HF 2207

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; income and franchise; modifying 
  1.3             allocation of gross income to state; amending 
  1.4             Minnesota Statutes 1998, sections 290.17, by adding a 
  1.5             subdivision; and 290.20, subdivision 1. 
  1.6   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.7      Section 1.  Minnesota Statutes 1998, section 290.17, is 
  1.8   amended by adding a subdivision to read: 
  1.9      Subd. 5a.  [SPECIAL RULES.] (a) Notwithstanding anything in 
  1.10  this section to the contrary, a gain derived from the sale or 
  1.11  exchange of an asset: 
  1.12     (1) is excluded from net income, if multiple taxation upon 
  1.13  net income results from the gain being assigned as nonbusiness 
  1.14  income outside of this state; or 
  1.15     (2) is reduced in proportion to the amount it is 
  1.16  apportioned to another state, if multiple taxation upon net 
  1.17  income results from the gain being assigned as nonbusiness 
  1.18  income to this state. 
  1.19     (b) Notwithstanding anything in this section to the 
  1.20  contrary, if a gain derived from the sale or exchange of a trade 
  1.21  or business is apportioned to this state under section 290.191, 
  1.22  and is also apportioned on a separate entity reporting basis to 
  1.23  another state for purposes of imposing tax upon net income, the 
  1.24  portion of the gain included in net income in this state shall 
  1.25  not be greater than the amount by which the total gain exceeds 
  2.1   the gain apportioned to another state for purposes of its tax. 
  2.2      (c) For purposes of this subdivision, the following terms 
  2.3   have the meanings given. 
  2.4      (1) "The sale or exchange of a trade or business" means 
  2.5   either the sale of substantially all the assets of a trade or 
  2.6   business or the sale of a significant interest in an entity that 
  2.7   directly or indirectly owns the trade or business. 
  2.8      (2) "A trade or a business" includes the assets of a 
  2.9   separate division, branch, or identifiable segment of a trade or 
  2.10  business, if, before the sale, the income and expenses 
  2.11  attributable to the separate division, branch, or identifiable 
  2.12  segment could be separately ascertained from the books of 
  2.13  account or record. 
  2.14     (3) "Significant interest" means not less than 20 percent 
  2.15  of the capital or profits interest in a partnership. 
  2.16     (4) "Significant gain" means any gain that exceeds 20 
  2.17  percent of the separate entity reporting taxable income 
  2.18  exclusive of such gain for the purposes of the other state's tax.
  2.19     Sec. 2.  Minnesota Statutes 1998, section 290.20, 
  2.20  subdivision 1, is amended to read: 
  2.21     Subdivision 1.  The methods prescribed by section sections 
  2.22  290.17 and 290.191 shall be presumed to determine fairly and 
  2.23  correctly the taxpayer's taxable net income allocable to this 
  2.24  state.  If the methods prescribed by section sections 290.17 and 
  2.25  290.191 do not fairly reflect all or any part of taxable net 
  2.26  income allocable to this state, the taxpayer may petition for or 
  2.27  the commissioner may require the determination of taxable net 
  2.28  income by the use of another method, if that method fairly 
  2.29  reflects taxable net income.  These other methods may include: 
  2.30     (1) separate accounting; 
  2.31     (2) excluding any one or more of the factors; 
  2.32     (3) including one or more additional factors; or 
  2.33     (4) some other method.