Capital Gains

UC §59-10-1022

A qualified taxpayer may claim a non-refundable credit for the short-term and long-term capital gain on a transaction if:

  • The transaction occurs on or after January 1, 2008;
  • At least 70 percent of the gross proceeds from the capital gain transaction are used to purchase qualifying stock in a Utah small business corporation within 12 months from when the capital gain transaction occurs; and
  • Prior to the purchase of the qualifying stock, the taxpayer did not have an ownership interest in the Utah small business corporation that issued the stock.

Definitions

Capital gain transaction is a transaction that results in a short-term or long-term capital gain (See IRC 1222).

Qualifying stock is either common or preferred stock originally issued by the Utah small business corporation for money or other property (except stock or securities) on or after January 1, 2008 to an individual, estate, trust, or partnership. (See UC §59-10-1022(1)(d)).

Utah small business corporation is a corporation that has its commercial domicile in Utah and meets the requirements of IRC section 1244, and for which the aggregate amount of money and other property received by the corporation for stock, as a contribution to capital and paid-in surplus, may not exceed $2,500,000.

Calculating the Capital Gain Transactions Credit

Capital Gain Transactions Tax Credit Calculation
1. Amount of eligible short-term or long-term capital gain $
2. Credit percentage - 5% .05
3. Calculated credit - multiply line 1 by line 2 $

Enter the amount from line 3 above on your Utah TC-40A, Part 3, using code 04.

There is no form for this credit. Keep all related tax documents with your tax records.

Any credit in excess of the tax due will not be refunded, and may not be carried back or carried forward.