HF 2206

as introduced - 81st Legislature (1999 - 2000) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to taxation; individual income; exempting 
  1.3             payments in settlement of certain holocaust claims 
  1.4             from state income taxation; amending Minnesota 
  1.5             Statutes 1998, sections 290.01, subdivision 19b, and 
  1.6             by adding a subdivision; and 290.091, subdivision 2. 
  1.7   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.8      Section 1.  Minnesota Statutes 1998, section 290.01, 
  1.9   subdivision 19b, is amended to read: 
  1.10     Subd. 19b.  [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 
  1.11  individuals, estates, and trusts, there shall be subtracted from 
  1.12  federal taxable income: 
  1.13     (1) interest income on obligations of any authority, 
  1.14  commission, or instrumentality of the United States to the 
  1.15  extent includable in taxable income for federal income tax 
  1.16  purposes but exempt from state income tax under the laws of the 
  1.17  United States; 
  1.18     (2) if included in federal taxable income, the amount of 
  1.19  any overpayment of income tax to Minnesota or to any other 
  1.20  state, for any previous taxable year, whether the amount is 
  1.21  received as a refund or as a credit to another taxable year's 
  1.22  income tax liability; 
  1.23     (3) the amount paid to others, less the credit allowed 
  1.24  under section 290.0674, not to exceed $1,625 for each dependent 
  1.25  in grades kindergarten to 6 and $2,500 for each dependent in 
  1.26  grades 7 to 12, for tuition, textbooks, and transportation of 
  2.1   each dependent in attending an elementary or secondary school 
  2.2   situated in Minnesota, North Dakota, South Dakota, Iowa, or 
  2.3   Wisconsin, wherein a resident of this state may legally fulfill 
  2.4   the state's compulsory attendance laws, which is not operated 
  2.5   for profit, and which adheres to the provisions of the Civil 
  2.6   Rights Act of 1964 and chapter 363.  For the purposes of this 
  2.7   clause, "tuition" includes fees or tuition as defined in section 
  2.8   290.0674, subdivision 1, clause (1).  As used in this clause, 
  2.9   "textbooks" includes books and other instructional materials and 
  2.10  equipment used in elementary and secondary schools in teaching 
  2.11  only those subjects legally and commonly taught in public 
  2.12  elementary and secondary schools in this state.  Equipment 
  2.13  expenses qualifying for deduction includes expenses as defined 
  2.14  and limited in section 290.0674, subdivision 1, clause (3).  
  2.15  "Textbooks" does not include instructional books and materials 
  2.16  used in the teaching of religious tenets, doctrines, or worship, 
  2.17  the purpose of which is to instill such tenets, doctrines, or 
  2.18  worship, nor does it include books or materials for, or 
  2.19  transportation to, extracurricular activities including sporting 
  2.20  events, musical or dramatic events, speech activities, driver's 
  2.21  education, or similar programs; 
  2.22     (4) to the extent included in federal taxable income, 
  2.23  distributions from a qualified governmental pension plan, an 
  2.24  individual retirement account, simplified employee pension, or 
  2.25  qualified plan covering a self-employed person that represent a 
  2.26  return of contributions that were included in Minnesota gross 
  2.27  income in the taxable year for which the contributions were made 
  2.28  but were deducted or were not included in the computation of 
  2.29  federal adjusted gross income.  The distribution shall be 
  2.30  allocated first to return of contributions until the 
  2.31  contributions included in Minnesota gross income have been 
  2.32  exhausted.  This subtraction applies only to contributions made 
  2.33  in a taxable year prior to 1985; 
  2.34     (5) income as provided under section 290.0802; 
  2.35     (6) the amount of unrecovered accelerated cost recovery 
  2.36  system deductions allowed under subdivision 19g; 
  3.1      (7) to the extent included in federal adjusted gross 
  3.2   income, income realized on disposition of property exempt from 
  3.3   tax under section 290.491; 
  3.4      (8) to the extent not deducted in determining federal 
  3.5   taxable income, the amount paid for health insurance of 
  3.6   self-employed individuals as determined under section 162(l) of 
  3.7   the Internal Revenue Code, except that the 25 percent limit does 
  3.8   not apply.  If the taxpayer deducted insurance payments under 
  3.9   section 213 of the Internal Revenue Code of 1986, the 
  3.10  subtraction under this clause must be reduced by the lesser of: 
  3.11     (i) the total itemized deductions allowed under section 
  3.12  63(d) of the Internal Revenue Code, less state, local, and 
  3.13  foreign income taxes deductible under section 164 of the 
  3.14  Internal Revenue Code and the standard deduction under section 
  3.15  63(c) of the Internal Revenue Code; or 
  3.16     (ii) the lesser of (A) the amount of insurance qualifying 
  3.17  as "medical care" under section 213(d) of the Internal Revenue 
  3.18  Code to the extent not deducted under section 162(1) of the 
  3.19  Internal Revenue Code or excluded from income or (B) the total 
  3.20  amount deductible for medical care under section 213(a); 
  3.21     (9) the exemption amount allowed under Laws 1995, chapter 
  3.22  255, article 3, section 2, subdivision 3; 
  3.23     (10) to the extent included in federal taxable income, 
  3.24  postservice benefits for youth community service under section 
  3.25  124D.42 for volunteer service under United States Code, title 
  3.26  42, section 5011(d), as amended; 
  3.27     (11) to the extent not subtracted under clause (1), the 
  3.28  amount of income or gain included in federal taxable income 
  3.29  under section 1366 of the Internal Revenue Code flowing from a 
  3.30  corporation that has a valid election in effect for the taxable 
  3.31  year under section 1362 of the Internal Revenue Code which is 
  3.32  not allowed to be an "S" corporation under section 290.9725; 
  3.33     (12) in the year stock of a corporation that had made a 
  3.34  valid election under section 1362 of the Internal Revenue Code 
  3.35  but was not an "S" corporation under section 290.9725 is sold or 
  3.36  disposed of in a transaction taxable under the Internal Revenue 
  4.1   Code, the amount of difference between the Minnesota basis of 
  4.2   the stock under subdivision 19f, paragraph (m), and the federal 
  4.3   basis if the Minnesota basis is higher than the shareholder's 
  4.4   federal basis; and 
  4.5      (13) an amount equal to an individual's, trust's, or 
  4.6   estate's net federal income tax liability for the tax year that 
  4.7   is attributable to items of income, expense, gain, loss, or 
  4.8   credits federally flowing to the taxpayer in the tax year from a 
  4.9   corporation, having a valid election in effect for federal tax 
  4.10  purposes under section 1362 of the Internal Revenue Code but not 
  4.11  treated as an "S" corporation for state tax purposes under 
  4.12  section 290.9725; and 
  4.13     (14) to the extent included in federal taxable income, 
  4.14  holocaust victims' settlement payments for any injury incurred 
  4.15  as a result of the holocaust, if received by an individual who 
  4.16  was persecuted for racial or religious reasons by Nazi Germany 
  4.17  or any other Axis regime or an heir of such a person. 
  4.18     Sec. 2.  Minnesota Statutes 1998, section 290.01, is 
  4.19  amended by adding a subdivision to read: 
  4.20     Subd. 32.  [HOLOCAUST SETTLEMENT PAYMENTS.] "Holocaust 
  4.21  victims' settlement payments" means: 
  4.22     (1) a payment received as a result of settlement of the 
  4.23  action entitled In re Holocaust Victims' Asset Litigation, in 
  4.24  United States district court for the eastern district of New 
  4.25  York, C.A. No. 96-4849; 
  4.26     (2) any amount received under the German Act Regulating 
  4.27  Unresolved Property Claims or any other foreign law providing 
  4.28  for payments for holocaust claims; and 
  4.29     (3) a payment received as a result of the settlement of a 
  4.30  holocaust claim not described in clause (1) or (2), including an 
  4.31  insurance claim, a claim relating to looted art or financial 
  4.32  assets, and a claim relating to slave labor wages. 
  4.33     Sec. 3.  Minnesota Statutes 1998, section 290.091, 
  4.34  subdivision 2, is amended to read: 
  4.35     Subd. 2.  [DEFINITIONS.] For purposes of the tax imposed by 
  4.36  this section, the following terms have the meanings given: 
  5.1      (a) "Alternative minimum taxable income" means the sum of 
  5.2   the following for the taxable year: 
  5.3      (1) the taxpayer's federal alternative minimum taxable 
  5.4   income as defined in section 55(b)(2) of the Internal Revenue 
  5.5   Code; 
  5.6      (2) the taxpayer's itemized deductions allowed in computing 
  5.7   federal alternative minimum taxable income, but excluding: 
  5.8      (i) the Minnesota charitable contribution deduction; 
  5.9      (ii) the medical expense deduction; 
  5.10     (iii) the casualty, theft, and disaster loss deduction; and 
  5.11     (iv) the impairment-related work expenses of a disabled 
  5.12  person; and 
  5.13     (v) holocaust victims' settlement payments to the extent 
  5.14  allowed under section 290.01, subdivision 19b; and 
  5.15     (3) for depletion allowances computed under section 613A(c) 
  5.16  of the Internal Revenue Code, with respect to each property (as 
  5.17  defined in section 614 of the Internal Revenue Code), to the 
  5.18  extent not included in federal alternative minimum taxable 
  5.19  income, the excess of the deduction for depletion allowable 
  5.20  under section 611 of the Internal Revenue Code for the taxable 
  5.21  year over the adjusted basis of the property at the end of the 
  5.22  taxable year (determined without regard to the depletion 
  5.23  deduction for the taxable year); 
  5.24     (4) to the extent not included in federal alternative 
  5.25  minimum taxable income, the amount of the tax preference for 
  5.26  intangible drilling cost under section 57(a)(2) of the Internal 
  5.27  Revenue Code determined without regard to subparagraph (E); 
  5.28     (5) to the extent not included in federal alternative 
  5.29  minimum taxable income, the amount of interest income as 
  5.30  provided by section 290.01, subdivision 19a, clause (1); 
  5.31     (6) amounts added to federal taxable income as provided by 
  5.32  section 290.01, subdivision 19a, clauses (5), (6), and (7); 
  5.33     less the sum of the amounts determined under the following 
  5.34  clauses (1) to (4): 
  5.35     (1) interest income as defined in section 290.01, 
  5.36  subdivision 19b, clause (1); 
  6.1      (2) an overpayment of state income tax as provided by 
  6.2   section 290.01, subdivision 19b, clause (2), to the extent 
  6.3   included in federal alternative minimum taxable income; 
  6.4      (3) the amount of investment interest paid or accrued 
  6.5   within the taxable year on indebtedness to the extent that the 
  6.6   amount does not exceed net investment income, as defined in 
  6.7   section 163(d)(4) of the Internal Revenue Code.  Interest does 
  6.8   not include amounts deducted in computing federal adjusted gross 
  6.9   income; and 
  6.10     (4) amounts subtracted from federal taxable income as 
  6.11  provided by section 290.01, subdivision 19b, clauses (11) and 
  6.12  (12). 
  6.13     In the case of an estate or trust, alternative minimum 
  6.14  taxable income must be computed as provided in section 59(c) of 
  6.15  the Internal Revenue Code. 
  6.16     (b) "Investment interest" means investment interest as 
  6.17  defined in section 163(d)(3) of the Internal Revenue Code. 
  6.18     (c) "Tentative minimum tax" equals seven percent of 
  6.19  alternative minimum taxable income after subtracting the 
  6.20  exemption amount determined under subdivision 3. 
  6.21     (d) "Regular tax" means the tax that would be imposed under 
  6.22  this chapter (without regard to this section and section 
  6.23  290.032), reduced by the sum of the nonrefundable credits 
  6.24  allowed under this chapter.  
  6.25     (e) "Net minimum tax" means the minimum tax imposed by this 
  6.26  section. 
  6.27     (f) "Minnesota charitable contribution deduction" means a 
  6.28  charitable contribution deduction under section 170 of the 
  6.29  Internal Revenue Code to or for the use of an entity described 
  6.30  in section 290.21, subdivision 3, clauses (a) to (e).  When the 
  6.31  federal deduction for charitable contributions is limited under 
  6.32  section 170(b) of the Internal Revenue Code, the allowable 
  6.33  contributions in the year of contribution are deemed to be first 
  6.34  contributions to entities described in section 290.21, 
  6.35  subdivision 3, clauses (a) to (e). 
  6.36     Sec. 4.  [EFFECTIVE DATE.] 
  7.1      Sections 1 to 3 are effective for taxable years beginning 
  7.2   after December 31, 1998.