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Capital Gain Transactions Tax Credit (code 04)


UC §59-10-1022

You may claim a credit for the short-term and long-term capital gain on a transaction if:

  1. the transaction occurs on or after Jan. 1, 2008;
  2. at least 70 percent of the gross proceeds of the transaction are used to buy stock in a qualified Utah small business corporation within 12 months from when the capital gain transaction occurred; and
  3. you did not have an ownership interest in the qualified Utah small business corporation at the time of investment.

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.

Calculation of Capital Gain Transactions Credit
1. Eligible short-term or long-term capital gain $
2. Multiply line 1 by 5% (.05). This is your credit. $
Enter this amount on TC-40A, Part 3, using code 04.

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

Note: Any credit that is more than the tax liability may not be carried back or forward.