Bill Text: MN HF79 | 2011-2012 | 87th Legislature | Engrossed
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Internal Revenue Code changes conformed, and corporate refund delay requirement repealed.
Sponsorship: Slight Partisan Bill (Republican 6-3)
Status: (Passed) 2011-03-23 - Secretary of State Chapter 8 03/21/11 [HF79 Detail]
Download: Minnesota-2011-HF79-Engrossed.html
Bill Title: Internal Revenue Code changes conformed, and corporate refund delay requirement repealed.
Sponsorship: Slight Partisan Bill (Republican 6-3)
Status: (Passed) 2011-03-23 - Secretary of State Chapter 8 03/21/11 [HF79 Detail]
Download: Minnesota-2011-HF79-Engrossed.html
1.2relating to taxation; income; franchise; conforming to certain changes in the
1.3Internal Revenue Code; repealing requirement that commissioner of revenue
1.4delay corporate refunds;amending Minnesota Statutes 2010, sections 289A.02,
1.5subdivision 7; 290.01, subdivisions 19, 19a, 19c, 31; 290A.03, subdivision 15;
1.6repealing Laws 2010, First Special Session chapter 1, article 13, section 6.
1.7BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.8 Section 1. Minnesota Statutes 2010, section 289A.02, subdivision 7, is amended to
1.9read:
1.10 Subd. 7. Internal Revenue Code. Unless specifically defined otherwise, for taxable
1.11years beginning before January 1, 2010, and after December 31, 2010, "Internal Revenue
1.12Code" means the Internal Revenue Code of 1986, as amended through March 18, 2010;
1.13and for taxable years beginning after December 31, 2009, and before January 1, 2011,
1.14"Internal Revenue Code" means the Internal Revenue Code of 1986, as amended through
1.15December 31, 2010.
1.16EFFECTIVE DATE.This section is effective the day following final enactment.
1.17 Sec. 2. Minnesota Statutes 2010, section 290.01, subdivision 19, is amended to read:
1.18 Subd. 19. Net income. The term "net income" means the federal taxable income,
1.19as defined in section 63 of the Internal Revenue Code of 1986, as amended through the
1.20date named in this subdivision, incorporating the federal effective dates of changes to the
1.21Internal Revenue Code and any elections made by the taxpayer in accordance with the
1.22Internal Revenue Code in determining federal taxable income for federal income tax
1.23purposes, and with the modifications provided in subdivisions 19a to 19f.
2.1 In the case of a regulated investment company or a fund thereof, as defined in section
2.2851(a) or 851(g) of the Internal Revenue Code, federal taxable income means investment
2.3company taxable income as defined in section 852(b)(2) of the Internal Revenue Code,
2.4except that:
2.5 (1) the exclusion of net capital gain provided in section 852(b)(2)(A) of the Internal
2.6Revenue Code does not apply;
2.7 (2) the deduction for dividends paid under section 852(b)(2)(D) of the Internal
2.8Revenue Code must be applied by allowing a deduction for capital gain dividends and
2.9exempt-interest dividends as defined in sections 852(b)(3)(C) and 852(b)(5) of the Internal
2.10Revenue Code; and
2.11 (3) the deduction for dividends paid must also be applied in the amount of any
2.12undistributed capital gains which the regulated investment company elects to have treated
2.13as provided in section 852(b)(3)(D) of the Internal Revenue Code.
2.14 The net income of a real estate investment trust as defined and limited by section
2.15856(a), (b), and (c) of the Internal Revenue Code means the real estate investment trust
2.16taxable income as defined in section 857(b)(2) of the Internal Revenue Code.
2.17 The net income of a designated settlement fund as defined in section 468B(d) of
2.18the Internal Revenue Code means the gross income as defined in section 468B(b) of the
2.19Internal Revenue Code.
2.20 The Internal Revenue Code of 1986, as amended through March 18, 2010, shall be
2.21in effect for taxable years beginning after December 31, 1996, except that for taxable years
2.22beginning after December 31, 2009, and before January 1, 2011, "Internal Revenue Code"
2.23means the Internal Revenue Code of 1986, as amended through December 31, 2010. The
2.24provisions of the act of January 22, 2010, Public Law 111-126, to accelerate the benefits
2.25for charitable cash contributions for the relief of victims of the Haitian earthquake, are
2.26effective at the same time it became effective for federal purposes and apply to the
2.27subtraction under subdivision 19b, clause (6). The provisions of title II, section 2112, of
2.28the act of September 27, 2010, Public Law 111-240, rollovers from elective deferral plans
2.29to designated Roth accounts, are effective at the same time they became effective for
2.30federal purposes and taxable rollovers are included in net income at the same time they are
2.31included in gross income for federal purposes.
2.32 Except as otherwise provided, references to the Internal Revenue Code in
2.33subdivisions 19 to 19f mean the code in effect for purposes of determining net income for
2.34the applicable year.
3.1EFFECTIVE DATE.This section is effective the day following final enactment,
3.2except that the changes incorporated by federal changes are effective at the same time as
3.3the changes were effective for federal purposes.
3.4 Sec. 3. Minnesota Statutes 2010, section 290.01, subdivision 19a, is amended to read:
3.5 Subd. 19a. Additions to federal taxable income. For individuals, estates, and
3.6trusts, there shall be added to federal taxable income:
3.7 (1)(i) interest income on obligations of any state other than Minnesota or a political
3.8or governmental subdivision, municipality, or governmental agency or instrumentality
3.9of any state other than Minnesota exempt from federal income taxes under the Internal
3.10Revenue Code or any other federal statute; and
3.11 (ii) exempt-interest dividends as defined in section 852(b)(5) of the Internal Revenue
3.12Code, except:
3.13(A) the portion of the exempt-interest dividends exempt from state taxation under
3.14the laws of the United States; and
3.15(B) the portion of the exempt-interest dividends derived from interest income
3.16on obligations of the state of Minnesota or its political or governmental subdivisions,
3.17municipalities, governmental agencies or instrumentalities, but only if the portion of the
3.18exempt-interest dividends from such Minnesota sources paid to all shareholders represents
3.1995 percent or more of the exempt-interest dividends, including any dividends exempt
3.20under subitem (A), that are paid by the regulated investment company as defined in section
3.21851(a) of the Internal Revenue Code, or the fund of the regulated investment company as
3.22defined in section 851(g) of the Internal Revenue Code, making the payment; and
3.23 (iii) for the purposes of items (i) and (ii), interest on obligations of an Indian tribal
3.24government described in section 7871(c) of the Internal Revenue Code shall be treated as
3.25interest income on obligations of the state in which the tribe is located;
3.26 (2) the amount of income, sales and use, motor vehicle sales, or excise taxes paid
3.27or accrued within the taxable year under this chapter and the amount of taxes based on
3.28net income paid, sales and use, motor vehicle sales, or excise taxes paid to any other
3.29state or to any province or territory of Canada, to the extent allowed as a deduction
3.30under section 63(d) of the Internal Revenue Code, but the addition may not be more
3.31than the amount by which the itemized deductions as allowed under section 63(d) of
3.32the Internal Revenue Code exceeds the amount of the standard deduction as defined in
3.33section 63(c) of the Internal Revenue Code, disregarding the amounts allowed under
3.34sections 63(c)(1)(C) and 63(c)(1)(E) of the Internal Revenue Code. For the purpose of
3.35this paragraph, the disallowance of itemized deductions under section 68 of the Internal
4.1Revenue Code of 1986, income, sales and use, motor vehicle sales, or excise taxes are
4.2the last itemized deductions disallowed;
4.3 (3) the capital gain amount of a lump-sum distribution to which the special tax under
4.4section 1122(h)(3)(B)(ii) of the Tax Reform Act of 1986, Public Law 99-514, applies;
4.5 (4) the amount of income taxes paid or accrued within the taxable year under this
4.6chapter and taxes based on net income paid to any other state or any province or territory
4.7of Canada, to the extent allowed as a deduction in determining federal adjusted gross
4.8income. For the purpose of this paragraph, income taxes do not include the taxes imposed
4.9by sections290.0922, subdivision 1 , paragraph (b),
290.9727 ,
290.9728 , and
290.9729 ;
4.10 (5) the amount of expense, interest, or taxes disallowed pursuant to section290.10
4.11other than expenses or interest used in computing net interest income for the subtraction
4.12allowed under subdivision 19b, clause (1);
4.13 (6) the amount of a partner's pro rata share of net income which does not flow
4.14through to the partner because the partnership elected to pay the tax on the income under
4.15section 6242(a)(2) of the Internal Revenue Code;
4.16 (7) 80 percent of the depreciation deduction allowed under section 168(k) of the
4.17Internal Revenue Code. For purposes of this clause, if the taxpayer has an activity that
4.18in the taxable year generates a deduction for depreciation under section 168(k) and the
4.19activity generates a loss for the taxable year that the taxpayer is not allowed to claim for
4.20the taxable year, "the depreciation allowed under section 168(k)" for the taxable year is
4.21limited to excess of the depreciation claimed by the activity under section 168(k) over the
4.22amount of the loss from the activity that is not allowed in the taxable year. In succeeding
4.23taxable years when the losses not allowed in the taxable year are allowed, the depreciation
4.24under section 168(k) is allowed;
4.25 (8) 80 percent of the amount by which the deduction allowed by section 179 of the
4.26Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
4.27Revenue Code of 1986, as amended through December 31, 2003;
4.28 (9) to the extent deducted in computing federal taxable income, the amount of the
4.29deduction allowable under section 199 of the Internal Revenue Code;
4.30 (10) the exclusion allowed under section 139A of the Internal Revenue Code for
4.31federal subsidies for prescription drug plans;
4.32(11) the amount of expenses disallowed under section 290.10, subdivision 2;
4.33 (12) for taxable years beginning before January 1, 2010, and after December 31,
4.342010, the amount deducted for qualified tuition and related expenses under section 222 of
4.35the Internal Revenue Code, to the extent deducted from gross income;
5.1 (13) for taxable years beginning before January 1, 2010, and after December 31,
5.22010, the amount deducted for certain expenses of elementary and secondary school
5.3teachers under section 62(a)(2)(D) of the Internal Revenue Code, to the extent deducted
5.4from gross income;
5.5(14) the additional standard deduction for property taxes payable that is allowable
5.6under section 63(c)(1)(C) of the Internal Revenue Code;
5.7(15) the additional standard deduction for qualified motor vehicle sales taxes
5.8allowable under section 63(c)(1)(E) of the Internal Revenue Code;
5.9(16) discharge of indebtedness income resulting from reacquisition of business
5.10indebtedness and deferred under section 108(i) of the Internal Revenue Code; and
5.11(17) the amount of unemployment compensation exempt from tax under section
5.1285(c) of the Internal Revenue Code.
5.13EFFECTIVE DATE.This section is effective for taxable years beginning after
5.14December 31, 2009.
5.15 Sec. 4. Minnesota Statutes 2010, section 290.01, subdivision 19c, is amended to read:
5.16 Subd. 19c. Corporations; additions to federal taxable income. For corporations,
5.17there shall be added to federal taxable income:
5.18 (1) the amount of any deduction taken for federal income tax purposes for income,
5.19excise, or franchise taxes based on net income or related minimum taxes, including but not
5.20limited to the tax imposed under section290.0922 , paid by the corporation to Minnesota,
5.21another state, a political subdivision of another state, the District of Columbia, or any
5.22foreign country or possession of the United States;
5.23 (2) interest not subject to federal tax upon obligations of: the United States, its
5.24possessions, its agencies, or its instrumentalities; the state of Minnesota or any other
5.25state, any of its political or governmental subdivisions, any of its municipalities, or any
5.26of its governmental agencies or instrumentalities; the District of Columbia; or Indian
5.27tribal governments;
5.28 (3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal
5.29Revenue Code;
5.30 (4) the amount of any net operating loss deduction taken for federal income tax
5.31purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss
5.32deduction under section 810 of the Internal Revenue Code;
5.33 (5) the amount of any special deductions taken for federal income tax purposes
5.34under sections 241 to 247 and 965 of the Internal Revenue Code;
6.1 (6) losses from the business of mining, as defined in section290.05, subdivision 1 ,
6.2clause (a), that are not subject to Minnesota income tax;
6.3 (7) the amount of any capital losses deducted for federal income tax purposes under
6.4sections 1211 and 1212 of the Internal Revenue Code;
6.5 (8) the exempt foreign trade income of a foreign sales corporation under sections
6.6921(a) and 291 of the Internal Revenue Code;
6.7 (9) the amount of percentage depletion deducted under sections 611 through 614 and
6.8291 of the Internal Revenue Code;
6.9 (10) for certified pollution control facilities placed in service in a taxable year
6.10beginning before December 31, 1986, and for which amortization deductions were elected
6.11under section 169 of the Internal Revenue Code of 1954, as amended through December
6.1231, 1985, the amount of the amortization deduction allowed in computing federal taxable
6.13income for those facilities;
6.14 (11) the amount of any deemed dividend from a foreign operating corporation
6.15determined pursuant to section290.17, subdivision 4 , paragraph (g). The deemed dividend
6.16shall be reduced by the amount of the addition to income required by clauses (20), (21),
6.17(22), and (23);
6.18 (12) the amount of a partner's pro rata share of net income which does not flow
6.19through to the partner because the partnership elected to pay the tax on the income under
6.20section 6242(a)(2) of the Internal Revenue Code;
6.21 (13) the amount of net income excluded under section 114 of the Internal Revenue
6.22Code;
6.23 (14) any increase in subpart F income, as defined in section 952(a) of the Internal
6.24Revenue Code, for the taxable year when subpart F income is calculated without regard to
6.25the provisions of Division C, title III, section 303(b) of Public Law 110-343;
6.26 (15) 80 percent of the depreciation deduction allowed under section 168(k)(1)(A)
6.27and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if the taxpayer
6.28has an activity that in the taxable year generates a deduction for depreciation under
6.29section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable year
6.30that the taxpayer is not allowed to claim for the taxable year, "the depreciation allowed
6.31under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess of the
6.32depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A) over the
6.33amount of the loss from the activity that is not allowed in the taxable year. In succeeding
6.34taxable years when the losses not allowed in the taxable year are allowed, the depreciation
6.35under section 168(k)(1)(A) and (k)(4)(A) is allowed;
7.1 (16) 80 percent of the amount by which the deduction allowed by section 179 of the
7.2Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
7.3Revenue Code of 1986, as amended through December 31, 2003;
7.4 (17) to the extent deducted in computing federal taxable income, the amount of the
7.5deduction allowable under section 199 of the Internal Revenue Code;
7.6 (18) the exclusion allowed under section 139A of the Internal Revenue Code for
7.7federal subsidies for prescription drug plans;
7.8 (19) the amount of expenses disallowed under section290.10, subdivision 2 ;
7.9 (20) an amount equal to the interest and intangible expenses, losses, and costs paid,
7.10accrued, or incurred by any member of the taxpayer's unitary group to or for the benefit
7.11of a corporation that is a member of the taxpayer's unitary business group that qualifies
7.12as a foreign operating corporation. For purposes of this clause, intangible expenses and
7.13costs include:
7.14 (i) expenses, losses, and costs for, or related to, the direct or indirect acquisition,
7.15use, maintenance or management, ownership, sale, exchange, or any other disposition of
7.16intangible property;
7.17 (ii) losses incurred, directly or indirectly, from factoring transactions or discounting
7.18transactions;
7.19 (iii) royalty, patent, technical, and copyright fees;
7.20 (iv) licensing fees; and
7.21 (v) other similar expenses and costs.
7.22For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
7.23applications, trade names, trademarks, service marks, copyrights, mask works, trade
7.24secrets, and similar types of intangible assets.
7.25This clause does not apply to any item of interest or intangible expenses or costs paid,
7.26accrued, or incurred, directly or indirectly, to a foreign operating corporation with respect
7.27to such item of income to the extent that the income to the foreign operating corporation
7.28is income from sources without the United States as defined in subtitle A, chapter 1,
7.29subchapter N, part 1, of the Internal Revenue Code;
7.30 (21) except as already included in the taxpayer's taxable income pursuant to clause
7.31(20), any interest income and income generated from intangible property received or
7.32accrued by a foreign operating corporation that is a member of the taxpayer's unitary
7.33group. For purposes of this clause, income generated from intangible property includes:
7.34 (i) income related to the direct or indirect acquisition, use, maintenance or
7.35management, ownership, sale, exchange, or any other disposition of intangible property;
7.36 (ii) income from factoring transactions or discounting transactions;
8.1 (iii) royalty, patent, technical, and copyright fees;
8.2 (iv) licensing fees; and
8.3 (v) other similar income.
8.4For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
8.5applications, trade names, trademarks, service marks, copyrights, mask works, trade
8.6secrets, and similar types of intangible assets.
8.7This clause does not apply to any item of interest or intangible income received or accrued
8.8by a foreign operating corporation with respect to such item of income to the extent that
8.9the income is income from sources without the United States as defined in subtitle A,
8.10chapter 1, subchapter N, part 1, of the Internal Revenue Code;
8.11 (22) the dividends attributable to the income of a foreign operating corporation that
8.12is a member of the taxpayer's unitary group in an amount that is equal to the dividends
8.13paid deduction of a real estate investment trust under section 561(a) of the Internal
8.14Revenue Code for amounts paid or accrued by the real estate investment trust to the
8.15foreign operating corporation;
8.16 (23) the income of a foreign operating corporation that is a member of the taxpayer's
8.17unitary group in an amount that is equal to gains derived from the sale of real or personal
8.18property located in the United States;
8.19 (24) for taxable years beginning before January 1, 2010, and after December 31,
8.202010, the additional amount allowed as a deduction for donation of computer technology
8.21and equipment under section 170(e)(6) of the Internal Revenue Code, to the extent
8.22deducted from taxable income; and
8.23(25) discharge of indebtedness income resulting from reacquisition of business
8.24indebtedness and deferred under section 108(i) of the Internal Revenue Code.
8.25EFFECTIVE DATE.This section is effective for taxable years beginning after
8.26December 31, 2009.
8.27 Sec. 5. Minnesota Statutes 2010, section 290.01, subdivision 31, is amended to read:
8.28 Subd. 31. Internal Revenue Code. Unless specifically defined otherwise, for
8.29taxable years beginning before January 1, 2010, and after December 31, 2010, "Internal
8.30Revenue Code" means the Internal Revenue Code of 1986, as amended through March 18,
8.312010; and for taxable years beginning after December 31, 2009, and before January 1,
8.322011, "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended
8.33through December 31, 2010. Internal Revenue Code also includes any uncodified
9.1provision in federal law that relates to provisions of the Internal Revenue Code that are
9.2incorporated into Minnesota law.
9.3EFFECTIVE DATE.This section is effective the day following final enactment,
9.4except the changes incorporated by federal changes are effective at the same time as the
9.5changes were effective for federal purposes.
9.6 Sec. 6. Minnesota Statutes 2010, section 290A.03, subdivision 15, is amended to read:
9.7 Subd. 15. Internal Revenue Code. For taxable years beginning before January 1,
9.82010, and after December 31, 2010, "Internal Revenue Code" means the Internal Revenue
9.9Code of 1986, as amended through March 18, 2010; and for taxable years beginning after
9.10December 31, 2009, and before January 1, 2011, "Internal Revenue Code" means the
9.11Internal Revenue Code of 1986, as amended through December 31, 2010.
9.12EFFECTIVE DATE.This section is effective for property tax refunds based on
9.13property taxes payable on or after December 31, 2010, and rent paid on or after December
9.1431, 2009.
9.15 Sec. 7. CORRECTED FORM W-2 NOT REQUIRED.
9.16Employers who have prepared and distributed form W-2, wage and tax statement,
9.17for tax year 2010, that reported to employees the amount of health coverage provided to
9.18adult children under age 27 includable in net income under prior law, are not required to
9.19prepare and distribute corrected tax year 2010 form W-2.
9.20EFFECTIVE DATE.This section is effective the day following final enactment.
9.21 Sec. 8. REPEALER.
9.22Laws 2010, First Special Session chapter 1, article 13, section 6, is repealed.
9.23EFFECTIVE DATE.This section is effective the day following final enactment.
1.3Internal Revenue Code; repealing requirement that commissioner of revenue
1.4delay corporate refunds;amending Minnesota Statutes 2010, sections 289A.02,
1.5subdivision 7; 290.01, subdivisions 19, 19a, 19c, 31; 290A.03, subdivision 15;
1.6repealing Laws 2010, First Special Session chapter 1, article 13, section 6.
1.7BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.8 Section 1. Minnesota Statutes 2010, section 289A.02, subdivision 7, is amended to
1.9read:
1.10 Subd. 7. Internal Revenue Code. Unless specifically defined otherwise, for taxable
1.11years beginning before January 1, 2010, and after December 31, 2010, "Internal Revenue
1.12Code" means the Internal Revenue Code of 1986, as amended through March 18, 2010;
1.13and for taxable years beginning after December 31, 2009, and before January 1, 2011,
1.14"Internal Revenue Code" means the Internal Revenue Code of 1986, as amended through
1.15December 31, 2010.
1.16EFFECTIVE DATE.This section is effective the day following final enactment.
1.17 Sec. 2. Minnesota Statutes 2010, section 290.01, subdivision 19, is amended to read:
1.18 Subd. 19. Net income. The term "net income" means the federal taxable income,
1.19as defined in section 63 of the Internal Revenue Code of 1986, as amended through the
1.20date named in this subdivision, incorporating the federal effective dates of changes to the
1.21Internal Revenue Code and any elections made by the taxpayer in accordance with the
1.22Internal Revenue Code in determining federal taxable income for federal income tax
1.23purposes, and with the modifications provided in subdivisions 19a to 19f.
2.1 In the case of a regulated investment company or a fund thereof, as defined in section
2.2851(a) or 851(g) of the Internal Revenue Code, federal taxable income means investment
2.3company taxable income as defined in section 852(b)(2) of the Internal Revenue Code,
2.4except that:
2.5 (1) the exclusion of net capital gain provided in section 852(b)(2)(A) of the Internal
2.6Revenue Code does not apply;
2.7 (2) the deduction for dividends paid under section 852(b)(2)(D) of the Internal
2.8Revenue Code must be applied by allowing a deduction for capital gain dividends and
2.9exempt-interest dividends as defined in sections 852(b)(3)(C) and 852(b)(5) of the Internal
2.10Revenue Code; and
2.11 (3) the deduction for dividends paid must also be applied in the amount of any
2.12undistributed capital gains which the regulated investment company elects to have treated
2.13as provided in section 852(b)(3)(D) of the Internal Revenue Code.
2.14 The net income of a real estate investment trust as defined and limited by section
2.15856(a), (b), and (c) of the Internal Revenue Code means the real estate investment trust
2.16taxable income as defined in section 857(b)(2) of the Internal Revenue Code.
2.17 The net income of a designated settlement fund as defined in section 468B(d) of
2.18the Internal Revenue Code means the gross income as defined in section 468B(b) of the
2.19Internal Revenue Code.
2.20 The Internal Revenue Code of 1986, as amended through March 18, 2010, shall be
2.21in effect for taxable years beginning after December 31, 1996, except that for taxable years
2.22beginning after December 31, 2009, and before January 1, 2011, "Internal Revenue Code"
2.23means the Internal Revenue Code of 1986, as amended through December 31, 2010. The
2.24provisions of the act of January 22, 2010, Public Law 111-126, to accelerate the benefits
2.25for charitable cash contributions for the relief of victims of the Haitian earthquake, are
2.26effective at the same time it became effective for federal purposes and apply to the
2.27subtraction under subdivision 19b, clause (6). The provisions of title II, section 2112, of
2.28the act of September 27, 2010, Public Law 111-240, rollovers from elective deferral plans
2.29to designated Roth accounts, are effective at the same time they became effective for
2.30federal purposes and taxable rollovers are included in net income at the same time they are
2.31included in gross income for federal purposes.
2.32 Except as otherwise provided, references to the Internal Revenue Code in
2.33subdivisions 19 to 19f mean the code in effect for purposes of determining net income for
2.34the applicable year.
3.1EFFECTIVE DATE.This section is effective the day following final enactment,
3.2except that the changes incorporated by federal changes are effective at the same time as
3.3the changes were effective for federal purposes.
3.4 Sec. 3. Minnesota Statutes 2010, section 290.01, subdivision 19a, is amended to read:
3.5 Subd. 19a. Additions to federal taxable income. For individuals, estates, and
3.6trusts, there shall be added to federal taxable income:
3.7 (1)(i) interest income on obligations of any state other than Minnesota or a political
3.8or governmental subdivision, municipality, or governmental agency or instrumentality
3.9of any state other than Minnesota exempt from federal income taxes under the Internal
3.10Revenue Code or any other federal statute; and
3.11 (ii) exempt-interest dividends as defined in section 852(b)(5) of the Internal Revenue
3.12Code, except:
3.13(A) the portion of the exempt-interest dividends exempt from state taxation under
3.14the laws of the United States; and
3.15(B) the portion of the exempt-interest dividends derived from interest income
3.16on obligations of the state of Minnesota or its political or governmental subdivisions,
3.17municipalities, governmental agencies or instrumentalities, but only if the portion of the
3.18exempt-interest dividends from such Minnesota sources paid to all shareholders represents
3.1995 percent or more of the exempt-interest dividends, including any dividends exempt
3.20under subitem (A), that are paid by the regulated investment company as defined in section
3.21851(a) of the Internal Revenue Code, or the fund of the regulated investment company as
3.22defined in section 851(g) of the Internal Revenue Code, making the payment; and
3.23 (iii) for the purposes of items (i) and (ii), interest on obligations of an Indian tribal
3.24government described in section 7871(c) of the Internal Revenue Code shall be treated as
3.25interest income on obligations of the state in which the tribe is located;
3.26 (2) the amount of income, sales and use, motor vehicle sales, or excise taxes paid
3.27or accrued within the taxable year under this chapter and the amount of taxes based on
3.28net income paid, sales and use, motor vehicle sales, or excise taxes paid to any other
3.29state or to any province or territory of Canada, to the extent allowed as a deduction
3.30under section 63(d) of the Internal Revenue Code, but the addition may not be more
3.31than the amount by which the itemized deductions as allowed under section 63(d) of
3.32the Internal Revenue Code exceeds the amount of the standard deduction as defined in
3.33section 63(c) of the Internal Revenue Code, disregarding the amounts allowed under
3.34sections 63(c)(1)(C) and 63(c)(1)(E) of the Internal Revenue Code. For the purpose of
3.35this paragraph, the disallowance of itemized deductions under section 68 of the Internal
4.1Revenue Code of 1986, income, sales and use, motor vehicle sales, or excise taxes are
4.2the last itemized deductions disallowed;
4.3 (3) the capital gain amount of a lump-sum distribution to which the special tax under
4.4section 1122(h)(3)(B)(ii) of the Tax Reform Act of 1986, Public Law 99-514, applies;
4.5 (4) the amount of income taxes paid or accrued within the taxable year under this
4.6chapter and taxes based on net income paid to any other state or any province or territory
4.7of Canada, to the extent allowed as a deduction in determining federal adjusted gross
4.8income. For the purpose of this paragraph, income taxes do not include the taxes imposed
4.9by sections
4.10 (5) the amount of expense, interest, or taxes disallowed pursuant to section
4.12allowed under subdivision 19b, clause (1);
4.13 (6) the amount of a partner's pro rata share of net income which does not flow
4.14through to the partner because the partnership elected to pay the tax on the income under
4.15section 6242(a)(2) of the Internal Revenue Code;
4.16 (7) 80 percent of the depreciation deduction allowed under section 168(k) of the
4.17Internal Revenue Code. For purposes of this clause, if the taxpayer has an activity that
4.18in the taxable year generates a deduction for depreciation under section 168(k) and the
4.19activity generates a loss for the taxable year that the taxpayer is not allowed to claim for
4.20the taxable year, "the depreciation allowed under section 168(k)" for the taxable year is
4.21limited to excess of the depreciation claimed by the activity under section 168(k) over the
4.22amount of the loss from the activity that is not allowed in the taxable year. In succeeding
4.23taxable years when the losses not allowed in the taxable year are allowed, the depreciation
4.24under section 168(k) is allowed;
4.25 (8) 80 percent of the amount by which the deduction allowed by section 179 of the
4.26Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
4.27Revenue Code of 1986, as amended through December 31, 2003;
4.28 (9) to the extent deducted in computing federal taxable income, the amount of the
4.29deduction allowable under section 199 of the Internal Revenue Code;
4.30 (10) the exclusion allowed under section 139A of the Internal Revenue Code for
4.31federal subsidies for prescription drug plans;
4.32(11) the amount of expenses disallowed under section 290.10, subdivision 2;
4.33 (12) for taxable years beginning before January 1, 2010, and after December 31,
4.342010, the amount deducted for qualified tuition and related expenses under section 222 of
4.35the Internal Revenue Code, to the extent deducted from gross income;
5.1 (13) for taxable years beginning before January 1, 2010, and after December 31,
5.22010, the amount deducted for certain expenses of elementary and secondary school
5.3teachers under section 62(a)(2)(D) of the Internal Revenue Code, to the extent deducted
5.4from gross income;
5.5(14) the additional standard deduction for property taxes payable that is allowable
5.6under section 63(c)(1)(C) of the Internal Revenue Code;
5.7(15) the additional standard deduction for qualified motor vehicle sales taxes
5.8allowable under section 63(c)(1)(E) of the Internal Revenue Code;
5.9(16) discharge of indebtedness income resulting from reacquisition of business
5.10indebtedness and deferred under section 108(i) of the Internal Revenue Code; and
5.11(17) the amount of unemployment compensation exempt from tax under section
5.1285(c) of the Internal Revenue Code.
5.13EFFECTIVE DATE.This section is effective for taxable years beginning after
5.14December 31, 2009.
5.15 Sec. 4. Minnesota Statutes 2010, section 290.01, subdivision 19c, is amended to read:
5.16 Subd. 19c. Corporations; additions to federal taxable income. For corporations,
5.17there shall be added to federal taxable income:
5.18 (1) the amount of any deduction taken for federal income tax purposes for income,
5.19excise, or franchise taxes based on net income or related minimum taxes, including but not
5.20limited to the tax imposed under section
5.21another state, a political subdivision of another state, the District of Columbia, or any
5.22foreign country or possession of the United States;
5.23 (2) interest not subject to federal tax upon obligations of: the United States, its
5.24possessions, its agencies, or its instrumentalities; the state of Minnesota or any other
5.25state, any of its political or governmental subdivisions, any of its municipalities, or any
5.26of its governmental agencies or instrumentalities; the District of Columbia; or Indian
5.27tribal governments;
5.28 (3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal
5.29Revenue Code;
5.30 (4) the amount of any net operating loss deduction taken for federal income tax
5.31purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss
5.32deduction under section 810 of the Internal Revenue Code;
5.33 (5) the amount of any special deductions taken for federal income tax purposes
5.34under sections 241 to 247 and 965 of the Internal Revenue Code;
6.1 (6) losses from the business of mining, as defined in section
6.2clause (a), that are not subject to Minnesota income tax;
6.3 (7) the amount of any capital losses deducted for federal income tax purposes under
6.4sections 1211 and 1212 of the Internal Revenue Code;
6.5 (8) the exempt foreign trade income of a foreign sales corporation under sections
6.6921(a) and 291 of the Internal Revenue Code;
6.7 (9) the amount of percentage depletion deducted under sections 611 through 614 and
6.8291 of the Internal Revenue Code;
6.9 (10) for certified pollution control facilities placed in service in a taxable year
6.10beginning before December 31, 1986, and for which amortization deductions were elected
6.11under section 169 of the Internal Revenue Code of 1954, as amended through December
6.1231, 1985, the amount of the amortization deduction allowed in computing federal taxable
6.13income for those facilities;
6.14 (11) the amount of any deemed dividend from a foreign operating corporation
6.15determined pursuant to section
6.16shall be reduced by the amount of the addition to income required by clauses (20), (21),
6.17(22), and (23);
6.18 (12) the amount of a partner's pro rata share of net income which does not flow
6.19through to the partner because the partnership elected to pay the tax on the income under
6.20section 6242(a)(2) of the Internal Revenue Code;
6.21 (13) the amount of net income excluded under section 114 of the Internal Revenue
6.22Code;
6.23 (14) any increase in subpart F income, as defined in section 952(a) of the Internal
6.24Revenue Code, for the taxable year when subpart F income is calculated without regard to
6.25the provisions of Division C, title III, section 303(b) of Public Law 110-343;
6.26 (15) 80 percent of the depreciation deduction allowed under section 168(k)(1)(A)
6.27and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if the taxpayer
6.28has an activity that in the taxable year generates a deduction for depreciation under
6.29section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable year
6.30that the taxpayer is not allowed to claim for the taxable year, "the depreciation allowed
6.31under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess of the
6.32depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A) over the
6.33amount of the loss from the activity that is not allowed in the taxable year. In succeeding
6.34taxable years when the losses not allowed in the taxable year are allowed, the depreciation
6.35under section 168(k)(1)(A) and (k)(4)(A) is allowed;
7.1 (16) 80 percent of the amount by which the deduction allowed by section 179 of the
7.2Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
7.3Revenue Code of 1986, as amended through December 31, 2003;
7.4 (17) to the extent deducted in computing federal taxable income, the amount of the
7.5deduction allowable under section 199 of the Internal Revenue Code;
7.6 (18) the exclusion allowed under section 139A of the Internal Revenue Code for
7.7federal subsidies for prescription drug plans;
7.8 (19) the amount of expenses disallowed under section
7.9 (20) an amount equal to the interest and intangible expenses, losses, and costs paid,
7.10accrued, or incurred by any member of the taxpayer's unitary group to or for the benefit
7.11of a corporation that is a member of the taxpayer's unitary business group that qualifies
7.12as a foreign operating corporation. For purposes of this clause, intangible expenses and
7.13costs include:
7.14 (i) expenses, losses, and costs for, or related to, the direct or indirect acquisition,
7.15use, maintenance or management, ownership, sale, exchange, or any other disposition of
7.16intangible property;
7.17 (ii) losses incurred, directly or indirectly, from factoring transactions or discounting
7.18transactions;
7.19 (iii) royalty, patent, technical, and copyright fees;
7.20 (iv) licensing fees; and
7.21 (v) other similar expenses and costs.
7.22For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
7.23applications, trade names, trademarks, service marks, copyrights, mask works, trade
7.24secrets, and similar types of intangible assets.
7.25This clause does not apply to any item of interest or intangible expenses or costs paid,
7.26accrued, or incurred, directly or indirectly, to a foreign operating corporation with respect
7.27to such item of income to the extent that the income to the foreign operating corporation
7.28is income from sources without the United States as defined in subtitle A, chapter 1,
7.29subchapter N, part 1, of the Internal Revenue Code;
7.30 (21) except as already included in the taxpayer's taxable income pursuant to clause
7.31(20), any interest income and income generated from intangible property received or
7.32accrued by a foreign operating corporation that is a member of the taxpayer's unitary
7.33group. For purposes of this clause, income generated from intangible property includes:
7.34 (i) income related to the direct or indirect acquisition, use, maintenance or
7.35management, ownership, sale, exchange, or any other disposition of intangible property;
7.36 (ii) income from factoring transactions or discounting transactions;
8.1 (iii) royalty, patent, technical, and copyright fees;
8.2 (iv) licensing fees; and
8.3 (v) other similar income.
8.4For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
8.5applications, trade names, trademarks, service marks, copyrights, mask works, trade
8.6secrets, and similar types of intangible assets.
8.7This clause does not apply to any item of interest or intangible income received or accrued
8.8by a foreign operating corporation with respect to such item of income to the extent that
8.9the income is income from sources without the United States as defined in subtitle A,
8.10chapter 1, subchapter N, part 1, of the Internal Revenue Code;
8.11 (22) the dividends attributable to the income of a foreign operating corporation that
8.12is a member of the taxpayer's unitary group in an amount that is equal to the dividends
8.13paid deduction of a real estate investment trust under section 561(a) of the Internal
8.14Revenue Code for amounts paid or accrued by the real estate investment trust to the
8.15foreign operating corporation;
8.16 (23) the income of a foreign operating corporation that is a member of the taxpayer's
8.17unitary group in an amount that is equal to gains derived from the sale of real or personal
8.18property located in the United States;
8.19 (24) for taxable years beginning before January 1, 2010, and after December 31,
8.202010, the additional amount allowed as a deduction for donation of computer technology
8.21and equipment under section 170(e)(6) of the Internal Revenue Code, to the extent
8.22deducted from taxable income; and
8.23(25) discharge of indebtedness income resulting from reacquisition of business
8.24indebtedness and deferred under section 108(i) of the Internal Revenue Code.
8.25EFFECTIVE DATE.This section is effective for taxable years beginning after
8.26December 31, 2009.
8.27 Sec. 5. Minnesota Statutes 2010, section 290.01, subdivision 31, is amended to read:
8.28 Subd. 31. Internal Revenue Code. Unless specifically defined otherwise, for
8.29taxable years beginning before January 1, 2010, and after December 31, 2010, "Internal
8.30Revenue Code" means the Internal Revenue Code of 1986, as amended through March 18,
8.312010; and for taxable years beginning after December 31, 2009, and before January 1,
8.322011, "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended
8.33through December 31, 2010. Internal Revenue Code also includes any uncodified
9.1provision in federal law that relates to provisions of the Internal Revenue Code that are
9.2incorporated into Minnesota law.
9.3EFFECTIVE DATE.This section is effective the day following final enactment,
9.4except the changes incorporated by federal changes are effective at the same time as the
9.5changes were effective for federal purposes.
9.6 Sec. 6. Minnesota Statutes 2010, section 290A.03, subdivision 15, is amended to read:
9.7 Subd. 15. Internal Revenue Code. For taxable years beginning before January 1,
9.82010, and after December 31, 2010, "Internal Revenue Code" means the Internal Revenue
9.9Code of 1986, as amended through March 18, 2010; and for taxable years beginning after
9.10December 31, 2009, and before January 1, 2011, "Internal Revenue Code" means the
9.11Internal Revenue Code of 1986, as amended through December 31, 2010.
9.12EFFECTIVE DATE.This section is effective for property tax refunds based on
9.13property taxes payable on or after December 31, 2010, and rent paid on or after December
9.1431, 2009.
9.15 Sec. 7. CORRECTED FORM W-2 NOT REQUIRED.
9.16Employers who have prepared and distributed form W-2, wage and tax statement,
9.17for tax year 2010, that reported to employees the amount of health coverage provided to
9.18adult children under age 27 includable in net income under prior law, are not required to
9.19prepare and distribute corrected tax year 2010 form W-2.
9.20EFFECTIVE DATE.This section is effective the day following final enactment.
9.21 Sec. 8. REPEALER.
9.22Laws 2010, First Special Session chapter 1, article 13, section 6, is repealed.
9.23EFFECTIVE DATE.This section is effective the day following final enactment.
