Bill Text: MN HF96 | 2011-2012 | 87th Legislature | Introduced
Bill Title: Individual income and corporate franchise taxes conformed to the federal section 179 expensing allowance for certain taxpayers.
Sponsorship: Slight Partisan Bill (Republican 2-1)
Status: (Introduced - Dead) 2011-01-26 - Author added Atkins [HF96 Detail]
Download: Minnesota-2011-HF96-Introduced.html
1.2relating to taxes; individual income and corporate franchise; conforming to
1.3the federal section 179 expensing allowance for certain taxpayers;amending
1.4Minnesota Statutes 2010, section 290.01, subdivisions 19, 19a, 19c.
1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.6 Section 1. Minnesota Statutes 2010, section 290.01, subdivision 19, is amended to read:
1.7 Subd. 19. Net income. The term "net income" means the federal taxable income,
1.8as defined in section 63 of the Internal Revenue Code of 1986, as amended through the
1.9date named in this subdivision, incorporating the federal effective dates of changes to the
1.10Internal Revenue Code and any elections made by the taxpayer in accordance with the
1.11Internal Revenue Code in determining federal taxable income for federal income tax
1.12purposes, and with the modifications provided in subdivisions 19a to 19f.
1.13 In the case of a regulated investment company or a fund thereof, as defined in section
1.14851(a) or 851(g) of the Internal Revenue Code, federal taxable income means investment
1.15company taxable income as defined in section 852(b)(2) of the Internal Revenue Code,
1.16except that:
1.17 (1) the exclusion of net capital gain provided in section 852(b)(2)(A) of the Internal
1.18Revenue Code does not apply;
1.19 (2) the deduction for dividends paid under section 852(b)(2)(D) of the Internal
1.20Revenue Code must be applied by allowing a deduction for capital gain dividends and
1.21exempt-interest dividends as defined in sections 852(b)(3)(C) and 852(b)(5) of the Internal
1.22Revenue Code; and
2.1 (3) the deduction for dividends paid must also be applied in the amount of any
2.2undistributed capital gains which the regulated investment company elects to have treated
2.3as provided in section 852(b)(3)(D) of the Internal Revenue Code.
2.4 The net income of a real estate investment trust as defined and limited by section
2.5856(a), (b), and (c) of the Internal Revenue Code means the real estate investment trust
2.6taxable income as defined in section 857(b)(2) of the Internal Revenue Code.
2.7 The net income of a designated settlement fund as defined in section 468B(d) of
2.8the Internal Revenue Code means the gross income as defined in section 468B(b) of the
2.9Internal Revenue Code.
2.10 The Internal Revenue Code of 1986, as amended through March 18, 2010, shall be
2.11in effect for taxable years beginning after December 31, 1996. The provisions of the
2.12act of January 22, 2010, Public Law 111-126, to accelerate the benefits for charitable
2.13cash contributions for the relief of victims of the Haitian earthquake, are effective at the
2.14same time it became effective for federal purposes and apply to the subtraction under
2.15subdivision 19b, clause (6). The provisions of section 2021 of the act of September 27,
2.162010, Public Law 111-240, increased expensing limitations for 2010 and 2011; certain real
2.17property treated as section 179 property, and the provisions of section 402 of the act of
2.18December 17, 2010, Public Law 111-312, temporary extension of increased small business
2.19expensing, are effective at the same time they became effective for federal purposes.
2.20 Except as otherwise provided, references to the Internal Revenue Code in
2.21subdivisions 19 to 19f mean the code in effect for purposes of determining net income for
2.22the applicable year.
2.23EFFECTIVE DATE.This section is effective the day following final enactment.
2.24 Sec. 2. Minnesota Statutes 2010, section 290.01, subdivision 19a, is amended to read:
2.25 Subd. 19a. Additions to federal taxable income. For individuals, estates, and
2.26trusts, there shall be added to federal taxable income:
2.27 (1)(i) interest income on obligations of any state other than Minnesota or a political
2.28or governmental subdivision, municipality, or governmental agency or instrumentality
2.29of any state other than Minnesota exempt from federal income taxes under the Internal
2.30Revenue Code or any other federal statute; and
2.31 (ii) exempt-interest dividends as defined in section 852(b)(5) of the Internal Revenue
2.32Code, except:
2.33(A) the portion of the exempt-interest dividends exempt from state taxation under
2.34the laws of the United States; and
3.1(B) the portion of the exempt-interest dividends derived from interest income
3.2on obligations of the state of Minnesota or its political or governmental subdivisions,
3.3municipalities, governmental agencies or instrumentalities, but only if the portion of the
3.4exempt-interest dividends from such Minnesota sources paid to all shareholders represents
3.595 percent or more of the exempt-interest dividends, including any dividends exempt
3.6under subitem (A), that are paid by the regulated investment company as defined in section
3.7851(a) of the Internal Revenue Code, or the fund of the regulated investment company as
3.8defined in section 851(g) of the Internal Revenue Code, making the payment; and
3.9 (iii) for the purposes of items (i) and (ii), interest on obligations of an Indian tribal
3.10government described in section 7871(c) of the Internal Revenue Code shall be treated as
3.11interest income on obligations of the state in which the tribe is located;
3.12 (2) the amount of income, sales and use, motor vehicle sales, or excise taxes paid
3.13or accrued within the taxable year under this chapter and the amount of taxes based on
3.14net income paid, sales and use, motor vehicle sales, or excise taxes paid to any other
3.15state or to any province or territory of Canada, to the extent allowed as a deduction
3.16under section 63(d) of the Internal Revenue Code, but the addition may not be more
3.17than the amount by which the itemized deductions as allowed under section 63(d) of
3.18the Internal Revenue Code exceeds the amount of the standard deduction as defined in
3.19section 63(c) of the Internal Revenue Code, disregarding the amounts allowed under
3.20sections 63(c)(1)(C) and 63(c)(1)(E) of the Internal Revenue Code. For the purpose of
3.21this paragraph, the disallowance of itemized deductions under section 68 of the Internal
3.22Revenue Code of 1986, income, sales and use, motor vehicle sales, or excise taxes are
3.23the last itemized deductions disallowed;
3.24 (3) the capital gain amount of a lump-sum distribution to which the special tax under
3.25section 1122(h)(3)(B)(ii) of the Tax Reform Act of 1986, Public Law 99-514, applies;
3.26 (4) the amount of income taxes paid or accrued within the taxable year under this
3.27chapter and taxes based on net income paid to any other state or any province or territory
3.28of Canada, to the extent allowed as a deduction in determining federal adjusted gross
3.29income. For the purpose of this paragraph, income taxes do not include the taxes imposed
3.30by sections290.0922, subdivision 1 , paragraph (b),
290.9727 ,
290.9728 , and
290.9729 ;
3.31 (5) the amount of expense, interest, or taxes disallowed pursuant to section290.10
3.32other than expenses or interest used in computing net interest income for the subtraction
3.33allowed under subdivision 19b, clause (1);
3.34 (6) the amount of a partner's pro rata share of net income which does not flow
3.35through to the partner because the partnership elected to pay the tax on the income under
3.36section 6242(a)(2) of the Internal Revenue Code;
4.1 (7) 80 percent of the depreciation deduction allowed under section 168(k) of the
4.2Internal Revenue Code. For purposes of this clause, if the taxpayer has an activity that
4.3in the taxable year generates a deduction for depreciation under section 168(k) and the
4.4activity generates a loss for the taxable year that the taxpayer is not allowed to claim for
4.5the taxable year, "the depreciation allowed under section 168(k)" for the taxable year is
4.6limited to excess of the depreciation claimed by the activity under section 168(k) over the
4.7amount of the loss from the activity that is not allowed in the taxable year. In succeeding
4.8taxable years when the losses not allowed in the taxable year are allowed, the depreciation
4.9under section 168(k) is allowed;
4.10 (8) 80 percent of the amount by which the deduction allowed by section 179 of the
4.11Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
4.12Revenue Code of 1986, as amended through December 31, 2003, except that for taxable
4.13years beginning after December 31, 2010, the addition in this clause does not apply to
4.14property used in farming that is used by a taxpayer who is actively engaged in farming.
4.15For purposes of this clause, "actively engaged in farming" has the meaning given in Code
4.16of Federal Regulations, title 7, section 1400.201, and "farming" has the meaning given in
4.17section 464(e)(1) of the Internal Revenue Code;
4.18 (9) to the extent deducted in computing federal taxable income, the amount of the
4.19deduction allowable under section 199 of the Internal Revenue Code;
4.20 (10) the exclusion allowed under section 139A of the Internal Revenue Code for
4.21federal subsidies for prescription drug plans;
4.22(11) the amount of expenses disallowed under section 290.10, subdivision 2;
4.23 (12) the amount deducted for qualified tuition and related expenses under section
4.24222 of the Internal Revenue Code, to the extent deducted from gross income;
4.25 (13) the amount deducted for certain expenses of elementary and secondary school
4.26teachers under section 62(a)(2)(D) of the Internal Revenue Code, to the extent deducted
4.27from gross income;
4.28(14) the additional standard deduction for property taxes payable that is allowable
4.29under section 63(c)(1)(C) of the Internal Revenue Code;
4.30(15) the additional standard deduction for qualified motor vehicle sales taxes
4.31allowable under section 63(c)(1)(E) of the Internal Revenue Code;
4.32(16) discharge of indebtedness income resulting from reacquisition of business
4.33indebtedness and deferred under section 108(i) of the Internal Revenue Code; and
4.34(17) the amount of unemployment compensation exempt from tax under section
4.3585(c) of the Internal Revenue Code.
4.36EFFECTIVE DATE.This section is effective the day following final enactment.
5.1 Sec. 3. Minnesota Statutes 2010, section 290.01, subdivision 19c, is amended to read:
5.2 Subd. 19c. Corporations; additions to federal taxable income. For corporations,
5.3there shall be added to federal taxable income:
5.4 (1) the amount of any deduction taken for federal income tax purposes for income,
5.5excise, or franchise taxes based on net income or related minimum taxes, including but not
5.6limited to the tax imposed under section290.0922 , paid by the corporation to Minnesota,
5.7another state, a political subdivision of another state, the District of Columbia, or any
5.8foreign country or possession of the United States;
5.9 (2) interest not subject to federal tax upon obligations of: the United States, its
5.10possessions, its agencies, or its instrumentalities; the state of Minnesota or any other
5.11state, any of its political or governmental subdivisions, any of its municipalities, or any
5.12of its governmental agencies or instrumentalities; the District of Columbia; or Indian
5.13tribal governments;
5.14 (3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal
5.15Revenue Code;
5.16 (4) the amount of any net operating loss deduction taken for federal income tax
5.17purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss
5.18deduction under section 810 of the Internal Revenue Code;
5.19 (5) the amount of any special deductions taken for federal income tax purposes
5.20under sections 241 to 247 and 965 of the Internal Revenue Code;
5.21 (6) losses from the business of mining, as defined in section290.05, subdivision 1 ,
5.22clause (a), that are not subject to Minnesota income tax;
5.23 (7) the amount of any capital losses deducted for federal income tax purposes under
5.24sections 1211 and 1212 of the Internal Revenue Code;
5.25 (8) the exempt foreign trade income of a foreign sales corporation under sections
5.26921(a) and 291 of the Internal Revenue Code;
5.27 (9) the amount of percentage depletion deducted under sections 611 through 614 and
5.28291 of the Internal Revenue Code;
5.29 (10) for certified pollution control facilities placed in service in a taxable year
5.30beginning before December 31, 1986, and for which amortization deductions were elected
5.31under section 169 of the Internal Revenue Code of 1954, as amended through December
5.3231, 1985, the amount of the amortization deduction allowed in computing federal taxable
5.33income for those facilities;
5.34 (11) the amount of any deemed dividend from a foreign operating corporation
5.35determined pursuant to section290.17, subdivision 4 , paragraph (g). The deemed dividend
6.1shall be reduced by the amount of the addition to income required by clauses (20), (21),
6.2(22), and (23);
6.3 (12) the amount of a partner's pro rata share of net income which does not flow
6.4through to the partner because the partnership elected to pay the tax on the income under
6.5section 6242(a)(2) of the Internal Revenue Code;
6.6 (13) the amount of net income excluded under section 114 of the Internal Revenue
6.7Code;
6.8 (14) any increase in subpart F income, as defined in section 952(a) of the Internal
6.9Revenue Code, for the taxable year when subpart F income is calculated without regard to
6.10the provisions of Division C, title III, section 303(b) of Public Law 110-343;
6.11 (15) 80 percent of the depreciation deduction allowed under section 168(k)(1)(A)
6.12and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if the taxpayer
6.13has an activity that in the taxable year generates a deduction for depreciation under
6.14section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable year
6.15that the taxpayer is not allowed to claim for the taxable year, "the depreciation allowed
6.16under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess of the
6.17depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A) over the
6.18amount of the loss from the activity that is not allowed in the taxable year. In succeeding
6.19taxable years when the losses not allowed in the taxable year are allowed, the depreciation
6.20under section 168(k)(1)(A) and (k)(4)(A) is allowed;
6.21 (16) 80 percent of the amount by which the deduction allowed by section 179 of the
6.22Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
6.23Revenue Code of 1986, as amended through December 31, 2003, except that for taxable
6.24years beginning after December 31, 2010, the addition in this clause does not apply to
6.25property used in farming that is used by a taxpayer who is actively engaged in farming.
6.26For purposes of this clause, "actively engaged in farming" has the meaning given in Code
6.27of Federal Regulations, title 7, section 1400.201, and "farming" has the meaning given in
6.28section 464(e)(1) of the Internal Revenue Code;
6.29 (17) to the extent deducted in computing federal taxable income, the amount of the
6.30deduction allowable under section 199 of the Internal Revenue Code;
6.31 (18) the exclusion allowed under section 139A of the Internal Revenue Code for
6.32federal subsidies for prescription drug plans;
6.33 (19) the amount of expenses disallowed under section290.10, subdivision 2 ;
6.34 (20) an amount equal to the interest and intangible expenses, losses, and costs paid,
6.35accrued, or incurred by any member of the taxpayer's unitary group to or for the benefit
6.36of a corporation that is a member of the taxpayer's unitary business group that qualifies
7.1as a foreign operating corporation. For purposes of this clause, intangible expenses and
7.2costs include:
7.3 (i) expenses, losses, and costs for, or related to, the direct or indirect acquisition,
7.4use, maintenance or management, ownership, sale, exchange, or any other disposition of
7.5intangible property;
7.6 (ii) losses incurred, directly or indirectly, from factoring transactions or discounting
7.7transactions;
7.8 (iii) royalty, patent, technical, and copyright fees;
7.9 (iv) licensing fees; and
7.10 (v) other similar expenses and costs.
7.11For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
7.12applications, trade names, trademarks, service marks, copyrights, mask works, trade
7.13secrets, and similar types of intangible assets.
7.14This clause does not apply to any item of interest or intangible expenses or costs paid,
7.15accrued, or incurred, directly or indirectly, to a foreign operating corporation with respect
7.16to such item of income to the extent that the income to the foreign operating corporation
7.17is income from sources without the United States as defined in subtitle A, chapter 1,
7.18subchapter N, part 1, of the Internal Revenue Code;
7.19 (21) except as already included in the taxpayer's taxable income pursuant to clause
7.20(20), any interest income and income generated from intangible property received or
7.21accrued by a foreign operating corporation that is a member of the taxpayer's unitary
7.22group. For purposes of this clause, income generated from intangible property includes:
7.23 (i) income related to the direct or indirect acquisition, use, maintenance or
7.24management, ownership, sale, exchange, or any other disposition of intangible property;
7.25 (ii) income from factoring transactions or discounting transactions;
7.26 (iii) royalty, patent, technical, and copyright fees;
7.27 (iv) licensing fees; and
7.28 (v) other similar income.
7.29For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
7.30applications, trade names, trademarks, service marks, copyrights, mask works, trade
7.31secrets, and similar types of intangible assets.
7.32This clause does not apply to any item of interest or intangible income received or accrued
7.33by a foreign operating corporation with respect to such item of income to the extent that
7.34the income is income from sources without the United States as defined in subtitle A,
7.35chapter 1, subchapter N, part 1, of the Internal Revenue Code;
8.1 (22) the dividends attributable to the income of a foreign operating corporation that
8.2is a member of the taxpayer's unitary group in an amount that is equal to the dividends
8.3paid deduction of a real estate investment trust under section 561(a) of the Internal
8.4Revenue Code for amounts paid or accrued by the real estate investment trust to the
8.5foreign operating corporation;
8.6 (23) the income of a foreign operating corporation that is a member of the taxpayer's
8.7unitary group in an amount that is equal to gains derived from the sale of real or personal
8.8property located in the United States;
8.9 (24) the additional amount allowed as a deduction for donation of computer
8.10technology and equipment under section 170(e)(6) of the Internal Revenue Code, to the
8.11extent deducted from taxable income; and
8.12(25) discharge of indebtedness income resulting from reacquisition of business
8.13indebtedness and deferred under section 108(i) of the Internal Revenue Code.
8.14EFFECTIVE DATE.This section is effective the day following final enactment.
1.3the federal section 179 expensing allowance for certain taxpayers;amending
1.4Minnesota Statutes 2010, section 290.01, subdivisions 19, 19a, 19c.
1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.6 Section 1. Minnesota Statutes 2010, section 290.01, subdivision 19, is amended to read:
1.7 Subd. 19. Net income. The term "net income" means the federal taxable income,
1.8as defined in section 63 of the Internal Revenue Code of 1986, as amended through the
1.9date named in this subdivision, incorporating the federal effective dates of changes to the
1.10Internal Revenue Code and any elections made by the taxpayer in accordance with the
1.11Internal Revenue Code in determining federal taxable income for federal income tax
1.12purposes, and with the modifications provided in subdivisions 19a to 19f.
1.13 In the case of a regulated investment company or a fund thereof, as defined in section
1.14851(a) or 851(g) of the Internal Revenue Code, federal taxable income means investment
1.15company taxable income as defined in section 852(b)(2) of the Internal Revenue Code,
1.16except that:
1.17 (1) the exclusion of net capital gain provided in section 852(b)(2)(A) of the Internal
1.18Revenue Code does not apply;
1.19 (2) the deduction for dividends paid under section 852(b)(2)(D) of the Internal
1.20Revenue Code must be applied by allowing a deduction for capital gain dividends and
1.21exempt-interest dividends as defined in sections 852(b)(3)(C) and 852(b)(5) of the Internal
1.22Revenue Code; and
2.1 (3) the deduction for dividends paid must also be applied in the amount of any
2.2undistributed capital gains which the regulated investment company elects to have treated
2.3as provided in section 852(b)(3)(D) of the Internal Revenue Code.
2.4 The net income of a real estate investment trust as defined and limited by section
2.5856(a), (b), and (c) of the Internal Revenue Code means the real estate investment trust
2.6taxable income as defined in section 857(b)(2) of the Internal Revenue Code.
2.7 The net income of a designated settlement fund as defined in section 468B(d) of
2.8the Internal Revenue Code means the gross income as defined in section 468B(b) of the
2.9Internal Revenue Code.
2.10 The Internal Revenue Code of 1986, as amended through March 18, 2010, shall be
2.11in effect for taxable years beginning after December 31, 1996. The provisions of the
2.12act of January 22, 2010, Public Law 111-126, to accelerate the benefits for charitable
2.13cash contributions for the relief of victims of the Haitian earthquake, are effective at the
2.14same time it became effective for federal purposes and apply to the subtraction under
2.15subdivision 19b, clause (6). The provisions of section 2021 of the act of September 27,
2.162010, Public Law 111-240, increased expensing limitations for 2010 and 2011; certain real
2.17property treated as section 179 property, and the provisions of section 402 of the act of
2.18December 17, 2010, Public Law 111-312, temporary extension of increased small business
2.19expensing, are effective at the same time they became effective for federal purposes.
2.20 Except as otherwise provided, references to the Internal Revenue Code in
2.21subdivisions 19 to 19f mean the code in effect for purposes of determining net income for
2.22the applicable year.
2.23EFFECTIVE DATE.This section is effective the day following final enactment.
2.24 Sec. 2. Minnesota Statutes 2010, section 290.01, subdivision 19a, is amended to read:
2.25 Subd. 19a. Additions to federal taxable income. For individuals, estates, and
2.26trusts, there shall be added to federal taxable income:
2.27 (1)(i) interest income on obligations of any state other than Minnesota or a political
2.28or governmental subdivision, municipality, or governmental agency or instrumentality
2.29of any state other than Minnesota exempt from federal income taxes under the Internal
2.30Revenue Code or any other federal statute; and
2.31 (ii) exempt-interest dividends as defined in section 852(b)(5) of the Internal Revenue
2.32Code, except:
2.33(A) the portion of the exempt-interest dividends exempt from state taxation under
2.34the laws of the United States; and
3.1(B) the portion of the exempt-interest dividends derived from interest income
3.2on obligations of the state of Minnesota or its political or governmental subdivisions,
3.3municipalities, governmental agencies or instrumentalities, but only if the portion of the
3.4exempt-interest dividends from such Minnesota sources paid to all shareholders represents
3.595 percent or more of the exempt-interest dividends, including any dividends exempt
3.6under subitem (A), that are paid by the regulated investment company as defined in section
3.7851(a) of the Internal Revenue Code, or the fund of the regulated investment company as
3.8defined in section 851(g) of the Internal Revenue Code, making the payment; and
3.9 (iii) for the purposes of items (i) and (ii), interest on obligations of an Indian tribal
3.10government described in section 7871(c) of the Internal Revenue Code shall be treated as
3.11interest income on obligations of the state in which the tribe is located;
3.12 (2) the amount of income, sales and use, motor vehicle sales, or excise taxes paid
3.13or accrued within the taxable year under this chapter and the amount of taxes based on
3.14net income paid, sales and use, motor vehicle sales, or excise taxes paid to any other
3.15state or to any province or territory of Canada, to the extent allowed as a deduction
3.16under section 63(d) of the Internal Revenue Code, but the addition may not be more
3.17than the amount by which the itemized deductions as allowed under section 63(d) of
3.18the Internal Revenue Code exceeds the amount of the standard deduction as defined in
3.19section 63(c) of the Internal Revenue Code, disregarding the amounts allowed under
3.20sections 63(c)(1)(C) and 63(c)(1)(E) of the Internal Revenue Code. For the purpose of
3.21this paragraph, the disallowance of itemized deductions under section 68 of the Internal
3.22Revenue Code of 1986, income, sales and use, motor vehicle sales, or excise taxes are
3.23the last itemized deductions disallowed;
3.24 (3) the capital gain amount of a lump-sum distribution to which the special tax under
3.25section 1122(h)(3)(B)(ii) of the Tax Reform Act of 1986, Public Law 99-514, applies;
3.26 (4) the amount of income taxes paid or accrued within the taxable year under this
3.27chapter and taxes based on net income paid to any other state or any province or territory
3.28of Canada, to the extent allowed as a deduction in determining federal adjusted gross
3.29income. For the purpose of this paragraph, income taxes do not include the taxes imposed
3.30by sections
3.31 (5) the amount of expense, interest, or taxes disallowed pursuant to section
3.33allowed under subdivision 19b, clause (1);
3.34 (6) the amount of a partner's pro rata share of net income which does not flow
3.35through to the partner because the partnership elected to pay the tax on the income under
3.36section 6242(a)(2) of the Internal Revenue Code;
4.1 (7) 80 percent of the depreciation deduction allowed under section 168(k) of the
4.2Internal Revenue Code. For purposes of this clause, if the taxpayer has an activity that
4.3in the taxable year generates a deduction for depreciation under section 168(k) and the
4.4activity generates a loss for the taxable year that the taxpayer is not allowed to claim for
4.5the taxable year, "the depreciation allowed under section 168(k)" for the taxable year is
4.6limited to excess of the depreciation claimed by the activity under section 168(k) over the
4.7amount of the loss from the activity that is not allowed in the taxable year. In succeeding
4.8taxable years when the losses not allowed in the taxable year are allowed, the depreciation
4.9under section 168(k) is allowed;
4.10 (8) 80 percent of the amount by which the deduction allowed by section 179 of the
4.11Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
4.12Revenue Code of 1986, as amended through December 31, 2003, except that for taxable
4.13years beginning after December 31, 2010, the addition in this clause does not apply to
4.14property used in farming that is used by a taxpayer who is actively engaged in farming.
4.15For purposes of this clause, "actively engaged in farming" has the meaning given in Code
4.16of Federal Regulations, title 7, section 1400.201, and "farming" has the meaning given in
4.17section 464(e)(1) of the Internal Revenue Code;
4.18 (9) to the extent deducted in computing federal taxable income, the amount of the
4.19deduction allowable under section 199 of the Internal Revenue Code;
4.20 (10) the exclusion allowed under section 139A of the Internal Revenue Code for
4.21federal subsidies for prescription drug plans;
4.22(11) the amount of expenses disallowed under section 290.10, subdivision 2;
4.23 (12) the amount deducted for qualified tuition and related expenses under section
4.24222 of the Internal Revenue Code, to the extent deducted from gross income;
4.25 (13) the amount deducted for certain expenses of elementary and secondary school
4.26teachers under section 62(a)(2)(D) of the Internal Revenue Code, to the extent deducted
4.27from gross income;
4.28(14) the additional standard deduction for property taxes payable that is allowable
4.29under section 63(c)(1)(C) of the Internal Revenue Code;
4.30(15) the additional standard deduction for qualified motor vehicle sales taxes
4.31allowable under section 63(c)(1)(E) of the Internal Revenue Code;
4.32(16) discharge of indebtedness income resulting from reacquisition of business
4.33indebtedness and deferred under section 108(i) of the Internal Revenue Code; and
4.34(17) the amount of unemployment compensation exempt from tax under section
4.3585(c) of the Internal Revenue Code.
4.36EFFECTIVE DATE.This section is effective the day following final enactment.
5.1 Sec. 3. Minnesota Statutes 2010, section 290.01, subdivision 19c, is amended to read:
5.2 Subd. 19c. Corporations; additions to federal taxable income. For corporations,
5.3there shall be added to federal taxable income:
5.4 (1) the amount of any deduction taken for federal income tax purposes for income,
5.5excise, or franchise taxes based on net income or related minimum taxes, including but not
5.6limited to the tax imposed under section
5.7another state, a political subdivision of another state, the District of Columbia, or any
5.8foreign country or possession of the United States;
5.9 (2) interest not subject to federal tax upon obligations of: the United States, its
5.10possessions, its agencies, or its instrumentalities; the state of Minnesota or any other
5.11state, any of its political or governmental subdivisions, any of its municipalities, or any
5.12of its governmental agencies or instrumentalities; the District of Columbia; or Indian
5.13tribal governments;
5.14 (3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal
5.15Revenue Code;
5.16 (4) the amount of any net operating loss deduction taken for federal income tax
5.17purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss
5.18deduction under section 810 of the Internal Revenue Code;
5.19 (5) the amount of any special deductions taken for federal income tax purposes
5.20under sections 241 to 247 and 965 of the Internal Revenue Code;
5.21 (6) losses from the business of mining, as defined in section
5.22clause (a), that are not subject to Minnesota income tax;
5.23 (7) the amount of any capital losses deducted for federal income tax purposes under
5.24sections 1211 and 1212 of the Internal Revenue Code;
5.25 (8) the exempt foreign trade income of a foreign sales corporation under sections
5.26921(a) and 291 of the Internal Revenue Code;
5.27 (9) the amount of percentage depletion deducted under sections 611 through 614 and
5.28291 of the Internal Revenue Code;
5.29 (10) for certified pollution control facilities placed in service in a taxable year
5.30beginning before December 31, 1986, and for which amortization deductions were elected
5.31under section 169 of the Internal Revenue Code of 1954, as amended through December
5.3231, 1985, the amount of the amortization deduction allowed in computing federal taxable
5.33income for those facilities;
5.34 (11) the amount of any deemed dividend from a foreign operating corporation
5.35determined pursuant to section
6.1shall be reduced by the amount of the addition to income required by clauses (20), (21),
6.2(22), and (23);
6.3 (12) the amount of a partner's pro rata share of net income which does not flow
6.4through to the partner because the partnership elected to pay the tax on the income under
6.5section 6242(a)(2) of the Internal Revenue Code;
6.6 (13) the amount of net income excluded under section 114 of the Internal Revenue
6.7Code;
6.8 (14) any increase in subpart F income, as defined in section 952(a) of the Internal
6.9Revenue Code, for the taxable year when subpart F income is calculated without regard to
6.10the provisions of Division C, title III, section 303(b) of Public Law 110-343;
6.11 (15) 80 percent of the depreciation deduction allowed under section 168(k)(1)(A)
6.12and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if the taxpayer
6.13has an activity that in the taxable year generates a deduction for depreciation under
6.14section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable year
6.15that the taxpayer is not allowed to claim for the taxable year, "the depreciation allowed
6.16under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess of the
6.17depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A) over the
6.18amount of the loss from the activity that is not allowed in the taxable year. In succeeding
6.19taxable years when the losses not allowed in the taxable year are allowed, the depreciation
6.20under section 168(k)(1)(A) and (k)(4)(A) is allowed;
6.21 (16) 80 percent of the amount by which the deduction allowed by section 179 of the
6.22Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
6.23Revenue Code of 1986, as amended through December 31, 2003, except that for taxable
6.24years beginning after December 31, 2010, the addition in this clause does not apply to
6.25property used in farming that is used by a taxpayer who is actively engaged in farming.
6.26For purposes of this clause, "actively engaged in farming" has the meaning given in Code
6.27of Federal Regulations, title 7, section 1400.201, and "farming" has the meaning given in
6.28section 464(e)(1) of the Internal Revenue Code;
6.29 (17) to the extent deducted in computing federal taxable income, the amount of the
6.30deduction allowable under section 199 of the Internal Revenue Code;
6.31 (18) the exclusion allowed under section 139A of the Internal Revenue Code for
6.32federal subsidies for prescription drug plans;
6.33 (19) the amount of expenses disallowed under section
6.34 (20) an amount equal to the interest and intangible expenses, losses, and costs paid,
6.35accrued, or incurred by any member of the taxpayer's unitary group to or for the benefit
6.36of a corporation that is a member of the taxpayer's unitary business group that qualifies
7.1as a foreign operating corporation. For purposes of this clause, intangible expenses and
7.2costs include:
7.3 (i) expenses, losses, and costs for, or related to, the direct or indirect acquisition,
7.4use, maintenance or management, ownership, sale, exchange, or any other disposition of
7.5intangible property;
7.6 (ii) losses incurred, directly or indirectly, from factoring transactions or discounting
7.7transactions;
7.8 (iii) royalty, patent, technical, and copyright fees;
7.9 (iv) licensing fees; and
7.10 (v) other similar expenses and costs.
7.11For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
7.12applications, trade names, trademarks, service marks, copyrights, mask works, trade
7.13secrets, and similar types of intangible assets.
7.14This clause does not apply to any item of interest or intangible expenses or costs paid,
7.15accrued, or incurred, directly or indirectly, to a foreign operating corporation with respect
7.16to such item of income to the extent that the income to the foreign operating corporation
7.17is income from sources without the United States as defined in subtitle A, chapter 1,
7.18subchapter N, part 1, of the Internal Revenue Code;
7.19 (21) except as already included in the taxpayer's taxable income pursuant to clause
7.20(20), any interest income and income generated from intangible property received or
7.21accrued by a foreign operating corporation that is a member of the taxpayer's unitary
7.22group. For purposes of this clause, income generated from intangible property includes:
7.23 (i) income related to the direct or indirect acquisition, use, maintenance or
7.24management, ownership, sale, exchange, or any other disposition of intangible property;
7.25 (ii) income from factoring transactions or discounting transactions;
7.26 (iii) royalty, patent, technical, and copyright fees;
7.27 (iv) licensing fees; and
7.28 (v) other similar income.
7.29For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
7.30applications, trade names, trademarks, service marks, copyrights, mask works, trade
7.31secrets, and similar types of intangible assets.
7.32This clause does not apply to any item of interest or intangible income received or accrued
7.33by a foreign operating corporation with respect to such item of income to the extent that
7.34the income is income from sources without the United States as defined in subtitle A,
7.35chapter 1, subchapter N, part 1, of the Internal Revenue Code;
8.1 (22) the dividends attributable to the income of a foreign operating corporation that
8.2is a member of the taxpayer's unitary group in an amount that is equal to the dividends
8.3paid deduction of a real estate investment trust under section 561(a) of the Internal
8.4Revenue Code for amounts paid or accrued by the real estate investment trust to the
8.5foreign operating corporation;
8.6 (23) the income of a foreign operating corporation that is a member of the taxpayer's
8.7unitary group in an amount that is equal to gains derived from the sale of real or personal
8.8property located in the United States;
8.9 (24) the additional amount allowed as a deduction for donation of computer
8.10technology and equipment under section 170(e)(6) of the Internal Revenue Code, to the
8.11extent deducted from taxable income; and
8.12(25) discharge of indebtedness income resulting from reacquisition of business
8.13indebtedness and deferred under section 108(i) of the Internal Revenue Code.
8.14EFFECTIVE DATE.This section is effective the day following final enactment.
