1.1 	A bill for an act
1.2 	relating to taxation; clarifying research and development base percentage; 
1.3 	amending Minnesota Statutes 2010, section 290.068, subdivision 2.
1.4 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.5 	Section 1. Minnesota Statutes 2010, section 290.068, subdivision 2, is amended to read:
1.6 		Subd. 2.Definitions. For purposes of this section, the following terms have the 
1.7 	meanings given.
1.8 	(a) "Qualified research expenses" means (i) qualified research expenses and basic 
1.9 	research payments as defined in section 41(b) and (e) of the Internal Revenue Code, except 
1.10 	it does not include expenses incurred for qualified research or basic research conducted 
1.11 	outside the state of Minnesota pursuant to section 41(d) and (e) of the Internal Revenue 
1.12 	Code; and (ii) contributions to a nonprofit corporation established and operated pursuant 
1.13 	to the provisions of chapter 317A for the purpose of promoting the establishment and 
1.14 	expansion of business in this state, provided the contributions are invested by the nonprofit 
1.15 	corporation for the purpose of providing funds for small, technologically innovative 
1.16 	enterprises in Minnesota during the early stages of their development.
1.17 	(b) "Qualified research" means qualified research as defined in section 41(d) of the 
1.18 	Internal Revenue Code, except that the term does not include qualified research conducted 
1.19 	outside the state of Minnesota.
1.20 	(c) "Base amount" means base amount as defined in section 41(c) of the Internal 
1.21 	Revenue Code, except that the average annual gross receipts must be calculated using 
1.22 	Minnesota sales or receipts under section 290.191 and the definitions contained in clauses 
1.23 	(a) and (b) shall apply. For a case in which the taxpayer cannot document the amount 
1.24 	of the taxpayer's fixed-base percentage under section 41(c)(3) of the Internal Revenue 
2.1 	Code, the taxpayer may elect to calculate the base amount using a fixed-base percentage 
2.2 	of 16 percent.

2.3 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
2.4 	December 31, 2010.