HF 711

as introduced - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

A bill for an act
relating to taxation; income; modifying alternative
minimum taxable income; amending Minnesota Statutes
2004, section 290.091, subdivisions 2, 3.

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

Section 1.

Minnesota Statutes 2004, section 290.091,
subdivision 2, is amended to read:

Subd. 2.

Definitions.

For purposes of the tax imposed by
this section, the following terms have the meanings given:

(a) "Alternative minimum taxable income" means the sum of
the following for the taxable year:

(1) the taxpayer's federal alternative minimum taxable
income as defined in section 55(b)(2) of the Internal Revenue
Code;

(2) the taxpayer's itemized deductions allowed in computing
federal alternative minimum taxable income, but excluding:

(i) the charitable contribution deduction under section 170
of the Internal Revenue Code to the extent that the deduction
exceeds deleted text begin 1.0 percent deleted text end new text begin the applicable percentage for the taxable
year new text end of adjusted gross income, as defined in section 62 of the
Internal Revenue Code new text begin , the applicable percentage for the tax
year beginning January 1, 2005, is 0.75 percent; the applicable
percentage for the tax year beginning January 1, 2006, is 0.50
percent; the applicable percentage for the tax year beginning
January 1, 2007, is 0.25 percent; the applicable percentage for
tax years beginning after December 31, 2007, is zero percent new text end ;

(ii) the medical expense deduction;

(iii) the casualty, theft, and disaster loss deduction; deleted text begin and
deleted text end

(iv) the impairment-related work expenses of a disabled
person; new text begin and
new text end

new text begin (v) the mortgage interest deduction not to exceed a maximum
amount of $5,000. For taxable years beginning after December
31, 2005, the maximum dollar amount that may be deducted for
mortgage interest shall be adjusted for inflation by the
percentage determined under section 290.06, subdivision 2d,
paragraph (b);
new text end

(3) for depletion allowances computed under section 613A(c)
of the Internal Revenue Code, with respect to each property (as
defined in section 614 of the Internal Revenue Code), to the
extent not included in federal alternative minimum taxable
income, the excess of the deduction for depletion allowable
under section 611 of the Internal Revenue Code for the taxable
year over the adjusted basis of the property at the end of the
taxable year (determined without regard to the depletion
deduction for the taxable year);

(4) to the extent not included in federal alternative
minimum taxable income, the amount of the tax preference for
intangible drilling cost under section 57(a)(2) of the Internal
Revenue Code determined without regard to subparagraph (E);

(5) to the extent not included in federal alternative
minimum taxable income, the amount of interest income as
provided by section 290.01, subdivision 19a, clause (1); and

(6) the amount of addition required by section 290.01,
subdivision 19a, clause (7);

less the sum of the amounts determined under the following:

(1) interest income as defined in section 290.01,
subdivision 19b, clause (1);

(2) an overpayment of state income tax as provided by
section 290.01, subdivision 19b, clause (2), to the extent
included in federal alternative minimum taxable income;

(3) the amount of investment interest paid or accrued
within the taxable year on indebtedness to the extent that the
amount does not exceed net investment income, as defined in
section 163(d)(4) of the Internal Revenue Code. Interest does
not include amounts deducted in computing federal adjusted gross
income; and

(4) amounts subtracted from federal taxable income as
provided by section 290.01, subdivision 19b, clauses (10) and
(11).

In the case of an estate or trust, alternative minimum
taxable income must be computed as provided in section 59(c) of
the Internal Revenue Code.

(b) "Investment interest" means investment interest as
defined in section 163(d)(3) of the Internal Revenue Code.

(c) "Tentative minimum tax" equals 6.4 percent of
alternative minimum taxable income after subtracting the
exemption amount determined under subdivision 3.

(d) "Regular tax" means the tax that would be imposed under
this chapter (without regard to this section and section
290.032), reduced by the sum of the nonrefundable credits
allowed under this chapter.

(e) "Net minimum tax" means the minimum tax imposed by this
section.

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

Sec. 2.

Minnesota Statutes 2004, section 290.091,
subdivision 3, is amended to read:

Subd. 3.

Exemption amount.

For purposes of computing the
alternative minimum tax, the exemption amount is deleted text begin the exemption
determined under section 55(d) of the Internal Revenue Code, as
amended through December 31, 1992, except that alternative
minimum taxable income as determined under this section must be
substituted in the computation of the phase out under section
55(d)(3) deleted text end new text begin $45,000 for married individuals filing joint returns
and surviving spouses as defined in section 2(a) of the Internal
Revenue Code, and $33,750 for unmarried individuals and
individuals qualifying as a head of household as defined in
section 2(b) of the Internal Revenue Code. For taxable years
beginning after December 31, 2005, the exemption amount shall be
adjusted for inflation by the percentage determined under
section 290.06, subdivision 2d, paragraph (b) 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