Bill Text: MN HF3049 | 2011-2012 | 87th Legislature | Introduced
Bill Title: Small business technology transfer corporate tax exemption created.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2012-05-09 - Introduction and first reading, referred to Jobs and Economic Development Finance [HF3049 Detail]
Download: Minnesota-2011-HF3049-Introduced.html
1.2relating to economic development; science and technology; creating a technology
1.3transfer corporate tax exemption for certain licensing agreements;amending
1.4Minnesota Statutes 2010, section 290.01, subdivision 19d; proposing coding for
1.5new law in Minnesota Statutes, chapter 116J.
1.6BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.7 Section 1. [116J.8738] SMALL BUSINESS TECHNOLOGY TRANSFER
1.8LICENSING AGREEMENTS.
1.9 Subdivision 1. Definitions. (a) "Qualified small business" means a business that
1.10satisfies all of the following conditions:
1.11(1) the business has its headquarters in Minnesota;
1.12(2) at least 51 percent of the business's employees are employed in Minnesota, and
1.13at least 51 percent of the business's total payroll is paid or incurred in Minnesota;
1.14(3) the business had less than $2,000,000 in gross annual receipts in each of its
1.15three previous taxable years; and
1.16(4) the business has not been in operation for more than five years.
1.17(b) "Qualified technology" means a proprietary process, formula, pattern, device, or
1.18compilation of scientific or technical information that is not in the public domain at the
1.19time the technology transfer licensing agreement is entered into.
1.20(c) "Technology transfer licensing agreement" means a licensing agreement that has
1.21been approved by the commissioner pursuant to subdivision 3.
1.22 Subd. 2. Royalties exemption. (a) The royalties received by a corporation pursuant
1.23to a technology transfer licensing agreement entered into between the corporation and
1.24a qualified small business are exempt from the taxes imposed under chapter 290 for a
1.25period not to exceed ten years from the effective date of the technology transfer licensing
2.1agreement or the corporation has received $10,000,000 in royalties under the terms of the
2.2technology transfer licensing agreement, whichever occurs first.
2.3 Subd. 3. Technology transfer licensing agreement. (a) The technology transfer
2.4licensing agreement must transfer the exclusive right of use for a specific purpose a
2.5qualified technology owned by a corporation to a qualified small business for a period of
2.6five years or longer.
2.7(b) The technology transfer licensing agreement must take effect on or after January
2.81, 2013.
2.9(c) The technology transfer licensing agreement must be approved by the
2.10commissioner of employment and economic development. Before approval of a
2.11technology transfer licensing agreement, the commissioner must find that the agreement
2.12will enable development and use of a qualified technology that would not otherwise occur,
2.13and that the new development and use of the qualified technology can reasonably be
2.14expected to create new employment opportunities in Minnesota.
2.15EFFECTIVE DATE.This section is effective for taxable years beginning after
2.16December 31, 2012.
2.17 Sec. 2. Minnesota Statutes 2010, section 290.01, subdivision 19d, is amended to read:
2.18 Subd. 19d. Corporations; modifications decreasing federal taxable income. For
2.19corporations, there shall be subtracted from federal taxable income after the increases
2.20provided in subdivision 19c:
2.21 (1) the amount of foreign dividend gross-up added to gross income for federal
2.22income tax purposes under section 78 of the Internal Revenue Code;
2.23 (2) the amount of salary expense not allowed for federal income tax purposes due to
2.24claiming the work opportunity credit under section 51 of the Internal Revenue Code;
2.25 (3) any dividend (not including any distribution in liquidation) paid within the
2.26taxable year by a national or state bank to the United States, or to any instrumentality of
2.27the United States exempt from federal income taxes, on the preferred stock of the bank
2.28owned by the United States or the instrumentality;
2.29 (4) amounts disallowed for intangible drilling costs due to differences between
2.30this chapter and the Internal Revenue Code in taxable years beginning before January
2.311, 1987, as follows:
2.32 (i) to the extent the disallowed costs are represented by physical property, an amount
2.33equal to the allowance for depreciation under Minnesota Statutes 1986, section290.09,
2.34subdivision 7 , subject to the modifications contained in subdivision 19e; and
3.1 (ii) to the extent the disallowed costs are not represented by physical property, an
3.2amount equal to the allowance for cost depletion under Minnesota Statutes 1986, section
3.3290.09, subdivision 8
;
3.4 (5) the deduction for capital losses pursuant to sections 1211 and 1212 of the
3.5Internal Revenue Code, except that:
3.6 (i) for capital losses incurred in taxable years beginning after December 31, 1986,
3.7capital loss carrybacks shall not be allowed;
3.8 (ii) for capital losses incurred in taxable years beginning after December 31, 1986,
3.9a capital loss carryover to each of the 15 taxable years succeeding the loss year shall be
3.10allowed;
3.11 (iii) for capital losses incurred in taxable years beginning before January 1, 1987, a
3.12capital loss carryback to each of the three taxable years preceding the loss year, subject to
3.13the provisions of Minnesota Statutes 1986, section290.16 , shall be allowed; and
3.14 (iv) for capital losses incurred in taxable years beginning before January 1, 1987,
3.15a capital loss carryover to each of the five taxable years succeeding the loss year to the
3.16extent such loss was not used in a prior taxable year and subject to the provisions of
3.17Minnesota Statutes 1986, section290.16 , shall be allowed;
3.18 (6) an amount for interest and expenses relating to income not taxable for federal
3.19income tax purposes, if (i) the income is taxable under this chapter and (ii) the interest and
3.20expenses were disallowed as deductions under the provisions of section 171(a)(2), 265 or
3.21291 of the Internal Revenue Code in computing federal taxable income;
3.22 (7) in the case of mines, oil and gas wells, other natural deposits, and timber for
3.23which percentage depletion was disallowed pursuant to subdivision 19c, clause (9), a
3.24reasonable allowance for depletion based on actual cost. In the case of leases the deduction
3.25must be apportioned between the lessor and lessee in accordance with rules prescribed
3.26by the commissioner. In the case of property held in trust, the allowable deduction must
3.27be apportioned between the income beneficiaries and the trustee in accordance with the
3.28pertinent provisions of the trust, or if there is no provision in the instrument, on the basis
3.29of the trust's income allocable to each;
3.30 (8) for certified pollution control facilities placed in service in a taxable year
3.31beginning before December 31, 1986, and for which amortization deductions were elected
3.32under section 169 of the Internal Revenue Code of 1954, as amended through December
3.3331, 1985, an amount equal to the allowance for depreciation under Minnesota Statutes
3.341986, section290.09, subdivision 7 ;
3.35 (9) amounts included in federal taxable income that are due to refunds of income,
3.36excise, or franchise taxes based on net income or related minimum taxes paid by the
4.1corporation to Minnesota, another state, a political subdivision of another state, the
4.2District of Columbia, or a foreign country or possession of the United States to the extent
4.3that the taxes were added to federal taxable income under section290.01, subdivision 19c ,
4.4clause (1), in a prior taxable year;
4.5 (10) 80 percent of royalties, fees, or other like income accrued or received from a
4.6foreign operating corporation or a foreign corporation which is part of the same unitary
4.7business as the receiving corporation, unless the income resulting from such payments or
4.8accruals is income from sources within the United States as defined in subtitle A, chapter
4.91, subchapter N, part 1, of the Internal Revenue Code;
4.10 (11) income or gains from the business of mining as defined in section290.05,
4.11subdivision 1 , clause (a), that are not subject to Minnesota franchise tax;
4.12 (12) the amount of disability access expenditures in the taxable year which are not
4.13allowed to be deducted or capitalized under section 44(d)(7) of the Internal Revenue Code;
4.14 (13) the amount of qualified research expenses not allowed for federal income tax
4.15purposes under section 280C(c) of the Internal Revenue Code, but only to the extent that
4.16the amount exceeds the amount of the credit allowed under section290.068 ;
4.17 (14) the amount of salary expenses not allowed for federal income tax purposes due
4.18to claiming the Indian employment credit under section 45A(a) of the Internal Revenue
4.19Code;
4.20 (15) for a corporation whose foreign sales corporation, as defined in section 922
4.21of the Internal Revenue Code, constituted a foreign operating corporation during any
4.22taxable year ending before January 1, 1995, and a return was filed by August 15, 1996,
4.23claiming the deduction under section290.21, subdivision 4 , for income received from
4.24the foreign operating corporation, an amount equal to1.23 multiplied by the amount of
4.25income excluded under section 114 of the Internal Revenue Code, provided the income is
4.26not income of a foreign operating company;
4.27 (16) any decrease in subpart F income, as defined in section 952(a) of the Internal
4.28Revenue Code, for the taxable year when subpart F income is calculated without regard to
4.29the provisions of Division C, title III, section 303(b) of Public Law 110-343;
4.30 (17) in each of the five tax years immediately following the tax year in which an
4.31addition is required under subdivision 19c, clause (15), an amount equal to one-fifth of
4.32the delayed depreciation. For purposes of this clause, "delayed depreciation" means the
4.33amount of the addition made by the taxpayer under subdivision 19c, clause (15). The
4.34resulting delayed depreciation cannot be less than zero;
5.1 (18) in each of the five tax years immediately following the tax year in which an
5.2addition is required under subdivision 19c, clause (16), an amount equal to one-fifth of
5.3the amount of the addition;and
5.4(19) to the extent included in federal taxable income, discharge of indebtedness
5.5income resulting from reacquisition of business indebtedness included in federal taxable
5.6income under section 108(i) of the Internal Revenue Code. This subtraction applies only
5.7to the extent that the income was included in net income in a prior year as a result of the
5.8addition under section290.01, subdivision 19c , clause (25).; and
5.9(20) royalties accrued or received pursuant to a technology transfer license
5.10agreement entered into with a qualified small business, and approved by the commissioner
5.11of employment and economic development, under section 116J.8738, for a period of up
5.12to ten years from the effective date of the technology transfer licensing agreement. A
5.13corporation shall not subtract more than $10,000,000 in royalties under this clause for
5.14each technology transfer licensing agreement the corporation has entered into.
5.15EFFECTIVE DATE.This section is effective for taxable years beginning after
5.16December 31, 2012.
1.3transfer corporate tax exemption for certain licensing agreements;amending
1.4Minnesota Statutes 2010, section 290.01, subdivision 19d; proposing coding for
1.5new law in Minnesota Statutes, chapter 116J.
1.6BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.7 Section 1. [116J.8738] SMALL BUSINESS TECHNOLOGY TRANSFER
1.8LICENSING AGREEMENTS.
1.9 Subdivision 1. Definitions. (a) "Qualified small business" means a business that
1.10satisfies all of the following conditions:
1.11(1) the business has its headquarters in Minnesota;
1.12(2) at least 51 percent of the business's employees are employed in Minnesota, and
1.13at least 51 percent of the business's total payroll is paid or incurred in Minnesota;
1.14(3) the business had less than $2,000,000 in gross annual receipts in each of its
1.15three previous taxable years; and
1.16(4) the business has not been in operation for more than five years.
1.17(b) "Qualified technology" means a proprietary process, formula, pattern, device, or
1.18compilation of scientific or technical information that is not in the public domain at the
1.19time the technology transfer licensing agreement is entered into.
1.20(c) "Technology transfer licensing agreement" means a licensing agreement that has
1.21been approved by the commissioner pursuant to subdivision 3.
1.22 Subd. 2. Royalties exemption. (a) The royalties received by a corporation pursuant
1.23to a technology transfer licensing agreement entered into between the corporation and
1.24a qualified small business are exempt from the taxes imposed under chapter 290 for a
1.25period not to exceed ten years from the effective date of the technology transfer licensing
2.1agreement or the corporation has received $10,000,000 in royalties under the terms of the
2.2technology transfer licensing agreement, whichever occurs first.
2.3 Subd. 3. Technology transfer licensing agreement. (a) The technology transfer
2.4licensing agreement must transfer the exclusive right of use for a specific purpose a
2.5qualified technology owned by a corporation to a qualified small business for a period of
2.6five years or longer.
2.7(b) The technology transfer licensing agreement must take effect on or after January
2.81, 2013.
2.9(c) The technology transfer licensing agreement must be approved by the
2.10commissioner of employment and economic development. Before approval of a
2.11technology transfer licensing agreement, the commissioner must find that the agreement
2.12will enable development and use of a qualified technology that would not otherwise occur,
2.13and that the new development and use of the qualified technology can reasonably be
2.14expected to create new employment opportunities in Minnesota.
2.15EFFECTIVE DATE.This section is effective for taxable years beginning after
2.16December 31, 2012.
2.17 Sec. 2. Minnesota Statutes 2010, section 290.01, subdivision 19d, is amended to read:
2.18 Subd. 19d. Corporations; modifications decreasing federal taxable income. For
2.19corporations, there shall be subtracted from federal taxable income after the increases
2.20provided in subdivision 19c:
2.21 (1) the amount of foreign dividend gross-up added to gross income for federal
2.22income tax purposes under section 78 of the Internal Revenue Code;
2.23 (2) the amount of salary expense not allowed for federal income tax purposes due to
2.24claiming the work opportunity credit under section 51 of the Internal Revenue Code;
2.25 (3) any dividend (not including any distribution in liquidation) paid within the
2.26taxable year by a national or state bank to the United States, or to any instrumentality of
2.27the United States exempt from federal income taxes, on the preferred stock of the bank
2.28owned by the United States or the instrumentality;
2.29 (4) amounts disallowed for intangible drilling costs due to differences between
2.30this chapter and the Internal Revenue Code in taxable years beginning before January
2.311, 1987, as follows:
2.32 (i) to the extent the disallowed costs are represented by physical property, an amount
2.33equal to the allowance for depreciation under Minnesota Statutes 1986, section
2.34subdivision 7
3.1 (ii) to the extent the disallowed costs are not represented by physical property, an
3.2amount equal to the allowance for cost depletion under Minnesota Statutes 1986, section
3.4 (5) the deduction for capital losses pursuant to sections 1211 and 1212 of the
3.5Internal Revenue Code, except that:
3.6 (i) for capital losses incurred in taxable years beginning after December 31, 1986,
3.7capital loss carrybacks shall not be allowed;
3.8 (ii) for capital losses incurred in taxable years beginning after December 31, 1986,
3.9a capital loss carryover to each of the 15 taxable years succeeding the loss year shall be
3.10allowed;
3.11 (iii) for capital losses incurred in taxable years beginning before January 1, 1987, a
3.12capital loss carryback to each of the three taxable years preceding the loss year, subject to
3.13the provisions of Minnesota Statutes 1986, section
3.14 (iv) for capital losses incurred in taxable years beginning before January 1, 1987,
3.15a capital loss carryover to each of the five taxable years succeeding the loss year to the
3.16extent such loss was not used in a prior taxable year and subject to the provisions of
3.17Minnesota Statutes 1986, section
3.18 (6) an amount for interest and expenses relating to income not taxable for federal
3.19income tax purposes, if (i) the income is taxable under this chapter and (ii) the interest and
3.20expenses were disallowed as deductions under the provisions of section 171(a)(2), 265 or
3.21291 of the Internal Revenue Code in computing federal taxable income;
3.22 (7) in the case of mines, oil and gas wells, other natural deposits, and timber for
3.23which percentage depletion was disallowed pursuant to subdivision 19c, clause (9), a
3.24reasonable allowance for depletion based on actual cost. In the case of leases the deduction
3.25must be apportioned between the lessor and lessee in accordance with rules prescribed
3.26by the commissioner. In the case of property held in trust, the allowable deduction must
3.27be apportioned between the income beneficiaries and the trustee in accordance with the
3.28pertinent provisions of the trust, or if there is no provision in the instrument, on the basis
3.29of the trust's income allocable to each;
3.30 (8) for certified pollution control facilities placed in service in a taxable year
3.31beginning before December 31, 1986, and for which amortization deductions were elected
3.32under section 169 of the Internal Revenue Code of 1954, as amended through December
3.3331, 1985, an amount equal to the allowance for depreciation under Minnesota Statutes
3.341986, section
3.35 (9) amounts included in federal taxable income that are due to refunds of income,
3.36excise, or franchise taxes based on net income or related minimum taxes paid by the
4.1corporation to Minnesota, another state, a political subdivision of another state, the
4.2District of Columbia, or a foreign country or possession of the United States to the extent
4.3that the taxes were added to federal taxable income under section
4.4clause (1), in a prior taxable year;
4.5 (10) 80 percent of royalties, fees, or other like income accrued or received from a
4.6foreign operating corporation or a foreign corporation which is part of the same unitary
4.7business as the receiving corporation, unless the income resulting from such payments or
4.8accruals is income from sources within the United States as defined in subtitle A, chapter
4.91, subchapter N, part 1, of the Internal Revenue Code;
4.10 (11) income or gains from the business of mining as defined in section
4.11subdivision 1
4.12 (12) the amount of disability access expenditures in the taxable year which are not
4.13allowed to be deducted or capitalized under section 44(d)(7) of the Internal Revenue Code;
4.14 (13) the amount of qualified research expenses not allowed for federal income tax
4.15purposes under section 280C(c) of the Internal Revenue Code, but only to the extent that
4.16the amount exceeds the amount of the credit allowed under section
4.17 (14) the amount of salary expenses not allowed for federal income tax purposes due
4.18to claiming the Indian employment credit under section 45A(a) of the Internal Revenue
4.19Code;
4.20 (15) for a corporation whose foreign sales corporation, as defined in section 922
4.21of the Internal Revenue Code, constituted a foreign operating corporation during any
4.22taxable year ending before January 1, 1995, and a return was filed by August 15, 1996,
4.23claiming the deduction under section
4.24the foreign operating corporation, an amount equal to
4.25income excluded under section 114 of the Internal Revenue Code, provided the income is
4.26not income of a foreign operating company;
4.27 (16) any decrease in subpart F income, as defined in section 952(a) of the Internal
4.28Revenue Code, for the taxable year when subpart F income is calculated without regard to
4.29the provisions of Division C, title III, section 303(b) of Public Law 110-343;
4.30 (17) in each of the five tax years immediately following the tax year in which an
4.31addition is required under subdivision 19c, clause (15), an amount equal to one-fifth of
4.32the delayed depreciation. For purposes of this clause, "delayed depreciation" means the
4.33amount of the addition made by the taxpayer under subdivision 19c, clause (15). The
4.34resulting delayed depreciation cannot be less than zero;
5.1 (18) in each of the five tax years immediately following the tax year in which an
5.2addition is required under subdivision 19c, clause (16), an amount equal to one-fifth of
5.3the amount of the addition;
5.4(19) to the extent included in federal taxable income, discharge of indebtedness
5.5income resulting from reacquisition of business indebtedness included in federal taxable
5.6income under section 108(i) of the Internal Revenue Code. This subtraction applies only
5.7to the extent that the income was included in net income in a prior year as a result of the
5.8addition under section
5.9(20) royalties accrued or received pursuant to a technology transfer license
5.10agreement entered into with a qualified small business, and approved by the commissioner
5.11of employment and economic development, under section 116J.8738, for a period of up
5.12to ten years from the effective date of the technology transfer licensing agreement. A
5.13corporation shall not subtract more than $10,000,000 in royalties under this clause for
5.14each technology transfer licensing agreement the corporation has entered into.
5.15EFFECTIVE DATE.This section is effective for taxable years beginning after
5.16December 31, 2012.
