Creator:
Date Created:
Place Created:
Keywords:H. Tracy Hall
August 30, 1972,August 31, 1972,January 1, 1969
Context:
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H. Tracy Hall
August 30, 1972
August 30, 1972
August 30, 1972
August 31, 1972
UTAH CORPORATION FRANCHISE TAX REGULATION NO. 2 FIRST RETURNS
Note Importance of the First Return
The corporation franchise tax liability for two periods is determined on the basis of the first return.
1.	For the period covered by the return, and
2.	For the succeeding twelvemonth period.
To establish a reporting period other than the calendar year, the fiscal period must be selected on or before the due date for filing the first return on the basis of the fiscal year desired. A taxable year once established, whether calendar year or fiscal year, can thereafter be changed only with permission of the Tax Commission.
January 1, 1969
UTAH CORPORATION FRANCHISE TAX REGULATION NO. 2, AS AMENDED
FIRST RETURN
1.	General statement of liability.
Section 59-13-21 of the Utah Code requires a corporation which is qualified or incorporated in this state, or which commences to do business in this state, to prepay the minimum tax of $ 25.00 upon incorporation or qualification, and to file a return within three months and fifteen days after the close of its first taxable year. This "first return" is used as the basis for determining the franchise tax both for the period covered by the return and for the succeeding twelve-month period.
2.	Unqualified foreign corporation doing business in the state.
An unqualified foreign corporation doing business in this state must file a return for the period beginning with the date of commencing to do business in this state and terminating with the last day of its fiscal period. The liability for the franchise tax in connection with this "first return" will be computed in the same manner as in the case of a qualified corporation. The corporation must file a return and pay the tax thereon due for each successive fiscal period during which the corporation does business in this state. (See Sections 4 and 5 of this regulation and Sections 16-10-120 and 59-13-21 of the Utah Code.)
3.	Adoption of reporting period (Taxable Year).
Section 59-13-15 of the Utah Code provides that "the net income shall be computed upon the basis of the taxpayer's annual accounting period (fiscal year or calendar year as the case may be) in accordance with the method of accounting regularly employed in keeping the books of such taxpayer.....", and provides for a calendar year basis unless a fiscal year has been established by the taxpayer.
In order to establish a fiscal year as the basis of reporting for Utah corporation franchise tax purposes, such fiscal year must be adopted on or before the due date for filing the return (not including extensions). The Tax Commission must be notified in writing on or before such date of the fiscal period selected. The filing of a return on or before such due date will constitute such notification, provided the return clearly indicates the fiscal period selected.
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A corporation newly incorporated or qualified in this state, or commencing to do business in this state whether or not qualified here, which fails to give notification of the fiscal period desired within the time set forth above must file its returns on the calendar year basis.
Once the calendar year or a given fiscal year has been adopted or established as the reporting period (taxable year) as provided herein, it may thereafter be changed only with permission of the Tax Commission.
Period to be covered by first return.
The period covered by a "first return" shall commence, in the case of a Utah corporation, with the date of incorporation; i.e., the date on which the certificate of incorporation is issued by the Secretary of State as provided by Section 16-10-51 of the Utah Code; and shall terminate with the last day of its reporting period.
In the case of foreign corporation, the "first return" shall commence with the date of qualification or the date of commencing to do business in this state, whichever is the earlier, and shall terminate with the last day of its reporting period.
5. Computation of tax due on first return.
The corporation franchise tax for the period covered by the return is either 6% of the net income for the period covered by the return assignable to business done in Utah; or, $ 25.00 which ever is greater.
The corporation franchise tax for any part or all of the following twelvemonth period is computed by reference to the tax due for the first taxable period. The tax for the second period is an amount which bears the same ratio to the sum determined to be the tax for the period covered by the return, disregarding the $ 25.00 minimum, as 12 bears to the number of months included in the return period, but in no event may the tax for the second period be less than $ 25.00.
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UTAH CORPORATION FRANCHISE TAX REGULATION NO. 2 SUPPLEMENTAL INFORMATION AND EXAMPLES
1.	Period to be covered by the First Return.
The first return may cover a period of less than twelve calendar months, but the period covered by such a return may not exceed twelve calendar months. In either case, the period must end on the last day of a calendar month.
The first return period begins with the date of incorporation in the case of a domestic corporation. Activity prior to date of incorporation must be reported on individual income or partnership returns, or of such other entity as may be appropriate in the circumstances of the particular case.
The first return period begins, in the case of a foreign corporation, with the date of qualification or the date of commencing to do business within the state, whichever is the earlier.
The first return period ends with the last day of the calendar month of the particular fiscal or calendar year adopted or established as the reporting period by the taxpayer.
2.	Adoption of Reporting Period (Taxable Year).
The first return must be filed on the calendar year basis unless a timely election of a fiscal year basis has been made.
A fiscal year may be established as the reporting period by written notice to the Tax Commission of the fiscal period desired. Such notification must be made on or before the due date for the filing of a return on such a fiscal basis, not including extensions.
The timely filing of the first return on either the calendar year or the fiscal year basis constitutes an election of the reporting period on the basis of which such return is made.
Once the calendar year or a given fiscal year has been established as the reporting period for Utah corporation franchise tax purposes, it may
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thereafter be changed only with the permission of the Tax Commission.
3. Examples of Tax Computations for the First and Second Taxable Periods.
Example A
(Corporation Franchise Tax Computed on Income Base for the Period Covered by the Return)
A corporation which incorporated or qualified to do business in Utah under date of April 1, 1969, and which is on the calendar year basis of reporting, made a profit of $ 4,500.00 from April 1, 1969 to December 31, 1969, the tax would be computed as follows: Tax for the Period April 1, 1969 to December 31, 1969
$ 4,500.00 x 6%	= $ 270.00
Tax for the Period January 1, 1970 to December 31, 1970
$ 270.00 x 12/9	= $ 360.00
Example B
($ 25.00 Minimum Corporation Franchise Tax Due for the Period Covered by the Return)
A corporation which incorporated or qualified to do business in Utah on
December 1, 1969, and which is on the calendar year basis of reporting, had a
net income allocated to Utah for the month of December, 1969 of $ 200.00. The
tax computed thereon would be $ 12.00 which is less than the $ 25.00 minimum.
The tax would be computed as follows:
Tax for the Period December 1, 1969 to December 31, 1969
Minimum tax	= $ 25.00
Tax for the Period January 1, 1970 to December 31, 1970
$ 12.00 x 12/1	= $ 144.00
Example C
(Minimum Tax due for Both the First and Second Taxable Periods)
In the illustration of Example B above, the minimum tax of $ 25.00
applied for the first period, and a larger amount than $ 25.00 was due for
the second period.
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In case the second period's tax computation produced a figure of less than $ 25.00, the minimum tax of $ 25.00 would also apply for the second period, and the total tax due for the two periods would be $ 50.00.
The tax for any period cannot be less than the $ 25.00 minimum provided by the statute.
Example D
(Use of Number of Days in Computation of Tax for the Second Taxable Period)
A corporation which incorporated or qualified to do business in Utah on April 3, 1969, and which is on the calendar year basis of reporting, had taxable net income allocated to Utah for the period April 3, 1969 to December 31, 1969 of $ 9,100.00.
Since the period covered by the first return involves a fractional part of a month, recourse would be had to the actual number of days in computing the tax for the second taxable period, as follows:
Tax for the Period April 3, 1969 to December 31, 1969
$ 9,100.00 x 6%
= $ 546.00
Tax for the Period January 1, 1970 to December 31, 1970
$ 546.00 x 365/273
= $ 730.00
Example E
(Schedule to be attached to the Firs Return)
Credit will be allowed on the return for the first year for the prepayment of $ 25.00 made at time of incorporation or qualification. The tax for the first taxable year is due in full on or before the due date of the return (three months and fifteen days after the close of the first taxable period). The tax for the second taxable year may be paid quarterly, if desired. The first quarterly installment is due on or before the due date of the return. If the installment basis is not desired for payment of the second period's tax, the entire amount of the tax for both the first and
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second periods, less credit for the $ 25.00 prepayment, should be remitted with the return.
The first return will be filed on the usual Form TC-20, and schedule attached showing the computation of the tax for the first and second periods, in somewhat the following form:
Tax for the First Taxable Year (July 1, 1969 to December 31, 1969)
$ 1,000.00 x 6%
= $ 60.00
Tax for the Second Taxable Year (January 1, 1970 to December 31, 1970)
$ 60.00 x 12/6
120.00
Total Tax for the First and Second Taxable Years
Amount remitted with return:
Tax for first taxable year (as above)	$ 60.00
Less prepayment upon incorporation	25.00
Balance of first year's tax	$ 35.00
Add one-quarter second year's tax
(1/4 of $ 120.00)	30.00
Remittance attached	$ 65.00
January 1, 1969