 1, 2020, but begins on or before December 31, 2020:

(i)

the numerator of the fraction is the sum of:

(A)	the property factor as calculated under Section 59-7-312;

(B)	the payroll factor as calculated under Section 59-7-315; and

(C)	the sales factor as calculated under Subsection (4)(e)(ii); and

(ii)	the denominator of the fraction is 10.

(d)	For a taxable year that begins on or after January 1, 2021, a phased-in sales factor weighted taxpayer shall calculate the fraction as described in Subsection (2).

(e)

(i)

For the taxable year that begins on or after January 1, 2019, but begins on or before December 31, 2019, the sales factor shall be:

(A)	calculated as described in Section 59-7-317; and

(B)	multiplied by four.

(ii)

For the taxable year that begins on or after January 1, 2020, but begins on or before December 31, 2020, the sales factor shall be:

(A)	calculated as described in Section 59-7-317; and

(B)	multiplied by eight.

(5)

(a)	The taxpayer shall determine the method for calculating the fraction for apportioning business income to this state under this section on or before the due date for filing the taxpayer’s return under this chapter for the taxable year, including extensions.

(b)	The method described in Subsection (5)(a) is in effect for the taxable year.

(6)	In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the commission may make rules providing procedures for a taxpayer to make the election required by Subsection (3).

Amended by Chapter 456, 2018 General Session
Amended by Chapter 471, 2018 General Session

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