Bill Text: MN SF2099 | 2011-2012 | 87th Legislature | Introduced
Bill Title: Individual income and corporate franchise taxes conformance to federal section 179 expensing allowance
Sponsorship: Moderate Partisan Bill (Republican 4-1)
Status: (Introduced - Dead) 2012-02-27 - Referred to Taxes [SF2099 Detail]
Download: Minnesota-2011-SF2099-Introduced.html
1.2relating to taxes; individual income and corporate franchise; conforming
1.3to federal section 179 expensing allowance for certain taxpayers;amending
1.4Minnesota Statutes 2011 Supplement, section 290.01, subdivisions 19a, 19c.
1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.6 Section 1. Minnesota Statutes 2011 Supplement, section 290.01, subdivision 19a,
1.7is amended to read:
1.8 Subd. 19a. Additions to federal taxable income. For individuals, estates, and
1.9trusts, there shall be added to federal taxable income:
1.10 (1)(i) interest income on obligations of any state other than Minnesota or a political
1.11or governmental subdivision, municipality, or governmental agency or instrumentality
1.12of any state other than Minnesota exempt from federal income taxes under the Internal
1.13Revenue Code or any other federal statute; and
1.14 (ii) exempt-interest dividends as defined in section 852(b)(5) of the Internal Revenue
1.15Code, except:
1.16(A) the portion of the exempt-interest dividends exempt from state taxation under
1.17the laws of the United States; and
1.18(B) the portion of the exempt-interest dividends derived from interest income
1.19on obligations of the state of Minnesota or its political or governmental subdivisions,
1.20municipalities, governmental agencies or instrumentalities, but only if the portion of the
1.21exempt-interest dividends from such Minnesota sources paid to all shareholders represents
1.2295 percent or more of the exempt-interest dividends, including any dividends exempt
1.23under subitem (A), that are paid by the regulated investment company as defined in section
2.1851(a) of the Internal Revenue Code, or the fund of the regulated investment company as
2.2defined in section 851(g) of the Internal Revenue Code, making the payment; and
2.3 (iii) for the purposes of items (i) and (ii), interest on obligations of an Indian tribal
2.4government described in section 7871(c) of the Internal Revenue Code shall be treated as
2.5interest income on obligations of the state in which the tribe is located;
2.6 (2) the amount of income, sales and use, motor vehicle sales, or excise taxes paid or
2.7accrued within the taxable year under this chapter and the amount of taxes based on net
2.8income paid, sales and use, motor vehicle sales, or excise taxes paid to any other state
2.9or to any province or territory of Canada, to the extent allowed as a deduction under
2.10section 63(d) of the Internal Revenue Code, but the addition may not be more than the
2.11amount by which the itemized deductions as allowed under section 63(d) of the Internal
2.12Revenue Code exceeds the amount of the standard deduction as defined in section 63(c) of
2.13the Internal Revenue Code, disregarding the amounts allowed under sections 63(c)(1)(C)
2.14and 63(c)(1)(E) of the Internal Revenue Code, minus any addition that would have been
2.15required under clause (21) if the taxpayer had claimed the standard deduction. For the
2.16purpose of this paragraph, the disallowance of itemized deductions under section 68 of
2.17the Internal Revenue Code of 1986, income, sales and use, motor vehicle sales, or excise
2.18taxes are the last itemized deductions disallowed;
2.19 (3) the capital gain amount of a lump-sum distribution to which the special tax under
2.20section 1122(h)(3)(B)(ii) of the Tax Reform Act of 1986, Public Law 99-514, applies;
2.21 (4) the amount of income taxes paid or accrued within the taxable year under this
2.22chapter and taxes based on net income paid to any other state or any province or territory
2.23of Canada, to the extent allowed as a deduction in determining federal adjusted gross
2.24income. For the purpose of this paragraph, income taxes do not include the taxes imposed
2.25by sections290.0922, subdivision 1 , paragraph (b),
290.9727 ,
290.9728 , and
290.9729 ;
2.26 (5) the amount of expense, interest, or taxes disallowed pursuant to section290.10
2.27other than expenses or interest used in computing net interest income for the subtraction
2.28allowed under subdivision 19b, clause (1);
2.29 (6) the amount of a partner's pro rata share of net income which does not flow
2.30through to the partner because the partnership elected to pay the tax on the income under
2.31section 6242(a)(2) of the Internal Revenue Code;
2.32 (7) 80 percent of the depreciation deduction allowed under section 168(k) of the
2.33Internal Revenue Code. For purposes of this clause, if the taxpayer has an activity that
2.34in the taxable year generates a deduction for depreciation under section 168(k) and the
2.35activity generates a loss for the taxable year that the taxpayer is not allowed to claim for
2.36the taxable year, "the depreciation allowed under section 168(k)" for the taxable year is
3.1limited to excess of the depreciation claimed by the activity under section 168(k) over the
3.2amount of the loss from the activity that is not allowed in the taxable year. In succeeding
3.3taxable years when the losses not allowed in the taxable year are allowed, the depreciation
3.4under section 168(k) is allowed;
3.5 (8) 80 percent of the amount by which the deduction allowed by section 179 of the
3.6Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
3.7Revenue Code of 1986, as amended through December 31, 2003;, except that for taxable
3.8years beginning after December 31, 2011, the addition in this clause does not apply to
3.9property used in farming that is used by a taxpayer who is actively engaged in farming.
3.10For purposes of this clause, "actively engaged in farming" has the meaning given in Code
3.11of Federal Regulations, title 7, section 1400.201, and "farming" has the meaning given in
3.12section 464(e)(1) of the Internal Revenue Code;
3.13 (9) to the extent deducted in computing federal taxable income, the amount of the
3.14deduction allowable under section 199 of the Internal Revenue Code;
3.15 (10) for taxable years beginning before January 1, 2013, the exclusion allowed
3.16under section 139A of the Internal Revenue Code for federal subsidies for prescription
3.17drug plans;
3.18(11) the amount of expenses disallowed under section 290.10, subdivision 2;
3.19 (12) for taxable years beginning before January 1, 2010, the amount deducted for
3.20qualified tuition and related expenses under section 222 of the Internal Revenue Code, to
3.21the extent deducted from gross income;
3.22 (13) for taxable years beginning before January 1, 2010, the amount deducted for
3.23certain expenses of elementary and secondary school teachers under section 62(a)(2)(D)
3.24of the Internal Revenue Code, to the extent deducted from gross income;
3.25(14) the additional standard deduction for property taxes payable that is allowable
3.26under section 63(c)(1)(C) of the Internal Revenue Code;
3.27(15) the additional standard deduction for qualified motor vehicle sales taxes
3.28allowable under section 63(c)(1)(E) of the Internal Revenue Code;
3.29(16) discharge of indebtedness income resulting from reacquisition of business
3.30indebtedness and deferred under section 108(i) of the Internal Revenue Code;
3.31(17) the amount of unemployment compensation exempt from tax under section
3.3285(c) of the Internal Revenue Code;
3.33(18) changes to federal taxable income attributable to a net operating loss that the
3.34taxpayer elected to carry back for more than two years for federal purposes but for which
3.35the losses can be carried back for only two years under section290.095, subdivision
3.3611 , paragraph (c);
4.1(19) to the extent included in the computation of federal taxable income in taxable
4.2years beginning after December 31, 2010, the amount of disallowed itemized deductions,
4.3but the amount of disallowed itemized deductions plus the addition required under clause
4.4(2) may not be more than the amount by which the itemized deductions as allowed under
4.5section 63(d) of the Internal Revenue Code exceeds the amount of the standard deduction
4.6as defined in section 63(c) of the Internal Revenue Code, disregarding the amounts
4.7allowed under sections 63(c)(1)(C) and 63(c)(1)(E) of the Internal Revenue Code, and
4.8reduced by any addition that would have been required under clause (21) if the taxpayer
4.9had claimed the standard deduction;
4.10(i) The amount of disallowed itemized deductions is equal to the lesser of:
4.11(A) three percent of the excess of the taxpayer's federal adjusted gross income
4.12over the applicable amount; or
4.13(B) 80 percent of the amount of the itemized deductions otherwise allowable to the
4.14taxpayer under the Internal Revenue Code for the taxable year.
4.15(ii) The term "applicable amount" means $100,000, or $50,000 in the case of a
4.16married individual filing a separate return. Each dollar amount shall be increased by
4.17an amount equal to:
4.18(A) such dollar amount, multiplied by
4.19(B) the cost-of-living adjustment determined under section 1(f)(3) of the Internal
4.20Revenue Code for the calendar year in which the taxable year begins, by substituting
4.21"calendar year 1990" for "calendar year 1992" in subparagraph (B) thereof.
4.22(iii) The term "itemized deductions" does not include:
4.23(A) the deduction for medical expenses under section 213 of the Internal Revenue
4.24Code;
4.25(B) any deduction for investment interest as defined in section 163(d) of the Internal
4.26Revenue Code; and
4.27(C) the deduction under section 165(a) of the Internal Revenue Code for casualty or
4.28theft losses described in paragraph (2) or (3) of section 165(c) of the Internal Revenue
4.29Code or for losses described in section 165(d) of the Internal Revenue Code;
4.30(20) to the extent included in federal taxable income in taxable years beginning after
4.31December 31, 2010, the amount of disallowed personal exemptions for taxpayers with
4.32federal adjusted gross income over the threshold amount;
4.33(i) The disallowed personal exemption amount is equal to the dollar amount of the
4.34personal exemptions claimed by the taxpayer in the computation of federal taxable income
4.35multiplied by the applicable percentage.
5.1(ii) "Applicable percentage" means two percentage points for each $2,500 (or
5.2fraction thereof) by which the taxpayer's federal adjusted gross income for the taxable
5.3year exceeds the threshold amount. In the case of a married individual filing a separate
5.4return, the preceding sentence shall be applied by substituting "$1,250" for "$2,500." In
5.5no event shall the applicable percentage exceed 100 percent.
5.6(iii) The term "threshold amount" means:
5.7(A) $150,000 in the case of a joint return or a surviving spouse;
5.8(B) $125,000 in the case of a head of a household;
5.9(C) $100,000 in the case of an individual who is not married and who is not a
5.10surviving spouse or head of a household; and
5.11(D) $75,000 in the case of a married individual filing a separate return.
5.12(iv) The thresholds shall be increased by an amount equal to:
5.13(A) such dollar amount, multiplied by
5.14(B) the cost-of-living adjustment determined under section 1(f)(3) of the Internal
5.15Revenue Code for the calendar year in which the taxable year begins, by substituting
5.16"calendar year 1990" for "calendar year 1992" in subparagraph (B) thereof; and
5.17(21) to the extent deducted in the computation of federal taxable income, for taxable
5.18years beginning after December 31, 2010, and before January 1, 2013, the difference
5.19between the standard deduction allowed under section 63(c) of the Internal Revenue Code
5.20and the standard deduction allowed for 2011 and 2012 under the Internal Revenue Code
5.21as amended through December 1, 2010.
5.22EFFECTIVE DATE.This section is effective the day following final enactment.
5.23 Sec. 2. Minnesota Statutes 2011 Supplement, section 290.01, subdivision 19c, is
5.24amended to read:
5.25 Subd. 19c. Corporations; additions to federal taxable income. For corporations,
5.26there shall be added to federal taxable income:
5.27 (1) the amount of any deduction taken for federal income tax purposes for income,
5.28excise, or franchise taxes based on net income or related minimum taxes, including but not
5.29limited to the tax imposed under section290.0922 , paid by the corporation to Minnesota,
5.30another state, a political subdivision of another state, the District of Columbia, or any
5.31foreign country or possession of the United States;
5.32 (2) interest not subject to federal tax upon obligations of: the United States, its
5.33possessions, its agencies, or its instrumentalities; the state of Minnesota or any other
5.34state, any of its political or governmental subdivisions, any of its municipalities, or any
6.1of its governmental agencies or instrumentalities; the District of Columbia; or Indian
6.2tribal governments;
6.3 (3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal
6.4Revenue Code;
6.5 (4) the amount of any net operating loss deduction taken for federal income tax
6.6purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss
6.7deduction under section 810 of the Internal Revenue Code;
6.8 (5) the amount of any special deductions taken for federal income tax purposes
6.9under sections 241 to 247 and 965 of the Internal Revenue Code;
6.10 (6) losses from the business of mining, as defined in section290.05, subdivision 1 ,
6.11clause (a), that are not subject to Minnesota income tax;
6.12 (7) the amount of any capital losses deducted for federal income tax purposes under
6.13sections 1211 and 1212 of the Internal Revenue Code;
6.14 (8) the exempt foreign trade income of a foreign sales corporation under sections
6.15921(a) and 291 of the Internal Revenue Code;
6.16 (9) the amount of percentage depletion deducted under sections 611 through 614 and
6.17291 of the Internal Revenue Code;
6.18 (10) for certified pollution control facilities placed in service in a taxable year
6.19beginning before December 31, 1986, and for which amortization deductions were elected
6.20under section 169 of the Internal Revenue Code of 1954, as amended through December
6.2131, 1985, the amount of the amortization deduction allowed in computing federal taxable
6.22income for those facilities;
6.23 (11) the amount of any deemed dividend from a foreign operating corporation
6.24determined pursuant to section290.17, subdivision 4 , paragraph (g). The deemed dividend
6.25shall be reduced by the amount of the addition to income required by clauses (20), (21),
6.26(22), and (23);
6.27 (12) the amount of a partner's pro rata share of net income which does not flow
6.28through to the partner because the partnership elected to pay the tax on the income under
6.29section 6242(a)(2) of the Internal Revenue Code;
6.30 (13) the amount of net income excluded under section 114 of the Internal Revenue
6.31Code;
6.32 (14) any increase in subpart F income, as defined in section 952(a) of the Internal
6.33Revenue Code, for the taxable year when subpart F income is calculated without regard to
6.34the provisions of Division C, title III, section 303(b) of Public Law 110-343;
6.35 (15) 80 percent of the depreciation deduction allowed under section 168(k)(1)(A)
6.36and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if the taxpayer
7.1has an activity that in the taxable year generates a deduction for depreciation under
7.2section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable year
7.3that the taxpayer is not allowed to claim for the taxable year, "the depreciation allowed
7.4under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess of the
7.5depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A) over the
7.6amount of the loss from the activity that is not allowed in the taxable year. In succeeding
7.7taxable years when the losses not allowed in the taxable year are allowed, the depreciation
7.8under section 168(k)(1)(A) and (k)(4)(A) is allowed;
7.9 (16) 80 percent of the amount by which the deduction allowed by section 179 of the
7.10Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
7.11Revenue Code of 1986, as amended through December 31, 2003;, except that for taxable
7.12years beginning after December 31, 2011, the addition in this clause does not apply to
7.13property used in farming that is used by a taxpayer who is actively engaged in farming.
7.14For purposes of this clause, "actively engaged in farming" has the meaning given in Code
7.15of Federal Regulations, title 7, section 1400.201, and "farming" has the meaning given in
7.16section 464(e)(1) of the Internal Revenue Code;
7.17 (17) to the extent deducted in computing federal taxable income, the amount of the
7.18deduction allowable under section 199 of the Internal Revenue Code;
7.19 (18) for taxable years beginning before January 1, 2013, the exclusion allowed
7.20under section 139A of the Internal Revenue Code for federal subsidies for prescription
7.21drug plans;
7.22 (19) the amount of expenses disallowed under section290.10, subdivision 2 ;
7.23 (20) an amount equal to the interest and intangible expenses, losses, and costs paid,
7.24accrued, or incurred by any member of the taxpayer's unitary group to or for the benefit
7.25of a corporation that is a member of the taxpayer's unitary business group that qualifies
7.26as a foreign operating corporation. For purposes of this clause, intangible expenses and
7.27costs include:
7.28 (i) expenses, losses, and costs for, or related to, the direct or indirect acquisition,
7.29use, maintenance or management, ownership, sale, exchange, or any other disposition of
7.30intangible property;
7.31 (ii) losses incurred, directly or indirectly, from factoring transactions or discounting
7.32transactions;
7.33 (iii) royalty, patent, technical, and copyright fees;
7.34 (iv) licensing fees; and
7.35 (v) other similar expenses and costs.
8.1For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
8.2applications, trade names, trademarks, service marks, copyrights, mask works, trade
8.3secrets, and similar types of intangible assets.
8.4This clause does not apply to any item of interest or intangible expenses or costs paid,
8.5accrued, or incurred, directly or indirectly, to a foreign operating corporation with respect
8.6to such item of income to the extent that the income to the foreign operating corporation
8.7is income from sources without the United States as defined in subtitle A, chapter 1,
8.8subchapter N, part 1, of the Internal Revenue Code;
8.9 (21) except as already included in the taxpayer's taxable income pursuant to clause
8.10(20), any interest income and income generated from intangible property received or
8.11accrued by a foreign operating corporation that is a member of the taxpayer's unitary
8.12group. For purposes of this clause, income generated from intangible property includes:
8.13 (i) income related to the direct or indirect acquisition, use, maintenance or
8.14management, ownership, sale, exchange, or any other disposition of intangible property;
8.15 (ii) income from factoring transactions or discounting transactions;
8.16 (iii) royalty, patent, technical, and copyright fees;
8.17 (iv) licensing fees; and
8.18 (v) other similar income.
8.19For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
8.20applications, trade names, trademarks, service marks, copyrights, mask works, trade
8.21secrets, and similar types of intangible assets.
8.22This clause does not apply to any item of interest or intangible income received or accrued
8.23by a foreign operating corporation with respect to such item of income to the extent that
8.24the income is income from sources without the United States as defined in subtitle A,
8.25chapter 1, subchapter N, part 1, of the Internal Revenue Code;
8.26 (22) the dividends attributable to the income of a foreign operating corporation that
8.27is a member of the taxpayer's unitary group in an amount that is equal to the dividends
8.28paid deduction of a real estate investment trust under section 561(a) of the Internal
8.29Revenue Code for amounts paid or accrued by the real estate investment trust to the
8.30foreign operating corporation;
8.31 (23) the income of a foreign operating corporation that is a member of the taxpayer's
8.32unitary group in an amount that is equal to gains derived from the sale of real or personal
8.33property located in the United States;
9.1 (24) for taxable years beginning before January 1, 2010, the additional amount
9.2allowed as a deduction for donation of computer technology and equipment under section
9.3170(e)(6) of the Internal Revenue Code, to the extent deducted from taxable income; and
9.4(25) discharge of indebtedness income resulting from reacquisition of business
9.5indebtedness and deferred under section 108(i) of the Internal Revenue Code.
9.6EFFECTIVE DATE.This section is effective the day following final enactment.
1.3to federal section 179 expensing allowance for certain taxpayers;amending
1.4Minnesota Statutes 2011 Supplement, section 290.01, subdivisions 19a, 19c.
1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.6 Section 1. Minnesota Statutes 2011 Supplement, section 290.01, subdivision 19a,
1.7is amended to read:
1.8 Subd. 19a. Additions to federal taxable income. For individuals, estates, and
1.9trusts, there shall be added to federal taxable income:
1.10 (1)(i) interest income on obligations of any state other than Minnesota or a political
1.11or governmental subdivision, municipality, or governmental agency or instrumentality
1.12of any state other than Minnesota exempt from federal income taxes under the Internal
1.13Revenue Code or any other federal statute; and
1.14 (ii) exempt-interest dividends as defined in section 852(b)(5) of the Internal Revenue
1.15Code, except:
1.16(A) the portion of the exempt-interest dividends exempt from state taxation under
1.17the laws of the United States; and
1.18(B) the portion of the exempt-interest dividends derived from interest income
1.19on obligations of the state of Minnesota or its political or governmental subdivisions,
1.20municipalities, governmental agencies or instrumentalities, but only if the portion of the
1.21exempt-interest dividends from such Minnesota sources paid to all shareholders represents
1.2295 percent or more of the exempt-interest dividends, including any dividends exempt
1.23under subitem (A), that are paid by the regulated investment company as defined in section
2.1851(a) of the Internal Revenue Code, or the fund of the regulated investment company as
2.2defined in section 851(g) of the Internal Revenue Code, making the payment; and
2.3 (iii) for the purposes of items (i) and (ii), interest on obligations of an Indian tribal
2.4government described in section 7871(c) of the Internal Revenue Code shall be treated as
2.5interest income on obligations of the state in which the tribe is located;
2.6 (2) the amount of income, sales and use, motor vehicle sales, or excise taxes paid or
2.7accrued within the taxable year under this chapter and the amount of taxes based on net
2.8income paid, sales and use, motor vehicle sales, or excise taxes paid to any other state
2.9or to any province or territory of Canada, to the extent allowed as a deduction under
2.10section 63(d) of the Internal Revenue Code, but the addition may not be more than the
2.11amount by which the itemized deductions as allowed under section 63(d) of the Internal
2.12Revenue Code exceeds the amount of the standard deduction as defined in section 63(c) of
2.13the Internal Revenue Code, disregarding the amounts allowed under sections 63(c)(1)(C)
2.14and 63(c)(1)(E) of the Internal Revenue Code, minus any addition that would have been
2.15required under clause (21) if the taxpayer had claimed the standard deduction. For the
2.16purpose of this paragraph, the disallowance of itemized deductions under section 68 of
2.17the Internal Revenue Code of 1986, income, sales and use, motor vehicle sales, or excise
2.18taxes are the last itemized deductions disallowed;
2.19 (3) the capital gain amount of a lump-sum distribution to which the special tax under
2.20section 1122(h)(3)(B)(ii) of the Tax Reform Act of 1986, Public Law 99-514, applies;
2.21 (4) the amount of income taxes paid or accrued within the taxable year under this
2.22chapter and taxes based on net income paid to any other state or any province or territory
2.23of Canada, to the extent allowed as a deduction in determining federal adjusted gross
2.24income. For the purpose of this paragraph, income taxes do not include the taxes imposed
2.25by sections
2.26 (5) the amount of expense, interest, or taxes disallowed pursuant to section
2.28allowed under subdivision 19b, clause (1);
2.29 (6) the amount of a partner's pro rata share of net income which does not flow
2.30through to the partner because the partnership elected to pay the tax on the income under
2.31section 6242(a)(2) of the Internal Revenue Code;
2.32 (7) 80 percent of the depreciation deduction allowed under section 168(k) of the
2.33Internal Revenue Code. For purposes of this clause, if the taxpayer has an activity that
2.34in the taxable year generates a deduction for depreciation under section 168(k) and the
2.35activity generates a loss for the taxable year that the taxpayer is not allowed to claim for
2.36the taxable year, "the depreciation allowed under section 168(k)" for the taxable year is
3.1limited to excess of the depreciation claimed by the activity under section 168(k) over the
3.2amount of the loss from the activity that is not allowed in the taxable year. In succeeding
3.3taxable years when the losses not allowed in the taxable year are allowed, the depreciation
3.4under section 168(k) is allowed;
3.5 (8) 80 percent of the amount by which the deduction allowed by section 179 of the
3.6Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
3.7Revenue Code of 1986, as amended through December 31, 2003
3.8years beginning after December 31, 2011, the addition in this clause does not apply to
3.9property used in farming that is used by a taxpayer who is actively engaged in farming.
3.10For purposes of this clause, "actively engaged in farming" has the meaning given in Code
3.11of Federal Regulations, title 7, section 1400.201, and "farming" has the meaning given in
3.12section 464(e)(1) of the Internal Revenue Code;
3.13 (9) to the extent deducted in computing federal taxable income, the amount of the
3.14deduction allowable under section 199 of the Internal Revenue Code;
3.15 (10) for taxable years beginning before January 1, 2013, the exclusion allowed
3.16under section 139A of the Internal Revenue Code for federal subsidies for prescription
3.17drug plans;
3.18(11) the amount of expenses disallowed under section 290.10, subdivision 2;
3.19 (12) for taxable years beginning before January 1, 2010, the amount deducted for
3.20qualified tuition and related expenses under section 222 of the Internal Revenue Code, to
3.21the extent deducted from gross income;
3.22 (13) for taxable years beginning before January 1, 2010, the amount deducted for
3.23certain expenses of elementary and secondary school teachers under section 62(a)(2)(D)
3.24of the Internal Revenue Code, to the extent deducted from gross income;
3.25(14) the additional standard deduction for property taxes payable that is allowable
3.26under section 63(c)(1)(C) of the Internal Revenue Code;
3.27(15) the additional standard deduction for qualified motor vehicle sales taxes
3.28allowable under section 63(c)(1)(E) of the Internal Revenue Code;
3.29(16) discharge of indebtedness income resulting from reacquisition of business
3.30indebtedness and deferred under section 108(i) of the Internal Revenue Code;
3.31(17) the amount of unemployment compensation exempt from tax under section
3.3285(c) of the Internal Revenue Code;
3.33(18) changes to federal taxable income attributable to a net operating loss that the
3.34taxpayer elected to carry back for more than two years for federal purposes but for which
3.35the losses can be carried back for only two years under section
3.3611
4.1(19) to the extent included in the computation of federal taxable income in taxable
4.2years beginning after December 31, 2010, the amount of disallowed itemized deductions,
4.3but the amount of disallowed itemized deductions plus the addition required under clause
4.4(2) may not be more than the amount by which the itemized deductions as allowed under
4.5section 63(d) of the Internal Revenue Code exceeds the amount of the standard deduction
4.6as defined in section 63(c) of the Internal Revenue Code, disregarding the amounts
4.7allowed under sections 63(c)(1)(C) and 63(c)(1)(E) of the Internal Revenue Code, and
4.8reduced by any addition that would have been required under clause (21) if the taxpayer
4.9had claimed the standard deduction;
4.10(i) The amount of disallowed itemized deductions is equal to the lesser of:
4.11(A) three percent of the excess of the taxpayer's federal adjusted gross income
4.12over the applicable amount; or
4.13(B) 80 percent of the amount of the itemized deductions otherwise allowable to the
4.14taxpayer under the Internal Revenue Code for the taxable year.
4.15(ii) The term "applicable amount" means $100,000, or $50,000 in the case of a
4.16married individual filing a separate return. Each dollar amount shall be increased by
4.17an amount equal to:
4.18(A) such dollar amount, multiplied by
4.19(B) the cost-of-living adjustment determined under section 1(f)(3) of the Internal
4.20Revenue Code for the calendar year in which the taxable year begins, by substituting
4.21"calendar year 1990" for "calendar year 1992" in subparagraph (B) thereof.
4.22(iii) The term "itemized deductions" does not include:
4.23(A) the deduction for medical expenses under section 213 of the Internal Revenue
4.24Code;
4.25(B) any deduction for investment interest as defined in section 163(d) of the Internal
4.26Revenue Code; and
4.27(C) the deduction under section 165(a) of the Internal Revenue Code for casualty or
4.28theft losses described in paragraph (2) or (3) of section 165(c) of the Internal Revenue
4.29Code or for losses described in section 165(d) of the Internal Revenue Code;
4.30(20) to the extent included in federal taxable income in taxable years beginning after
4.31December 31, 2010, the amount of disallowed personal exemptions for taxpayers with
4.32federal adjusted gross income over the threshold amount;
4.33(i) The disallowed personal exemption amount is equal to the dollar amount of the
4.34personal exemptions claimed by the taxpayer in the computation of federal taxable income
4.35multiplied by the applicable percentage.
5.1(ii) "Applicable percentage" means two percentage points for each $2,500 (or
5.2fraction thereof) by which the taxpayer's federal adjusted gross income for the taxable
5.3year exceeds the threshold amount. In the case of a married individual filing a separate
5.4return, the preceding sentence shall be applied by substituting "$1,250" for "$2,500." In
5.5no event shall the applicable percentage exceed 100 percent.
5.6(iii) The term "threshold amount" means:
5.7(A) $150,000 in the case of a joint return or a surviving spouse;
5.8(B) $125,000 in the case of a head of a household;
5.9(C) $100,000 in the case of an individual who is not married and who is not a
5.10surviving spouse or head of a household; and
5.11(D) $75,000 in the case of a married individual filing a separate return.
5.12(iv) The thresholds shall be increased by an amount equal to:
5.13(A) such dollar amount, multiplied by
5.14(B) the cost-of-living adjustment determined under section 1(f)(3) of the Internal
5.15Revenue Code for the calendar year in which the taxable year begins, by substituting
5.16"calendar year 1990" for "calendar year 1992" in subparagraph (B) thereof; and
5.17(21) to the extent deducted in the computation of federal taxable income, for taxable
5.18years beginning after December 31, 2010, and before January 1, 2013, the difference
5.19between the standard deduction allowed under section 63(c) of the Internal Revenue Code
5.20and the standard deduction allowed for 2011 and 2012 under the Internal Revenue Code
5.21as amended through December 1, 2010.
5.22EFFECTIVE DATE.This section is effective the day following final enactment.
5.23 Sec. 2. Minnesota Statutes 2011 Supplement, section 290.01, subdivision 19c, is
5.24amended to read:
5.25 Subd. 19c. Corporations; additions to federal taxable income. For corporations,
5.26there shall be added to federal taxable income:
5.27 (1) the amount of any deduction taken for federal income tax purposes for income,
5.28excise, or franchise taxes based on net income or related minimum taxes, including but not
5.29limited to the tax imposed under section
5.30another state, a political subdivision of another state, the District of Columbia, or any
5.31foreign country or possession of the United States;
5.32 (2) interest not subject to federal tax upon obligations of: the United States, its
5.33possessions, its agencies, or its instrumentalities; the state of Minnesota or any other
5.34state, any of its political or governmental subdivisions, any of its municipalities, or any
6.1of its governmental agencies or instrumentalities; the District of Columbia; or Indian
6.2tribal governments;
6.3 (3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal
6.4Revenue Code;
6.5 (4) the amount of any net operating loss deduction taken for federal income tax
6.6purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss
6.7deduction under section 810 of the Internal Revenue Code;
6.8 (5) the amount of any special deductions taken for federal income tax purposes
6.9under sections 241 to 247 and 965 of the Internal Revenue Code;
6.10 (6) losses from the business of mining, as defined in section
6.11clause (a), that are not subject to Minnesota income tax;
6.12 (7) the amount of any capital losses deducted for federal income tax purposes under
6.13sections 1211 and 1212 of the Internal Revenue Code;
6.14 (8) the exempt foreign trade income of a foreign sales corporation under sections
6.15921(a) and 291 of the Internal Revenue Code;
6.16 (9) the amount of percentage depletion deducted under sections 611 through 614 and
6.17291 of the Internal Revenue Code;
6.18 (10) for certified pollution control facilities placed in service in a taxable year
6.19beginning before December 31, 1986, and for which amortization deductions were elected
6.20under section 169 of the Internal Revenue Code of 1954, as amended through December
6.2131, 1985, the amount of the amortization deduction allowed in computing federal taxable
6.22income for those facilities;
6.23 (11) the amount of any deemed dividend from a foreign operating corporation
6.24determined pursuant to section
6.25shall be reduced by the amount of the addition to income required by clauses (20), (21),
6.26(22), and (23);
6.27 (12) the amount of a partner's pro rata share of net income which does not flow
6.28through to the partner because the partnership elected to pay the tax on the income under
6.29section 6242(a)(2) of the Internal Revenue Code;
6.30 (13) the amount of net income excluded under section 114 of the Internal Revenue
6.31Code;
6.32 (14) any increase in subpart F income, as defined in section 952(a) of the Internal
6.33Revenue Code, for the taxable year when subpart F income is calculated without regard to
6.34the provisions of Division C, title III, section 303(b) of Public Law 110-343;
6.35 (15) 80 percent of the depreciation deduction allowed under section 168(k)(1)(A)
6.36and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if the taxpayer
7.1has an activity that in the taxable year generates a deduction for depreciation under
7.2section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable year
7.3that the taxpayer is not allowed to claim for the taxable year, "the depreciation allowed
7.4under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess of the
7.5depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A) over the
7.6amount of the loss from the activity that is not allowed in the taxable year. In succeeding
7.7taxable years when the losses not allowed in the taxable year are allowed, the depreciation
7.8under section 168(k)(1)(A) and (k)(4)(A) is allowed;
7.9 (16) 80 percent of the amount by which the deduction allowed by section 179 of the
7.10Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
7.11Revenue Code of 1986, as amended through December 31, 2003
7.12years beginning after December 31, 2011, the addition in this clause does not apply to
7.13property used in farming that is used by a taxpayer who is actively engaged in farming.
7.14For purposes of this clause, "actively engaged in farming" has the meaning given in Code
7.15of Federal Regulations, title 7, section 1400.201, and "farming" has the meaning given in
7.16section 464(e)(1) of the Internal Revenue Code;
7.17 (17) to the extent deducted in computing federal taxable income, the amount of the
7.18deduction allowable under section 199 of the Internal Revenue Code;
7.19 (18) for taxable years beginning before January 1, 2013, the exclusion allowed
7.20under section 139A of the Internal Revenue Code for federal subsidies for prescription
7.21drug plans;
7.22 (19) the amount of expenses disallowed under section
7.23 (20) an amount equal to the interest and intangible expenses, losses, and costs paid,
7.24accrued, or incurred by any member of the taxpayer's unitary group to or for the benefit
7.25of a corporation that is a member of the taxpayer's unitary business group that qualifies
7.26as a foreign operating corporation. For purposes of this clause, intangible expenses and
7.27costs include:
7.28 (i) expenses, losses, and costs for, or related to, the direct or indirect acquisition,
7.29use, maintenance or management, ownership, sale, exchange, or any other disposition of
7.30intangible property;
7.31 (ii) losses incurred, directly or indirectly, from factoring transactions or discounting
7.32transactions;
7.33 (iii) royalty, patent, technical, and copyright fees;
7.34 (iv) licensing fees; and
7.35 (v) other similar expenses and costs.
8.1For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
8.2applications, trade names, trademarks, service marks, copyrights, mask works, trade
8.3secrets, and similar types of intangible assets.
8.4This clause does not apply to any item of interest or intangible expenses or costs paid,
8.5accrued, or incurred, directly or indirectly, to a foreign operating corporation with respect
8.6to such item of income to the extent that the income to the foreign operating corporation
8.7is income from sources without the United States as defined in subtitle A, chapter 1,
8.8subchapter N, part 1, of the Internal Revenue Code;
8.9 (21) except as already included in the taxpayer's taxable income pursuant to clause
8.10(20), any interest income and income generated from intangible property received or
8.11accrued by a foreign operating corporation that is a member of the taxpayer's unitary
8.12group. For purposes of this clause, income generated from intangible property includes:
8.13 (i) income related to the direct or indirect acquisition, use, maintenance or
8.14management, ownership, sale, exchange, or any other disposition of intangible property;
8.15 (ii) income from factoring transactions or discounting transactions;
8.16 (iii) royalty, patent, technical, and copyright fees;
8.17 (iv) licensing fees; and
8.18 (v) other similar income.
8.19For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
8.20applications, trade names, trademarks, service marks, copyrights, mask works, trade
8.21secrets, and similar types of intangible assets.
8.22This clause does not apply to any item of interest or intangible income received or accrued
8.23by a foreign operating corporation with respect to such item of income to the extent that
8.24the income is income from sources without the United States as defined in subtitle A,
8.25chapter 1, subchapter N, part 1, of the Internal Revenue Code;
8.26 (22) the dividends attributable to the income of a foreign operating corporation that
8.27is a member of the taxpayer's unitary group in an amount that is equal to the dividends
8.28paid deduction of a real estate investment trust under section 561(a) of the Internal
8.29Revenue Code for amounts paid or accrued by the real estate investment trust to the
8.30foreign operating corporation;
8.31 (23) the income of a foreign operating corporation that is a member of the taxpayer's
8.32unitary group in an amount that is equal to gains derived from the sale of real or personal
8.33property located in the United States;
9.1 (24) for taxable years beginning before January 1, 2010, the additional amount
9.2allowed as a deduction for donation of computer technology and equipment under section
9.3170(e)(6) of the Internal Revenue Code, to the extent deducted from taxable income; and
9.4(25) discharge of indebtedness income resulting from reacquisition of business
9.5indebtedness and deferred under section 108(i) of the Internal Revenue Code.
9.6EFFECTIVE DATE.This section is effective the day following final enactment.
