HF 2756

as introduced - 91st Legislature (2019 - 2020) Posted on 04/04/2019 09:30am

A bill for an act
relating to taxation; income and estate; imposing additional tax on certain capital
gain and dividend income; proposing coding for new law in Minnesota Statutes,
chapter 290.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

new text begin [290.055] ADDITIONAL TAX ON CAPITAL GAIN INCOME.
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new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For purposes of this section, the following terms have
the meanings given.
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new text begin (b) "Adjusted gross income" has the meaning given in section 62 of the Internal Revenue
Code.
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new text begin (c) "Net long-term capital gain" has the meaning given in section 1222 of the Internal
Revenue Code, excluding a capital gain resulting from the sale of property classified as 2a
property under section 273.13, subdivision 23. Net long-term capital gain income is limited
to amounts included in adjusted gross income.
new text end

new text begin (d) "Preferential rate income" means the sum of a taxpayer's net long-term capital gain
and qualified dividend income.
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new text begin (e) "Qualified dividend income" has the meaning given in section 1(h)(11)(B) of the
Internal Revenue Code.
new text end

new text begin Subd. 2. new text end

new text begin Tax imposed; capital gains. new text end

new text begin In addition to the taxes imposed under sections
290.06, subdivision 2c, and 290.091, an individual, trust, or estate is liable for a tax equal
to three percent of preferential rate income in excess of $500,000.
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new text begin Subd. 3. new text end

new text begin Nonresidents. new text end

new text begin (a) For an individual who is not a resident for the entire taxable
year, the tax under subdivision 2 is imposed in an amount equal to: (1) the amount calculated
under subdivision 2 for the full year and for all preferential rate income multiplied by; (2)
the Minnesota percentage determined under paragraph (b).
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new text begin (b) "Minnesota percentage" equals:
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new text begin (1) the sum of the following amounts for the taxable year:
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new text begin (i) net long-term capital gain from the sale of real property located in Minnesota and
tangible personal property with a situs in Minnesota on the date of the sale;
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new text begin (ii) qualified dividend income received during and net long-term capital gain, other than
gain included under item (i), received for sales or exchanges made during a period when
the taxpayer was domiciled in Minnesota; divided by
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new text begin (2) the total amount of preferential rate income for the taxable year.
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new text begin Subd. 4. new text end

new text begin Credits for taxes paid to another state. new text end

new text begin For purposes of computing the credit
for taxes paid to another state under section 290.06, subdivision 22, if the net long-term
capital gain qualified for an exclusion, deduction, or exemption, in whole or part, from
taxation under the other state's tax, the tax under this section used to calculate the credit
must be reduced by three percent of the dollar amount of the exclusion, deduction, or
exemption amount that applies under the other state's tax.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2018.
new text end