2011 Utah Code
Title 59 Revenue and Taxation
Chapter 10 Individual Income Tax Act
Section 1026 Nonrefundable tax credit for capital gain transactions related to a life science establishment.

59-10-1026. Nonrefundable tax credit for capital gain transactions related to a life science establishment.
(1) As used in this section:
(a) (i) "Capital gain transaction" means a transaction that results in a short-term capital gain or long-term capital gain.
(ii) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the commission may by rule define the term "transaction."
(b) "Commercial domicile" means the principal place from which the trade or business of a Utah small business corporation is directed or managed.
(c) "Eligible claimant, estate, or trust" is as defined in Section 63M-1-2902.
(d) "Life science establishment" means an establishment described in one of the following NAICS codes of the 2007 North American Industry Classification System of the federal Executive Office of the President, Office of Management and Budget:
(i) NAICS Code 33911, Medical Equipment and Supplies Manufacturing;
(ii) NAICS Code 334510, Electromedical and Electrotherapeutic Apparatus Manufacturing; or
(iii) NAICS Code 334517, Irradiation Apparatus Manufacturing.
(e) "Long-term capital gain" is as defined in Section 1222, Internal Revenue Code.
(f) "Office" means the Governor's Office of Economic Development.
(g) "Pass-through entity" is as defined in Section 59-10-1402.
(h) "Pass-through entity taxpayer" is as defined in Section 59-10-1402.
(i) "Qualifying ownership interest" means an ownership interest that is:
(i) (A) common stock;
(B) preferred stock; or
(C) an ownership interest in a pass-through entity;
(ii) originally issued to:
(A) an eligible claimant, estate, or trust; or
(B) a pass-through entity if the eligible claimant, estate, or trust that claims a tax credit under this section was a pass-through entity taxpayer of the pass-through entity on the day on which the qualifying ownership interest was issued and remains a pass-through entity taxpayer of the pass-through entity until the last day of the taxable year for which the eligible claimant, estate, or trust claims a tax credit under this section; and
(iii) issued:
(A) by a Utah small business corporation;
(B) on or after January 1, 2011; and
(C) for money or other property, except for stock or securities.
(j) "Short-term capital gain" is as defined in Section 1222, Internal Revenue Code.
(k) (i) Except as provided in Subsection (1)(k)(ii), "Utah small business corporation" is as defined in Section 59-10-1022.
(ii) For purposes of this section, a corporation under Section 1244(c)(3)(A), Internal Revenue Code, is considered to include a pass-through entity.
(2) Subject to the other provisions of this section, for a taxable year beginning on or after January 1, 2011, an eligible claimant, estate, or trust that holds a tax credit certificate issued to the eligible claimant, estate, or trust in accordance with Section 63M-1-2908 for that taxable year and meets the requirements of Subsection (3) may claim a nonrefundable tax credit equal to the

lesser of:
(a) the amount shown on the tax credit certificate issued to the eligible claimant, estate, or trust by the office in accordance with Section 63M-1-2908; or
(b) the product of:
(i) the total amount of the eligible claimant's, estate's, or trust's short-term capital gain or long-term capital gain on a capital gain transaction that occurs on or after January 1, 2011; and
(ii) the tax rate imposed under Subsection 59-10-104(2)(b).
(3) An eligible claimant, estate, or trust may claim the nonrefundable tax credit allowed by Subsection (2) if:
(a) the gross proceeds of the capital gain transaction result from the sale of a qualifying ownership interest:
(i) held for at least two taxable years before the sale of the qualifying ownership interest; and
(ii) in a Utah small business corporation that is a life science establishment; and
(b) on each day of the taxable year of the capital gain transaction, the Utah small business corporation described in Subsection (3)(a)(ii) has at least 50% of its employees in the state.
(4) An eligible claimant, estate, or trust may not:
(a) carry forward or carry back a tax credit under this section; or
(b) claim a tax credit for a taxable year for which the eligible claimant, estate, or trust does not hold a tax credit certificate issued to the eligible claimant, estate, or trust for that taxable year by the office in accordance with Section 63M-1-2908.
(5) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the commission may make rules:
(a) defining the term "gross proceeds"; and
(b) prescribing the circumstances under which an eligible claimant, estate, or trust has a qualifying ownership interest in a Utah small business corporation.