Utah: Legislature Passes Bill Addressing GILTI and FDII

Utah House Bill 39, which has passed both the House and Senate, clarifies the taxation of 965 income, GILTI, and FDII. Specifically, effective retroactively to the last tax year beginning on or before December 31, 2017 and tax years beginning on or after January 1, 2018, amounts included in income under IRC sections 965(a) and 951A are eligible for the state’s 50 percent dividends received deduction. Further, a new section defines “special deduction” as any deduction under IRC section 250 or section 965(c) and eliminates the language “for dividends received” from the definition of unadjusted income. As such, unadjusted income (the starting point in computing Utah taxable income) is now defined as “federal taxable income as determined on a separate return basis before intercompany eliminations as determined by the Internal Revenue Code, before the net operating loss deduction and special deductions.”  This means that Utah is a Line 28 state, the deduction for FDII is not allowed, and that the 50 percent dividends- received deduction applies to the gross amount of GILTI and section 965 income included in the tax base.  Please contact Mike Larkin at 801-237-1335 with questions.