HF 134

as introduced - 84th Legislature, 2005 1st Special Session (2005 - 2005) Posted on 12/15/2009 12:00am

A bill for an act
relating to taxes; individual income; disallowing the
deduction of wagering losses; amending Minnesota
Statutes 2004, section 290.01, subdivision 19a, as
amended.

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

Section 1.

Minnesota Statutes 2004, section 290.01,
subdivision 19a, as amended by Laws 2005, chapter 151, article
6, section 12, is amended to read:

Subd. 19a.

Additions to federal taxable income.

For
individuals, estates, and trusts, there shall be added to
federal taxable income:

(1)(i) interest income on obligations of any state other
than Minnesota or a political or governmental subdivision,
municipality, or governmental agency or instrumentality of any
state other than Minnesota exempt from federal income taxes
under the Internal Revenue Code or any other federal statute;
and

(ii) exempt-interest dividends as defined in section
852(b)(5) of the Internal Revenue Code, except the portion of
the exempt-interest dividends derived from interest income on
obligations of the state of Minnesota or its political or
governmental subdivisions, municipalities, governmental agencies
or instrumentalities, but only if the portion of the
exempt-interest dividends from such Minnesota sources paid to
all shareholders represents 95 percent or more of the
exempt-interest dividends that are paid by the regulated
investment company as defined in section 851(a) of the Internal
Revenue Code, or the fund of the regulated investment company as
defined in section 851(g) of the Internal Revenue Code, making
the payment; and

(iii) for the purposes of items (i) and (ii), interest on
obligations of an Indian tribal government described in section
7871(c) of the Internal Revenue Code shall be treated as
interest income on obligations of the state in which the tribe
is located;

(2) the amount of income taxes paid or accrued within the
taxable year under this chapter and the amount of taxes based on
net income paid to any other state or to any province or
territory of Canada, to the extent allowed as a deduction under
section 63(d) of the Internal Revenue Code, but the addition may
not be more than the amount by which the itemized deductions as
allowed under section 63(d) of the Internal Revenue Code exceeds
the amount of the standard deduction as defined in section 63(c)
of the Internal Revenue Code. For the purpose of this
paragraph, the disallowance of itemized deductions under section
68 of the Internal Revenue Code of 1986, income tax is the last
itemized deduction disallowed;

(3) the capital gain amount of a lump sum distribution to
which the special tax under section 1122(h)(3)(B)(ii) of the Tax
Reform Act of 1986, Public Law 99-514, applies;

(4) the amount of income taxes paid or accrued within the
taxable year under this chapter and taxes based on net income
paid to any other state or any province or territory of Canada,
to the extent allowed as a deduction in determining federal
adjusted gross income. For the purpose of this paragraph,
income taxes do not include the taxes imposed by sections
290.0922, subdivision 1, paragraph (b), 290.9727, 290.9728, and
290.9729;

(5) the amount of expense, interest, or taxes disallowed
pursuant to section 290.10 other than expenses or interest used
in computing net interest income for the subtraction allowed
under subdivision 19b, clause (1);

(6) the amount of a partner's pro rata share of net income
which does not flow through to the partner because the
partnership elected to pay the tax on the income under section
6242(a)(2) of the Internal Revenue Code; deleted text begin and
deleted text end

(7) 80 percent of the depreciation deduction allowed under
section 168(k) of the Internal Revenue Code. For purposes of
this clause, if the taxpayer has an activity that in the taxable
year generates a deduction for depreciation under section 168(k)
and the activity generates a loss for the taxable year that the
taxpayer is not allowed to claim for the taxable year, "the
depreciation allowed under section 168(k)" for the taxable year
is limited to excess of the depreciation claimed by the activity
under section 168(k) over the amount of the loss from the
activity that is not allowed in the taxable year. In succeeding
taxable years when the losses not allowed in the taxable year
are allowed, the depreciation under section 168(k) is allowed new text begin ;
and
new text end

new text begin (8) to the extent allowed as a deduction in determining
federal taxable income, the deduction for wagering losses
allowed under section 165(d) of the Internal Revenue Code 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, 2004.
new text end