Instructions for Form TC-20 "Utah Corporation Franchise and Income Tax Return" - Utah

This document contains official instructions for Form TC-20, Utah Corporation Franchise and Income Tax Return - a form released and collected by the Utah State Tax Commission.

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Download Instructions for Form TC-20 "Utah Corporation Franchise and Income Tax Return" - Utah

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Utah 2019
Corporation Franchise
and Income Tax
Utah State Tax Commission
Utah State Tax Commission
210 North 1950 West • Salt Lake City, Utah 84134
210 North 1950 West • Salt Lake City, Utah 84134
tax.utah.gov
tax.utah.gov
Utah 2019
Corporation Franchise
and Income Tax
Utah State Tax Commission
Utah State Tax Commission
210 North 1950 West • Salt Lake City, Utah 84134
210 North 1950 West • Salt Lake City, Utah 84134
tax.utah.gov
tax.utah.gov
Contents
General Instructions and Information .........................................................................................................................................................1
TC-20 – Utah Corporation Franchise and Income Tax Return ...................................................................................................................6
Schedule A – Utah Net Taxable Income and Tax Calculation .....................................................................................................................8
Schedule B – Additions to Unadjusted Income ........................................................................................................................................13
Schedule C – Subtractions from Unadjusted Income ...................................................................................................................................... 15
Schedule D – Utah Contributions Deduction ............................................................................................................................................17
Schedule E – Prepayments of Any Type...................................................................................................................................................17
Schedule H – Nonbusiness Income Net of Expenses ..............................................................................................................................18
Schedule J – Apportionment Schedule ....................................................................................................................................................20
Schedule M – Corporations Included in Combined Filings .......................................................................................................................24
TC-559, Corporation/Partnership Payment Coupon .................................................................................................................................25
Common Return Errors ............................................................................................................................................................................26
Cover photo by Randolph Prawitt
File the Right Corporate Forms
Utah Taxpayer Advocate Service
The Taxpayer Advocate Service helps taxpayers who have made
TC-20
if Corporation fi led federal form 1120, 1120-IC-DISC
multiple, unsuccessful attempts to resolve concerns with the Tax
TC-20S
if S Corporation fi led federal form 1120S
Commission. This service helps resolve problems when normal
TC-20MC
if Corporation fi led federal forms 1120-H, 1120-RIC,
agency processes break down, identifi es why problems occurred, and
1120-REIT, 990-T or 8023
suggests solutions. See tax.utah.gov/contact, or contact us to fi nd
out if you qualify for this service at 801-297-7562 or 1-800-662-4335,
ext. 7562, or by email at taxpayeradvocate@utah.gov.
E-Filing is Easier!
Do not use the Taxpayer Advocate Service to bypass normal methods
E-fi ling is the easiest and most accurate way to fi le. Ask your tax
for resolving issues or disputes.
preparer about e-fi ling your individual, fi duciary, partnership, C cor-
poration and S corporation returns, or use commercial tax software.
Utah is Online
Need more information?
Utah offers many online services for individual and business fi lers,
Questions
801-297-2200 or
including:
1-800-662-4335 (outside the Salt Lake area)
tap.utah.gov
Research
Utah rules, bulletins and Commission decisions:
• Pay by e-check or credit card.
tax.utah.gov
• Manage your Utah tax account.
Utah Code (UC): le.utah.gov
• Request payment plans.
Internal Revenue Code (IRC):
law.cornell.edu/uscode/26
tax.utah.gov
• Download forms and instructions for all Utah tax types.
Order paper forms
• Link to free business resources and other services.
801-297-6700 or
1-800-662-4335, ext. 6700 (outside the SL area)
E-Verify for Employers
Employers can help prevent identity theft by verifying the Social
If you need an accommodation under the Americans with Disabili-
Security numbers of job applicants. E-Verify is a free service of
ties Act, email taxada@utah.gov, or call 801-297-3811 or TDD
the U.S. Department of Homeland Security that verifi es employ-
801-297-2020. Please allow three working days for a response.
ment eligibility through the Internet. Employers can use E-Verify at
uscis.gov/e-verify.
1
2019 Utah TC-20 Instructions
General Instructions and Information
Check with your software provider to see if they offer electronic
What’s New
corporation fi ling.
Net Operating Loss (NOL): Utah net losses from tax year
Learn more about fi ling your corporation return electronically
2018 and later can no longer be carried back to offset in-
at tax.utah.gov/developers/mef.
come in prior years, and the loss you claim for the current
year may not exceed 80 percent of Utah taxable income.
Identifi cation Numbers
Solar Energy Systems Phase-out: The maximum Re-
newable Residential Energy Systems Credit (Credit 21) for
The corporation's federal Employer Identifi cation Number
solar power systems installed in 2019 is $1,600.
(EIN) is the Utah identifi cation number. The Utah Department
Royalties Paid to Captive Insurers Related by Common
of Commerce also issues a registration number upon incor-
Ownership: The 2019 legislature passed HB 268, requir-
poration or qualifi cation in Utah. Enter both the EIN and Utah
ing an addback to corporate unadjusted income for any
Incorporation/Qualifi cation number in the proper fi elds. These
deduction for a royalty or other expense paid to a captive
numbers are used for identifi cation of the corporate tax return.
insurance company related to the fi ler by common owner-
ship for the use of certain intangible assets. See page 14.
Corporation Changes
FDIC Premium Deduction: The 2019 Utah Legislature
Report corporation changes (e.g., name change, physical and/
passed SB 12, creating a subtraction from income for FDIC
or mailing address changes, merger, or ceasing to do business
premiums that were not allowed on the federal return. See
in Utah) in writing to:
page 16.
UT Division of Corporations and Commercial Code
Guarantee Association Assessment Credit: The 2018
Department of Commerce
legislature passed HB 409, providing a tax credit to insurers
160 E 300 S, 2nd Floor
that are not subject to the health care insurance premium
PO Box 146705
tax and who receive a guarantee association assessment.
Salt Lake City, UT 84114-6705
See page 10.
and submit form TC-69C to:
Apportionment Method: The 2018 Utah Legislature
Exceptions Processing
passed HB 293, creating a new apportionment method
Utah State Tax Commission
and changing the industries that qualify as sales factor
210 N 1950 W
weighted taxpayers and optional apportionment taxpay-
Salt Lake City, UT 84134-3215
ers. See page 20.
Dissolution or Withdrawal
Reminders
Corporations that cease to do business in Utah must either
Market Sourcing of Revenues from Performance of
dissolve or withdraw the corporation.
Services by Multi-state Taxpayers: Corporations perform-
ing a service both in and outside of Utah must calculate
Corporations incorporated in Utah must fi le Articles of Dissolution
the sales factor numerator on Schedule J by considering
with the Department of Commerce.
the service income to be in Utah if the buyer receives a
Corporations incorporated outside of Utah (foreign corpora-
greater benefi t of the service in Utah than in any other state.
tions) must obtain a Certifi cate of Tax Clearance from the
See Schedule J – Apportionment Schedule in this book.
Tax Commission before withdrawing from Utah. Foreign
Foreign Operating Company Changes: A foreign operat-
corporations must fi le an Application for Withdrawal with the
ing company must have a minimum of at least $1,000,000
Department of Commerce.
in payroll located outside the United States and at least
To request a Certifi cate of Tax Clearance, email the Tax Com-
$2,000,000 in property located outside the United States.
mission at taxmaster@utah.gov, or call 801-297-7705 or
In addition, income generated from transactions between
1-800-662-4335 ext. 7705. We will send you form TC-2001
members of the unitary group, or from intangible property
to complete and return.
or an asset held for investment does not qualify for the 50
percent foreign operating company income exclusion on
Dissolving and withdrawing corporations must also close their
Schedule C. See pages 4 and 15.
other Utah tax accounts (sales, withholding, etc.). To close
related tax accounts, send a completed TC-69C, Notice of
Change for a Business and/or Tax Account, to the attention of
Electronic Filing
Exceptions Processing at the Tax Commission address above.
Utah corporation returns may be fi led electronically under a
joint program between the Internal Revenue Service and the
Rounding Off to Whole Dollars
Utah State Tax Commission.
Round off cents to the nearest whole dollar. Round down if cents
The federal and state information is submitted at the same time
are under 50 cents; round up if cents are 50 cents and above. Do
and the IRS extracts its federal data and forwards the state
not enter cents on the return.
data to the Tax Commission. No papers need to be mailed to
the agencies when fi ling electronically.
2
2019 Utah TC-20 Instructions
Liability for Filing and Paying
Taxable Year
The taxable year for Utah tax purposes must match the tax-
Tax Forms
able year used for federal tax purposes. When the taxable
year changes for federal purposes, the taxable year must
The Tax Commission does not mail forms for fi ling corporate
be changed for Utah purposes. Refer to Filing Return When
taxes. Get forms at tax.utah.gov/forms or by calling the Forms
Hotline at 801-297-6700 or 1-800-662-4335, ext. 6700.
Period Changed below.
Note: See What to Attach and What to Keep later in these
Filing Return When Period Changed
General Instructions for what federal information is required
with the Utah return.
When changes are made to the taxable year, as indicated
under Taxable Year above, a short-period return is required.
Franchise Tax
The short-period return must cover the period of less than
12 months between the prior taxable year-end and the new
Every C corporation incorporated in Utah (domestic), qualifi ed
taxable year. The tax rates as provided in UC §§59-7-104
in Utah (foreign), or doing business in Utah, whether qualifi ed
and 59-7-201 apply to short-period returns, which includes
or not, must fi le a corporate franchise tax return. C corporation
a minimum tax of $100.
returns are fi led on form TC-20. Every corporation that fi les
form TC-20 must pay a minimum tax (privilege tax) of $100,
Where to File
regardless of whether or not the corporation exercises its right
to do business.
Mail your return to:
Utah State Tax Commission
S Corporation
210 N 1950 W
Every S corporation (as defi ned in IRC §1361(a)) that has fi led
Salt Lake City, UT 84134-0300
a proper and timely election under IRC §1362(a) must fi le form
Due Date
TC-20S, so long as the federal election remains in effect. The
minimum tax does not apply to S corporations.
A return must be fi led on or before the 15th day of the fourth
month following the close of the taxable year. If the due date
Income Tax
falls on a Saturday, Sunday or legal holiday, the due date
Corporate income tax fi lers use form TC-20.
becomes the next business day.
Corporations required to fi le under the income tax provisions
Filing Extension
are those that derive income from Utah sources, but are not
qualifi ed to do business in Utah and have no regular and es-
Corporations are automatically allowed an extension of up to
tablished place of business in Utah, either owned or rented,
six months to fi le a return without fi ling an extension form. This
and do not maintain an inventory or have employees located
is NOT an extension of time to pay your taxes – it is only
at a place of business in Utah.
an extension of time to fi le your return. To avoid penalty,
the prepayment requirements must be met on or before the
original return due date, and the return must be fi led within the
Example 1:
six-month extension period.
A trucking company, operated in or through Utah by
a foreign corporation not qualifi ed to do business in
Prepayment Requirements
Utah, is subject to income tax rather than franchise tax.
Extension Prepayments
Extension prepayments must equal 90 percent of the cur-
Example 2:
rent year’s tax liability (or the $100 minimum tax, whichever
is greater) or 100 percent of the previous year’s tax liability.
A lender issuing credit cards to Utah customers from
The tax used to compute the 90 percent amount includes the
outside Utah that is not qualifi ed to do business in
interest on installment sales and the recapture of low-income
Utah and has no place of business in Utah is subject
housing credit on the return.
to income tax rather than franchise tax.
Use form TC-559, Corporation/Partnership Payment Coupon
to make the estimated prepayments.
A $100 minimum tax applies to the corporate income tax.
Quarterly Payments
Federal Form 1120-IC-DISC
Every corporation having a Utah tax liability of $3,000 or more
If the corporation is fi ling a federal form 1120-IC-DISC and
in the current taxable year, or a tax liability of $3,000 or more
is not owned 50 percent or more by another corporation,
in the previous taxable year, must make quarterly estimated
none of its income is taxable to the corporation but must be
tax payments. In addition, a parent company fi ling a combined
passed-through to the DISC corporation shareholders who
report with affi liated companies must make the quarterly pay-
would report and pay tax on the distribution on their personal
ment when the aggregate tax amount is $3,000 or more for all
or business tax returns.
companies listed on Schedule M, including those paying only
the minimum tax.
3
2019 Utah TC-20 Instructions
A corporation does not need to make quarterly estimated tax
Prepayment of Minimum Tax
payments the fi rst year it fi les in Utah if it pays the minimum
Corporations that meet the prepayment requirement in the
tax on or before the due date, without the extension.
current year and had a tax liability of $100 (the minimum
Quarterly estimated payments are due on the 15th day of the
tax) for the previous year may choose to prepay the $100
4th, 6th, 9th and 12th months of the corporation’s taxable year.
minimum tax on the 15th day of the 12th month instead of
Corporations may elect to make the quarterly estimated tax
four payments of $25.
payments equal to 100 percent of the prior year’s tax in four
Corporations that met the prepayment requirement in the
equal payments, or 90 percent of the current year’s tax based
previous year and have a tax liability of $100 (the minimum
on the percentages below. As defi ned in UC §59-7-504(2), the
tax) in the current year may choose to prepay the minimum
applicable percentage of the required payment for annualized
tax amount of $100 on the 15th day of 12th month instead of
income installments, for adjusted seasonal installments, and for
four payments of $25. In this case, the corporation must pay
estimated tax payments based on the current year tax liability:
$100, not 90 percent.
Installment
Percentage
Interest
(in addition to penalties due)
1st
22.5
Interest is assessed on underpayments from the due date
2nd
45.0
until the liability is paid in full. The interest rate for the 2020
3rd
67.5
calendar year is 4 percent.
4th
90.0
For more information, get Pub 58, Utah Interest and Penalties,
If you use a different annualization period than the period
at tax.utah.gov/forms.
used for federal purposes, you must make an election with the
Tax Commission at the same time as provided in IRC §6655.
Suspension for Failure to Pay
Make estimated tax payments with form TC-559, Corporation/
Tax Due
Partnership Payment Coupon.
Corporations that do not make the required tax prepayments
Utah law provides for suspension of a corporation’s right to do
are subject to a penalty. See Penalties, below.
business in Utah if it fails to pay taxes due before 5:00 p.m.
on the last day of the 11th month after the due date.
Penalties
If you cannot pay the full amount you owe, you can request a
payment plan. Go to tap.utah.gov and click "Request Waiver,
Utah law (UC §59-1-401) provides penalties for not fi ling tax
Payment Plan or e-Reminder."
returns by the due date, not paying tax due on time, not mak-
You may also:
ing suffi cient prepayment on extension returns, and not fi ling
information returns or supporting schedules. See tax.utah.
1. complete form TC-804B, Business Tax Payment Agreement
gov/billing/penalties-interest and Pub 58, Utah Interest and
Request (tax.utah.gov/forms), or
Penalties, at tax.utah.gov/forms.
2. call the Tax Commission at 801-297-7703 or 1-800-662-
The Tax Commission will calculate the penalty for underpay-
4335 ext. 7703.
ment of required prepayments.
What to Attach and What to Keep
Exceptions to Penalty on
Estimated Tax
Include the following with your Utah TC-20. Also, keep copies
of these with your tax records.
Annualized Exception
Utah Corporation Return Schedules: Attach applicable
A corporation may annualize its income before determining
Utah schedules A, B, C, D, E, H, J, and/or M.
the amount of each estimated tax installment. Follow federal
Federal Return: Attach only pages 1 through 5 of your
guidelines to determine annualized income. If the corporation
federal corporation return, plus Schedule M-3 and IRS
meets the annualized exception at the federal level for any
form 1125-A, if applicable.
installment, check the appropriate box(es) on form TC-20,
Do not send a copy of your entire federal return, credit
line 15.
schedules, worksheets, or other documentation with your
Recurring Seasonal Exception
Utah return unless otherwise stated in these instructions.
Keep these in your fi les. We may ask you to provide them later
A corporation with recurring seasonal income may annualize
to verify entries on your Utah return.
its income before determining the amount of each estimated
tax installment. Follow federal guidelines to determine seasonal
Combined Reports
income. If the corporation meets the seasonal exception at the
federal level for any installment, check the appropriate box(es)
Any corporation owned by another corporation, or owning more
on form TC-20, line 15.
than 50 percent of another corporation, or a group of corpora-
tions related through common ownership (i.e., certain brother/
sister corporations) and engaged in unitary business activity,
must fi le a combined report showing the combined income of
all such corporations.