Bill Text: MN SF10 | 2013-2014 | 88th Legislature | Introduced
Bill Title: Foreign source royalties repeal and research and development tax credit modification
Spectrum: Partisan Bill (Democrat 3-0)
Status: (Introduced - Dead) 2013-01-10 - Referred to Taxes [SF10 Detail]
Download: Minnesota-2013-SF10-Introduced.html
1.2relating to taxation; repealing the subtraction for foreign source royalties;
1.3modifying the research and development credit;amending Minnesota Statutes
1.42012, sections 290.01, subdivision 19d; 290.068, subdivision 1.
1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.6 Section 1. Minnesota Statutes 2012, section 290.01, subdivision 19d, is amended to read:
1.7 Subd. 19d. Corporations; modifications decreasing federal taxable income. For
1.8corporations, there shall be subtracted from federal taxable income after the increases
1.9provided in subdivision 19c:
1.10 (1) the amount of foreign dividend gross-up added to gross income for federal
1.11income tax purposes under section 78 of the Internal Revenue Code;
1.12 (2) the amount of salary expense not allowed for federal income tax purposes due to
1.13claiming the work opportunity credit under section 51 of the Internal Revenue Code;
1.14 (3) any dividend (not including any distribution in liquidation) paid within the
1.15taxable year by a national or state bank to the United States, or to any instrumentality of
1.16the United States exempt from federal income taxes, on the preferred stock of the bank
1.17owned by the United States or the instrumentality;
1.18 (4) amounts disallowed for intangible drilling costs due to differences between
1.19this chapter and the Internal Revenue Code in taxable years beginning before January
1.201, 1987, as follows:
1.21 (i) to the extent the disallowed costs are represented by physical property, an amount
1.22equal to the allowance for depreciation under Minnesota Statutes 1986, section290.09,
1.23subdivision 7 , subject to the modifications contained in subdivision 19e; and
2.1 (ii) to the extent the disallowed costs are not represented by physical property, an
2.2amount equal to the allowance for cost depletion under Minnesota Statutes 1986, section
2.3290.09, subdivision 8
;
2.4 (5) the deduction for capital losses pursuant to sections 1211 and 1212 of the
2.5Internal Revenue Code, except that:
2.6 (i) for capital losses incurred in taxable years beginning after December 31, 1986,
2.7capital loss carrybacks shall not be allowed;
2.8 (ii) for capital losses incurred in taxable years beginning after December 31, 1986,
2.9a capital loss carryover to each of the 15 taxable years succeeding the loss year shall be
2.10allowed;
2.11 (iii) for capital losses incurred in taxable years beginning before January 1, 1987, a
2.12capital loss carryback to each of the three taxable years preceding the loss year, subject to
2.13the provisions of Minnesota Statutes 1986, section290.16 , shall be allowed; and
2.14 (iv) for capital losses incurred in taxable years beginning before January 1, 1987,
2.15a capital loss carryover to each of the five taxable years succeeding the loss year to the
2.16extent such loss was not used in a prior taxable year and subject to the provisions of
2.17Minnesota Statutes 1986, section290.16 , shall be allowed;
2.18 (6) an amount for interest and expenses relating to income not taxable for federal
2.19income tax purposes, if (i) the income is taxable under this chapter and (ii) the interest and
2.20expenses were disallowed as deductions under the provisions of section 171(a)(2), 265 or
2.21291 of the Internal Revenue Code in computing federal taxable income;
2.22 (7) in the case of mines, oil and gas wells, other natural deposits, and timber for
2.23which percentage depletion was disallowed pursuant to subdivision 19c, clause (9), a
2.24reasonable allowance for depletion based on actual cost. In the case of leases the deduction
2.25must be apportioned between the lessor and lessee in accordance with rules prescribed
2.26by the commissioner. In the case of property held in trust, the allowable deduction must
2.27be apportioned between the income beneficiaries and the trustee in accordance with the
2.28pertinent provisions of the trust, or if there is no provision in the instrument, on the basis
2.29of the trust's income allocable to each;
2.30 (8) for certified pollution control facilities placed in service in a taxable year
2.31beginning before December 31, 1986, and for which amortization deductions were elected
2.32under section 169 of the Internal Revenue Code of 1954, as amended through December
2.3331, 1985, an amount equal to the allowance for depreciation under Minnesota Statutes
2.341986, section290.09, subdivision 7 ;
2.35 (9) amounts included in federal taxable income that are due to refunds of income,
2.36excise, or franchise taxes based on net income or related minimum taxes paid by the
3.1corporation to Minnesota, another state, a political subdivision of another state, the
3.2District of Columbia, or a foreign country or possession of the United States to the extent
3.3that the taxes were added to federal taxable income under section290.01, subdivision 19c ,
3.4clause (1), in a prior taxable year;
3.5(10) 80 percent of royalties, fees, or other like income accrued or received from a
3.6foreign operating corporation or a foreign corporation which is part of the same unitary
3.7business as the receiving corporation, unless the income resulting from such payments or
3.8accruals is income from sources within the United States as defined in subtitle A, chapter
3.91, subchapter N, part 1, of the Internal Revenue Code;
3.10(11) (10) income or gains from the business of mining as defined in section
290.05,
3.11subdivision 1 , clause (a), that are not subject to Minnesota franchise tax;
3.12(12) (11) the amount of disability access expenditures in the taxable year which are not
3.13allowed to be deducted or capitalized under section 44(d)(7) of the Internal Revenue Code;
3.14(13) (12) the amount of qualified research expenses not allowed for federal income
3.15tax purposes under section 280C(c) of the Internal Revenue Code, but only to the extent
3.16that the amount exceeds the amount of the credit allowed under section290.068 ;
3.17(14) (13) the amount of salary expenses not allowed for federal income tax purposes
3.18due to claiming the Indian employment credit under section 45A(a) of the Internal
3.19Revenue Code;
3.20(15) (14) for a corporation whose foreign sales corporation, as defined in section
3.21922 of the Internal Revenue Code, constituted a foreign operating corporation during any
3.22taxable year ending before January 1, 1995, and a return was filed by August 15, 1996,
3.23claiming the deduction under section290.21, subdivision 4 , for income received from
3.24the foreign operating corporation, an amount equal to1.23 multiplied by the amount of
3.25income excluded under section 114 of the Internal Revenue Code, provided the income is
3.26not income of a foreign operating company;
3.27(16) (15) any decrease in subpart F income, as defined in section 952(a) of the
3.28Internal Revenue Code, for the taxable year when subpart F income is calculated without
3.29regard to the provisions of Division C, title III, section 303(b) of Public Law 110-343;
3.30(17) (16) in each of the five tax years immediately following the tax year in which
3.31an addition is required under subdivision 19c, clause (15), an amount equal to one-fifth
3.32of the delayed depreciation. For purposes of this clause, "delayed depreciation" means
3.33the amount of the addition made by the taxpayer under subdivision 19c, clause (15). The
3.34resulting delayed depreciation cannot be less than zero;
4.1(18) (17) in each of the five tax years immediately following the tax year in which an
4.2addition is required under subdivision 19c, clause (16), an amount equal to one-fifth of
4.3the amount of the addition; and
4.4(19) (18) to the extent included in federal taxable income, discharge of indebtedness
4.5income resulting from reacquisition of business indebtedness included in federal taxable
4.6income under section 108(i) of the Internal Revenue Code. This subtraction applies only
4.7to the extent that the income was included in net income in a prior year as a result of the
4.8addition under section290.01, subdivision 19c , clause (25).
4.9EFFECTIVE DATE.This section is effective for taxable years beginning after
4.10December 31, 2012.
4.11 Sec. 2. Minnesota Statutes 2012, section 290.068, subdivision 1, is amended to read:
4.12 Subdivision 1. Credit allowed. A corporation, partners in a partnership, or
4.13shareholders in a corporation treated as an "S" corporation under section290.9725 are
4.14allowed a credit against the tax computed under this chapter for the taxable year equal to:
4.15 (a)ten ..... percent of the first $2,000,000 of the excess (if any) of
4.16 (1) the qualified research expenses for the taxable year, over
4.17 (2) the base amount; and
4.18 (b)2.5 ... percent on all of such excess expenses over $2,000,000.
4.19EFFECTIVE DATE.This section is effective for taxable years beginning after
4.20December 31, 2012.
1.3modifying the research and development credit;amending Minnesota Statutes
1.42012, sections 290.01, subdivision 19d; 290.068, subdivision 1.
1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.6 Section 1. Minnesota Statutes 2012, section 290.01, subdivision 19d, is amended to read:
1.7 Subd. 19d. Corporations; modifications decreasing federal taxable income. For
1.8corporations, there shall be subtracted from federal taxable income after the increases
1.9provided in subdivision 19c:
1.10 (1) the amount of foreign dividend gross-up added to gross income for federal
1.11income tax purposes under section 78 of the Internal Revenue Code;
1.12 (2) the amount of salary expense not allowed for federal income tax purposes due to
1.13claiming the work opportunity credit under section 51 of the Internal Revenue Code;
1.14 (3) any dividend (not including any distribution in liquidation) paid within the
1.15taxable year by a national or state bank to the United States, or to any instrumentality of
1.16the United States exempt from federal income taxes, on the preferred stock of the bank
1.17owned by the United States or the instrumentality;
1.18 (4) amounts disallowed for intangible drilling costs due to differences between
1.19this chapter and the Internal Revenue Code in taxable years beginning before January
1.201, 1987, as follows:
1.21 (i) to the extent the disallowed costs are represented by physical property, an amount
1.22equal to the allowance for depreciation under Minnesota Statutes 1986, section
1.23subdivision 7
2.1 (ii) to the extent the disallowed costs are not represented by physical property, an
2.2amount equal to the allowance for cost depletion under Minnesota Statutes 1986, section
2.4 (5) the deduction for capital losses pursuant to sections 1211 and 1212 of the
2.5Internal Revenue Code, except that:
2.6 (i) for capital losses incurred in taxable years beginning after December 31, 1986,
2.7capital loss carrybacks shall not be allowed;
2.8 (ii) for capital losses incurred in taxable years beginning after December 31, 1986,
2.9a capital loss carryover to each of the 15 taxable years succeeding the loss year shall be
2.10allowed;
2.11 (iii) for capital losses incurred in taxable years beginning before January 1, 1987, a
2.12capital loss carryback to each of the three taxable years preceding the loss year, subject to
2.13the provisions of Minnesota Statutes 1986, section
2.14 (iv) for capital losses incurred in taxable years beginning before January 1, 1987,
2.15a capital loss carryover to each of the five taxable years succeeding the loss year to the
2.16extent such loss was not used in a prior taxable year and subject to the provisions of
2.17Minnesota Statutes 1986, section
2.18 (6) an amount for interest and expenses relating to income not taxable for federal
2.19income tax purposes, if (i) the income is taxable under this chapter and (ii) the interest and
2.20expenses were disallowed as deductions under the provisions of section 171(a)(2), 265 or
2.21291 of the Internal Revenue Code in computing federal taxable income;
2.22 (7) in the case of mines, oil and gas wells, other natural deposits, and timber for
2.23which percentage depletion was disallowed pursuant to subdivision 19c, clause (9), a
2.24reasonable allowance for depletion based on actual cost. In the case of leases the deduction
2.25must be apportioned between the lessor and lessee in accordance with rules prescribed
2.26by the commissioner. In the case of property held in trust, the allowable deduction must
2.27be apportioned between the income beneficiaries and the trustee in accordance with the
2.28pertinent provisions of the trust, or if there is no provision in the instrument, on the basis
2.29of the trust's income allocable to each;
2.30 (8) for certified pollution control facilities placed in service in a taxable year
2.31beginning before December 31, 1986, and for which amortization deductions were elected
2.32under section 169 of the Internal Revenue Code of 1954, as amended through December
2.3331, 1985, an amount equal to the allowance for depreciation under Minnesota Statutes
2.341986, section
2.35 (9) amounts included in federal taxable income that are due to refunds of income,
2.36excise, or franchise taxes based on net income or related minimum taxes paid by the
3.1corporation to Minnesota, another state, a political subdivision of another state, the
3.2District of Columbia, or a foreign country or possession of the United States to the extent
3.3that the taxes were added to federal taxable income under section
3.4clause (1), in a prior taxable year;
3.5
3.6
3.7
3.8
3.9
3.10
3.11subdivision 1
3.12
3.13allowed to be deducted or capitalized under section 44(d)(7) of the Internal Revenue Code;
3.14
3.15tax purposes under section 280C(c) of the Internal Revenue Code, but only to the extent
3.16that the amount exceeds the amount of the credit allowed under section
3.17
3.18due to claiming the Indian employment credit under section 45A(a) of the Internal
3.19Revenue Code;
3.20
3.21922 of the Internal Revenue Code, constituted a foreign operating corporation during any
3.22taxable year ending before January 1, 1995, and a return was filed by August 15, 1996,
3.23claiming the deduction under section
3.24the foreign operating corporation, an amount equal to
3.25income excluded under section 114 of the Internal Revenue Code, provided the income is
3.26not income of a foreign operating company;
3.27
3.28Internal Revenue Code, for the taxable year when subpart F income is calculated without
3.29regard to the provisions of Division C, title III, section 303(b) of Public Law 110-343;
3.30
3.31an addition is required under subdivision 19c, clause (15), an amount equal to one-fifth
3.32of the delayed depreciation. For purposes of this clause, "delayed depreciation" means
3.33the amount of the addition made by the taxpayer under subdivision 19c, clause (15). The
3.34resulting delayed depreciation cannot be less than zero;
4.1
4.2addition is required under subdivision 19c, clause (16), an amount equal to one-fifth of
4.3the amount of the addition; and
4.4
4.5income resulting from reacquisition of business indebtedness included in federal taxable
4.6income under section 108(i) of the Internal Revenue Code. This subtraction applies only
4.7to the extent that the income was included in net income in a prior year as a result of the
4.8addition under section
4.9EFFECTIVE DATE.This section is effective for taxable years beginning after
4.10December 31, 2012.
4.11 Sec. 2. Minnesota Statutes 2012, section 290.068, subdivision 1, is amended to read:
4.12 Subdivision 1. Credit allowed. A corporation, partners in a partnership, or
4.13shareholders in a corporation treated as an "S" corporation under section
4.14allowed a credit against the tax computed under this chapter for the taxable year equal to:
4.15 (a)
4.16 (1) the qualified research expenses for the taxable year, over
4.17 (2) the base amount; and
4.18 (b)
4.19EFFECTIVE DATE.This section is effective for taxable years beginning after
4.20December 31, 2012.
