Bill Text: MN HF274 | 2011-2012 | 87th Legislature | Introduced
Bill Title: Qualified farm and business properties tax exemption provided.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2011-02-01 - Referred by Chair to Property and Local Tax Division [HF274 Detail]
Download: Minnesota-2011-HF274-Introduced.html
1.2relating to estate taxation; providing an exclusion for certain farm and business
1.3properties; amending Minnesota Statutes 2010, section 291.03, subdivision 1,
1.4by adding subdivisions.
1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.6 Section 1. Minnesota Statutes 2010, section 291.03, subdivision 1, is amended to read:
1.7 Subdivision 1. Tax amount. (a) The tax imposed shall be an amount equal to the
1.8proportion of the maximum credit for state death taxes computed under section 2011
1.9of the Internal Revenue Code, but using Minnesota adjusted taxable estate instead of
1.10federal adjusted taxable estate, as the Minnesota gross estate bears to the value of the
1.11federal gross estate.
1.12 (b) The tax determined under this subdivision must not be greater than the sum of
1.13the following amounts multiplied by a fraction, the numerator of which is the Minnesota
1.14gross estate and the denominator of which is the federal gross estate:
1.15 (1) the rates and brackets under section 2001(c) of the Internal Revenue Code
1.16multiplied by the sum of:
1.17 (i) the taxable estate, as defined under section 2051 of the Internal Revenue Code;
1.18plus
1.19 (ii) adjusted taxable gifts, as defined in section 2001(b) of the Internal Revenue
1.20Code; less
1.21(iii) the lesser of (A) the sum of the value of qualified small business property
1.22under subdivision 9, and the value of qualified farm property under subdivision 10,
1.23or (B) $4,000,000; less
2.1 (2) the amount of tax allowed under section 2001(b)(2) of the Internal Revenue
2.2Code; and less
2.3 (3) the federal credit allowed under section 2010 of the Internal Revenue Code.
2.4 (c) For purposes of this subdivision, "Internal Revenue Code" means the Internal
2.5Revenue Code of 1986, as amended through December 31, 2000.
2.6EFFECTIVE DATE.This section is effective for decedents dying after December
2.731, 2010.
2.8 Sec. 2. Minnesota Statutes 2010, section 291.03, is amended by adding a subdivision
2.9to read:
2.10 Subd. 8. Definitions. (a) For purposes of this section, the following terms have the
2.11meanings given in this subdivision.
2.12(b) "Family member" means a family member as defined in section 2032A(e)(2) of
2.13the Internal Revenue Code.
2.14(c) "Qualified heir" means a family member who acquired qualified property from
2.15the decedent and satisfies the requirement under subdivision 9, clause (6), or subdivision
2.1610, clause (4), for the property.
2.17(d) "Qualified property" means qualified small businesss property under subdivision
2.189 and qualified farm property under subdivision 10.
2.19EFFECTIVE DATE.This section is effective for decedents dying after December
2.2031, 2010.
2.21 Sec. 3. Minnesota Statutes 2010, section 291.03, is amended by adding a subdivision
2.22to read:
2.23 Subd. 9. Qualified small business property. Property satisfying all of the following
2.24requirements is qualified small business property:
2.25(1) The value of the property was included in the federal adjusted taxable estate.
2.26(2) The property consists of the assets of a trade or business or shares of stock or
2.27other ownership interests in a corporation or other entity engaged in a trade or business.
2.28The decedent or the decedent's spouse must have materially participated in the trade or
2.29business within the meaning of section 469 of the Internal Revenue Code during the
2.30taxable year that ended before the date of the decedent's death. Shares of stock in a
2.31corporation or an ownership interest in another type of entity do not qualify under this
2.32subdivision if the shares or ownership interests are traded on a public stock exchange at
2.33any time during the three-year period ending on the decedent's date of death.
3.1(3) The gross annual sales of the trade or business were $10,000,000 or less for the
3.2last taxable year that ended before the date of the death of the decedent.
3.3(4) The property does not consist of cash or cash equivalents. For property consisting
3.4of shares of stock or other ownership interests in an entity, the amount of cash or cash
3.5equivalents held by the corporation or other entity must be deducted from the value of
3.6the property qualifying under this subdivision in proportion to the decedent's share of
3.7ownership of the entity on the date of death.
3.8(5) The decedent continuously owned the property for the three-year period ending
3.9on the date of death of the decedent.
3.10(6) A family member continuously uses the property in the operation of the trade or
3.11business for three years following the date of death of the decedent.
3.12(7) The estate and the qualified heir elect to treat the property as qualified small
3.13business property and agree, in the form prescribed by the commissioner, to pay the
3.14recapture tax under subdivision 11, if applicable.
3.15EFFECTIVE DATE.This section is effective for decedents dying after December
3.1631, 2010.
3.17 Sec. 4. Minnesota Statutes 2010, section 291.03, is amended by adding a subdivision
3.18to read:
3.19 Subd. 10. Qualified farm property. Property satisfying all of the following
3.20requirements is qualified farm property:
3.21(1) The value of the property was included in the federal adjusted taxable estate.
3.22(2) The property consists of a farm meeting the requirements of section 500.24,
3.23and was classified for property tax purposes as the homestead of the decedent or the
3.24decedent's spouse or both under section 273.124, and as class 2a property under section
3.25273.13, subdivision 23.
3.26(3) The decedent continuously owned the property for the three-year period ending
3.27on the date of death of the decedent.
3.28(4) A family member continuously uses the property in the operation of the trade or
3.29business for three years following the date of death of the decedent.
3.30(5) The estate and the qualified heir elect to treat the property as qualified farm
3.31property and agree, in a form prescribed by the commissioner, to pay the recapture tax
3.32under subdivision 11, if applicable.
3.33EFFECTIVE DATE.This section is effective for decedents dying after December
3.3431, 2010.
4.1 Sec. 5. Minnesota Statutes 2010, section 291.03, is amended by adding a subdivision
4.2to read:
4.3 Subd. 11. Recapture tax. (a) If, within three years after the decedent's death and
4.4before the death of the qualified heir, the qualified heir disposes of any interest in qualified
4.5property, other than by a disposition to a family member, or a family member ceases to
4.6use the qualified property which was acquired or passed from the decedent, an additional
4.7estate tax is imposed on the property.
4.8(b) The amount of the additional tax equals the amount of the exclusion claimed by
4.9the estate under subdivision 8, paragraph (d), multiplied by 16 percent.
4.10(c) The additional tax under this subdivision is due on the day which is six months
4.11after the date of the disposition or cessation in paragraph (a).
4.12EFFECTIVE DATE.This section is effective for decedents dying after December
4.1331, 2010.
1.3properties; amending Minnesota Statutes 2010, section 291.03, subdivision 1,
1.4by adding subdivisions.
1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.6 Section 1. Minnesota Statutes 2010, section 291.03, subdivision 1, is amended to read:
1.7 Subdivision 1. Tax amount. (a) The tax imposed shall be an amount equal to the
1.8proportion of the maximum credit for state death taxes computed under section 2011
1.9of the Internal Revenue Code, but using Minnesota adjusted taxable estate instead of
1.10federal adjusted taxable estate, as the Minnesota gross estate bears to the value of the
1.11federal gross estate.
1.12 (b) The tax determined under this subdivision must not be greater than the sum of
1.13the following amounts multiplied by a fraction, the numerator of which is the Minnesota
1.14gross estate and the denominator of which is the federal gross estate:
1.15 (1) the rates and brackets under section 2001(c) of the Internal Revenue Code
1.16multiplied by the sum of:
1.17 (i) the taxable estate, as defined under section 2051 of the Internal Revenue Code;
1.18plus
1.19 (ii) adjusted taxable gifts, as defined in section 2001(b) of the Internal Revenue
1.20Code; less
1.21(iii) the lesser of (A) the sum of the value of qualified small business property
1.22under subdivision 9, and the value of qualified farm property under subdivision 10,
1.23or (B) $4,000,000; less
2.1 (2) the amount of tax allowed under section 2001(b)(2) of the Internal Revenue
2.2Code; and less
2.3 (3) the federal credit allowed under section 2010 of the Internal Revenue Code.
2.4 (c) For purposes of this subdivision, "Internal Revenue Code" means the Internal
2.5Revenue Code of 1986, as amended through December 31, 2000.
2.6EFFECTIVE DATE.This section is effective for decedents dying after December
2.731, 2010.
2.8 Sec. 2. Minnesota Statutes 2010, section 291.03, is amended by adding a subdivision
2.9to read:
2.10 Subd. 8. Definitions. (a) For purposes of this section, the following terms have the
2.11meanings given in this subdivision.
2.12(b) "Family member" means a family member as defined in section 2032A(e)(2) of
2.13the Internal Revenue Code.
2.14(c) "Qualified heir" means a family member who acquired qualified property from
2.15the decedent and satisfies the requirement under subdivision 9, clause (6), or subdivision
2.1610, clause (4), for the property.
2.17(d) "Qualified property" means qualified small businesss property under subdivision
2.189 and qualified farm property under subdivision 10.
2.19EFFECTIVE DATE.This section is effective for decedents dying after December
2.2031, 2010.
2.21 Sec. 3. Minnesota Statutes 2010, section 291.03, is amended by adding a subdivision
2.22to read:
2.23 Subd. 9. Qualified small business property. Property satisfying all of the following
2.24requirements is qualified small business property:
2.25(1) The value of the property was included in the federal adjusted taxable estate.
2.26(2) The property consists of the assets of a trade or business or shares of stock or
2.27other ownership interests in a corporation or other entity engaged in a trade or business.
2.28The decedent or the decedent's spouse must have materially participated in the trade or
2.29business within the meaning of section 469 of the Internal Revenue Code during the
2.30taxable year that ended before the date of the decedent's death. Shares of stock in a
2.31corporation or an ownership interest in another type of entity do not qualify under this
2.32subdivision if the shares or ownership interests are traded on a public stock exchange at
2.33any time during the three-year period ending on the decedent's date of death.
3.1(3) The gross annual sales of the trade or business were $10,000,000 or less for the
3.2last taxable year that ended before the date of the death of the decedent.
3.3(4) The property does not consist of cash or cash equivalents. For property consisting
3.4of shares of stock or other ownership interests in an entity, the amount of cash or cash
3.5equivalents held by the corporation or other entity must be deducted from the value of
3.6the property qualifying under this subdivision in proportion to the decedent's share of
3.7ownership of the entity on the date of death.
3.8(5) The decedent continuously owned the property for the three-year period ending
3.9on the date of death of the decedent.
3.10(6) A family member continuously uses the property in the operation of the trade or
3.11business for three years following the date of death of the decedent.
3.12(7) The estate and the qualified heir elect to treat the property as qualified small
3.13business property and agree, in the form prescribed by the commissioner, to pay the
3.14recapture tax under subdivision 11, if applicable.
3.15EFFECTIVE DATE.This section is effective for decedents dying after December
3.1631, 2010.
3.17 Sec. 4. Minnesota Statutes 2010, section 291.03, is amended by adding a subdivision
3.18to read:
3.19 Subd. 10. Qualified farm property. Property satisfying all of the following
3.20requirements is qualified farm property:
3.21(1) The value of the property was included in the federal adjusted taxable estate.
3.22(2) The property consists of a farm meeting the requirements of section 500.24,
3.23and was classified for property tax purposes as the homestead of the decedent or the
3.24decedent's spouse or both under section 273.124, and as class 2a property under section
3.25273.13, subdivision 23.
3.26(3) The decedent continuously owned the property for the three-year period ending
3.27on the date of death of the decedent.
3.28(4) A family member continuously uses the property in the operation of the trade or
3.29business for three years following the date of death of the decedent.
3.30(5) The estate and the qualified heir elect to treat the property as qualified farm
3.31property and agree, in a form prescribed by the commissioner, to pay the recapture tax
3.32under subdivision 11, if applicable.
3.33EFFECTIVE DATE.This section is effective for decedents dying after December
3.3431, 2010.
4.1 Sec. 5. Minnesota Statutes 2010, section 291.03, is amended by adding a subdivision
4.2to read:
4.3 Subd. 11. Recapture tax. (a) If, within three years after the decedent's death and
4.4before the death of the qualified heir, the qualified heir disposes of any interest in qualified
4.5property, other than by a disposition to a family member, or a family member ceases to
4.6use the qualified property which was acquired or passed from the decedent, an additional
4.7estate tax is imposed on the property.
4.8(b) The amount of the additional tax equals the amount of the exclusion claimed by
4.9the estate under subdivision 8, paragraph (d), multiplied by 16 percent.
4.10(c) The additional tax under this subdivision is due on the day which is six months
4.11after the date of the disposition or cessation in paragraph (a).
4.12EFFECTIVE DATE.This section is effective for decedents dying after December
4.1331, 2010.
