1.1                          A bill for an act
  1.2             relating to health; authorizing the establishment and 
  1.3             maintenance of medical care savings accounts; 
  1.4             exempting contributions from taxation; amending 
  1.5             Minnesota Statutes 1994, section 290.01, subdivisions 
  1.6             19a, 19b, and 19d; proposing coding for new law in 
  1.7             Minnesota Statutes, chapter 62Q. 
  1.8   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.9      Section 1.  [62Q.43] [CITATION.] 
  1.10     Sections 62Q.43 to 62Q.53 shall be known and may be cited 
  1.11  as the "medical care savings account act." 
  1.12     Sec. 2.  [62Q.45] [DEFINITIONS.] 
  1.13     Subdivision 1.  [APPLICABILITY.] For purposes of sections 
  1.14  62Q.43 to 62Q.53, the following terms defined in this section 
  1.15  have the meanings given. 
  1.16     Subd. 2.  [ACCOUNT ADMINISTRATOR.] "Account administrator" 
  1.17  means any of the following: 
  1.18     (1) a health plan company as defined in section 62Q.01, 
  1.19  subdivision 4; 
  1.20     (2) a third-party administrator licensed under section 
  1.21  60A.23, subdivision 8; 
  1.22     (3) a certified public accountant licensed to practice in 
  1.23  this state under section 326.19; 
  1.24     (4) an attorney licensed to practice in this state; or 
  1.25     (5) an employer that participates in the medical care 
  1.26  savings account program. 
  2.1      Subd. 3.  [CONTRIBUTOR.] "Contributor" means a participant, 
  2.2   a dependent of a participant, or an employer, who contributes 
  2.3   money into a medical care savings account. 
  2.4      Subd. 4.  [DEDUCTIBLE.] "Deductible" means the total 
  2.5   deductible for a participant and all the dependents of that 
  2.6   participant for a calendar year. 
  2.7      Subd. 5.  [DEPENDENT.] "Dependent" means the spouse of a 
  2.8   participant or a child of a participant if the child is any of 
  2.9   the following: 
  2.10     (1) under 19 years of age, or under 25 years of age and 
  2.11  enrolled as a full-time student at an accredited college or 
  2.12  university; 
  2.13     (2) legally entitled to the provision of proper or 
  2.14  necessary subsistence, education, medical care, or other care 
  2.15  necessary for the child's health, guidance, or well-being and 
  2.16  not otherwise emancipated, self-supporting, married, or a member 
  2.17  of the armed forces of the United States; or 
  2.18     (3) mentally or physically incapacitated to the extent that 
  2.19  the child is not self-sufficient. 
  2.20     Subd. 6.  [DOMICILE.] "Domicile" means the location of an 
  2.21  individual's true, fixed, and permanent home or principal 
  2.22  establishment, to which, whenever absent, the individual intends 
  2.23  to return.  Domicile continues until another permanent home or 
  2.24  principal establishment is established. 
  2.25     Subd. 7.  [ELIGIBLE EXPENSE.] "Eligible expense" means an 
  2.26  expense incurred by an individual for medical, dental, or vision 
  2.27  care as described in section 213(d) of the Internal Revenue Code 
  2.28  of 1986, as amended through December 31, 1994. 
  2.29     Subd. 8.  [ERISA.] "ERISA" means the Employer Retirement 
  2.30  Income Security Act of 1974, United States Code, title 29, 
  2.31  sections 1001 et seq. 
  2.32     Subd. 9.  [HIGHER DEDUCTIBLE.] "Higher deductible" means a 
  2.33  deductible of not less than $1,000 and not more than $5,000 for 
  2.34  calendar year 1995.  The commissioner of commerce shall annually 
  2.35  adjust this minimum and maximum to reflect changes in the 
  2.36  consumer price index for urban consumers (CPI-U). 
  3.1      Subd. 10.  [MEDICAL CARE SAVINGS ACCOUNT OR 
  3.2   ACCOUNT.] "Medical care savings account" or "account" means an 
  3.3   account established by an individual, or by an employer on 
  3.4   behalf of an employee, as part of a medical care savings account 
  3.5   program.  The account may earn interest, as long as the 
  3.6   principal value does not vary with market fluctuations. 
  3.7      Subd. 11.  [MEDICAL CARE SAVINGS ACCOUNT PROGRAM OR 
  3.8   PROGRAM.] "Medical care savings account program" or "program" 
  3.9   means a program that meets the requirements of sections 62Q.43 
  3.10  to 62Q.53 and which includes all of the following: 
  3.11     (1) the purchase by an employer or individual of a 
  3.12  qualified higher deductible health plan for the benefit of a 
  3.13  participant and the participant's dependents; 
  3.14     (2) the contribution into a medical care savings account by 
  3.15  a contributor; and 
  3.16     (3) an account administrator to administer the medical care 
  3.17  savings account from which payment of claims is made. 
  3.18     Subd. 12.  [PARTICIPANT.] "Participant" means an employed, 
  3.19  self-employed, or unemployed individual who:  (1) has 
  3.20  established a medical savings account, or has had a medical 
  3.21  savings account established by an employer on the individual's 
  3.22  behalf; and (2) participates in a medical care savings account 
  3.23  program. 
  3.24     Subd. 13.  [QUALIFIED HIGHER DEDUCTIBLE HEALTH 
  3.25  PLAN.] "Qualified higher deductible health plan" means a health 
  3.26  coverage policy, certificate, or contract that provides for 
  3.27  payments for covered benefits that exceed the higher deductible 
  3.28  and that is purchased by an employer or individual for the 
  3.29  benefit of a participant under a medical care savings account 
  3.30  program. 
  3.31     Sec. 3.  [62Q.47] [ESTABLISHMENT.] 
  3.32     Subdivision 1.  [EMPLOYERS.] Beginning January 1, 1996, an 
  3.33  employer, except as otherwise provided by law, contract, or a 
  3.34  collective bargaining agreement, may offer to employees a 
  3.35  medical care savings account program, subject to the 
  3.36  requirements of sections 62Q.43 to 62Q.53. 
  4.1      An employer that offers a medical care savings account 
  4.2   program shall inform all employees in writing, before making any 
  4.3   contributions, of the federal tax status of contributions made 
  4.4   under sections 62Q.43 to 62Q.53. 
  4.5      Subd. 2.  [INDIVIDUALS.] For tax years beginning on or 
  4.6   after January 1, 1996, an employed, self-employed, or unemployed 
  4.7   individual may establish a medical care savings account and 
  4.8   participate in a medical care savings account program, subject 
  4.9   to the requirements of sections 62Q.43 to 62Q.53. 
  4.10     Subd. 3.  [CONTRIBUTIONS INTO ACCOUNT.] A contributor may 
  4.11  deposit into a medical care savings account, on behalf of a 
  4.12  participant, all or part of the premium differential realized by 
  4.13  the purchase of a qualified higher deductible health plan for 
  4.14  the benefit of the participant and the participant's 
  4.15  dependents.  A contributor that did not previously provide, or 
  4.16  was not previously covered by, a health coverage policy, 
  4.17  certificate, or contract may contribute all or part of the 
  4.18  deductible of the qualified higher deductible plan purchased. 
  4.19     Sec. 4.  [62Q.49] [ADMINISTRATION.] 
  4.20     Subdivision 1.  [NOTIFICATION.] Not more than 30 days after 
  4.21  an account administrator begins to administer an account, the 
  4.22  administrator shall notify in writing each participant on whose 
  4.23  behalf the administrator administers an account of the date of 
  4.24  the last business day of the medical care savings account plan 
  4.25  year. 
  4.26     Subd. 2.  [USE OF FUNDS.] The account administrator shall 
  4.27  utilize the funds held in a medical care savings account solely 
  4.28  for the purpose of paying the eligible expenses of the 
  4.29  participant or the participant's dependents.  Funds held in a 
  4.30  medical care savings account shall not be used to cover medical, 
  4.31  dental, and vision expenses of a participant or a participant's 
  4.32  dependents that are otherwise covered, including but not limited 
  4.33  to expenses covered by an automobile insurance policy, workers' 
  4.34  compensation insurance policy or self-insured plan, or another 
  4.35  health coverage policy certificate or contract. 
  4.36     Subd. 3.  [REIMBURSEMENT.] Upon receipt of documentation of 
  5.1   eligible expenses incurred by a participant in the tax year, the 
  5.2   account administrator shall reimburse the participant from the 
  5.3   participant's account for eligible expenses. 
  5.4      Subd. 4.  [ADVANCE TO PARTICIPANT.] If an employer makes 
  5.5   contributions to a participant's medical care savings account on 
  5.6   a periodic installment basis, the employer shall advance to the 
  5.7   participant, interest free, the amount necessary to cover 
  5.8   eligible expenses incurred by the participant that exceed the 
  5.9   amount in the participant's medical care savings account at the 
  5.10  time the expense is incurred, as long as the participant agrees 
  5.11  to repay the advance from future installments.  The total amount 
  5.12  advanced by an employer during a tax year must not exceed the 
  5.13  total to be contributed by the employer to the participant's 
  5.14  medical savings account during that tax year. 
  5.15     Subd. 5.  [CARRYOVER.] Money remaining in a participant's 
  5.16  medical savings account at the end of a taxable year remains in 
  5.17  the account for the next taxable year, and may be used to pay 
  5.18  for future eligible medical expenses of the participant or the 
  5.19  participant's dependents. 
  5.20     Subd. 6.  [PARTICIPATION AT START OF TAX YEAR.] (a) 
  5.21  Employers that offer a medical savings account program shall 
  5.22  allow employees to begin participation only at the start of a 
  5.23  tax year.  Employers may offer alternative health care coverage 
  5.24  to employees who become eligible for or choose to enroll in 
  5.25  employee-sponsored health care coverage during the interim 
  5.26  period before the start of a tax year. 
  5.27     (b) An individual establishing a medical care savings 
  5.28  account may begin participation in a medical care savings 
  5.29  account program only at the start of a tax year. 
  5.30     Sec. 5.  [62Q.51] [TAXATION OF WITHDRAWALS.] 
  5.31     Subdivision 1.  [WITHDRAWALS FOR OTHER PURPOSES.] A 
  5.32  participant may withdraw money from a medical care savings 
  5.33  account for any purpose other than a purpose described in 
  5.34  section 62Q.49, subdivision 2, only on the last business day of 
  5.35  the medical care savings account plan year.  Money withdrawn 
  5.36  under this subdivision is subject to taxation as income as 
  6.1   provided in section 290.01, subdivision 19a. 
  6.2      Subd. 2.  [BANKRUPTCY.] The amount of a disbursement of any 
  6.3   assets of a medical care savings account pursuant to a filing 
  6.4   for protection under United States Code, title 11, sections 101 
  6.5   to 1330, by a participant or person for whose benefit the 
  6.6   account was established is not considered a withdrawal for 
  6.7   purposes of this section.  The amount of disbursement is not 
  6.8   subject to taxation under chapter 290. 
  6.9      Sec. 6.  [62Q.53] [CHANGES IN PARTICIPANT STATUS.] 
  6.10     Subdivision 1.  [DEATH OF PARTICIPANT.] Upon the death of a 
  6.11  participant, the account administrator shall distribute the 
  6.12  principal and accumulated interest of the medical care savings 
  6.13  account to the estate of the participant, unless the 
  6.14  participant's heirs request the account administrator to 
  6.15  continue to administer the medical care savings account.  If 
  6.16  this request is made, the account administrator shall allow the 
  6.17  principal balance to remain with the plan administrator for use 
  6.18  by the heirs for eligible expenses, including Consolidated 
  6.19  Omnibus Budget Reconciliation Act of 1985 (COBRA), Public Law 
  6.20  Number 99-272, as amended, insurance premiums, until the medical 
  6.21  care savings account fund balance is exhausted.  If the 
  6.22  principal and accumulated interest is distributed to the estate 
  6.23  of the participant, this money is subject to taxation as 
  6.24  provided in section 290.01, subdivision 19a, unless the 
  6.25  participant's heirs deposit the principal and accumulated 
  6.26  interest in a new medical care savings account. 
  6.27     Subd. 2.  [CHANGES IN EMPLOYMENT STATUS.] (a) If an 
  6.28  employee is no longer employed by an employer that participates 
  6.29  in a medical care savings account program, the employee may 
  6.30  transfer the account to a new administrator, if the employee's 
  6.31  new employer participates in a medical care savings account 
  6.32  program.  The employee must notify the new administrator of the 
  6.33  request for transfer within 60 days after the employee's final 
  6.34  day of employment with the previous employer.  An employer 
  6.35  participating in a medical savings account program shall accept 
  6.36  all requests for account transfers by new employees, if the 
  7.1   request for a transfer is made within this 60-day period. 
  7.2      (b) If the employee does not request a transfer under 
  7.3   paragraph (a), the employee may request in writing to the former 
  7.4   employer's account administrator, not later than 60 days after 
  7.5   the employee's final day of employment, that the account remain 
  7.6   with that administrator.  If the administrator rejects the 
  7.7   employee's requests, the former employer shall mail a check to 
  7.8   the former employee at the employee's last known address equal 
  7.9   to the amount in the former employee's account, not more than 30 
  7.10  days after the expiration of the 60-day period.  That amount is 
  7.11  subject to taxation under section 62Q.51, unless the employee 
  7.12  establishes a new medical care savings account and deposits the 
  7.13  full amount received from the employer in this new account, 
  7.14  within 60 days of receipt.  
  7.15     Sec. 7.  Minnesota Statutes 1994, section 290.01, 
  7.16  subdivision 19a, is amended to read: 
  7.17     Subd. 19a.  [ADDITIONS TO FEDERAL TAXABLE INCOME.] For 
  7.18  individuals, estates, and trusts, there shall be added to 
  7.19  federal taxable income: 
  7.20     (1)(i) interest income on obligations of any state other 
  7.21  than Minnesota or a political or governmental subdivision, 
  7.22  municipality, or governmental agency or instrumentality of any 
  7.23  state other than Minnesota exempt from federal income taxes 
  7.24  under the Internal Revenue Code or any other federal statute, 
  7.25  and 
  7.26     (ii) exempt-interest dividends as defined in section 
  7.27  852(b)(5) of the Internal Revenue Code, except the portion of 
  7.28  the exempt-interest dividends derived from interest income on 
  7.29  obligations of the state of Minnesota or its political or 
  7.30  governmental subdivisions, municipalities, governmental agencies 
  7.31  or instrumentalities, but only if the portion of the 
  7.32  exempt-interest dividends from such Minnesota sources paid to 
  7.33  all shareholders represents 95 percent or more of the 
  7.34  exempt-interest dividends that are paid by the regulated 
  7.35  investment company as defined in section 851(a) of the Internal 
  7.36  Revenue Code, or the fund of the regulated investment company as 
  8.1   defined in section 851(h) of the Internal Revenue Code, making 
  8.2   the payment; and 
  8.3      (iii) for the purposes of items (i) and (ii), interest on 
  8.4   obligations of an Indian tribal government described in section 
  8.5   7871(c) of the Internal Revenue Code shall be treated as 
  8.6   interest income on obligations of the state in which the tribe 
  8.7   is located; 
  8.8      (2) the amount of income taxes paid or accrued within the 
  8.9   taxable year under this chapter and income taxes paid to any 
  8.10  other state or to any province or territory of Canada, to the 
  8.11  extent allowed as a deduction under section 63(d) of the 
  8.12  Internal Revenue Code, but the addition may not be more than the 
  8.13  amount by which the itemized deductions as allowed under section 
  8.14  63(d) of the Internal Revenue Code exceeds the amount of the 
  8.15  standard deduction as defined in section 63(c) of the Internal 
  8.16  Revenue Code.  For the purpose of this paragraph, the 
  8.17  disallowance of itemized deductions under section 68 of the 
  8.18  Internal Revenue Code of 1986, income tax is the last itemized 
  8.19  deduction disallowed; 
  8.20     (3) the capital gain amount of a lump sum distribution to 
  8.21  which the special tax under section 1122(h)(3)(B)(ii) of the Tax 
  8.22  Reform Act of 1986, Public Law Number 99-514, applies; ~~and~~ 
  8.23     (4) the amount of income taxes paid or accrued within the 
  8.24  taxable year under this chapter and income taxes paid to any 
  8.25  other state or any province or territory of Canada, to the 
  8.26  extent allowed as a deduction in determining federal adjusted 
  8.27  gross income.  For the purpose of this paragraph, income taxes 
  8.28  do not include the taxes imposed by sections 290.0922, 
  8.29  subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729; 
  8.30  and 
  8.31     (5) a withdrawal from a medical care savings account under 
  8.32  section 62Q.51, subdivision 1, other than a withdrawal that 
  8.33  qualifies under section 62Q.49, subdivision 2. 
  8.34     Sec. 8.  Minnesota Statutes 1994, section 290.01, 
  8.35  subdivision 19b, is amended to read: 
  8.36     Subd. 19b.  [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 
  9.1   individuals, estates, and trusts, there shall be subtracted from 
  9.2   federal taxable income: 
  9.3      (1) interest income on obligations of any authority, 
  9.4   commission, or instrumentality of the United States to the 
  9.5   extent includable in taxable income for federal income tax 
  9.6   purposes but exempt from state income tax under the laws of the 
  9.7   United States; 
  9.8      (2) if included in federal taxable income, the amount of 
  9.9   any overpayment of income tax to Minnesota or to any other 
  9.10  state, for any previous taxable year, whether the amount is 
  9.11  received as a refund or as a credit to another taxable year's 
  9.12  income tax liability; 
  9.13     (3) the amount paid to others not to exceed $650 for each 
  9.14  dependent in grades kindergarten to 6 and $1,000 for each 
  9.15  dependent in grades 7 to 12, for tuition, textbooks, and 
  9.16  transportation of each dependent in attending an elementary or 
  9.17  secondary school situated in Minnesota, North Dakota, South 
  9.18  Dakota, Iowa, or Wisconsin, wherein a resident of this state may 
  9.19  legally fulfill the state's compulsory attendance laws, which is 
  9.20  not operated for profit, and which adheres to the provisions of 
  9.21  the Civil Rights Act of 1964 and chapter 363.  As used in this 
  9.22  clause, "textbooks" includes books and other instructional 
  9.23  materials and equipment used in elementary and secondary schools 
  9.24  in teaching only those subjects legally and commonly taught in 
  9.25  public elementary and secondary schools in this state.  
  9.26  "Textbooks" does not include instructional books and materials 
  9.27  used in the teaching of religious tenets, doctrines, or worship, 
  9.28  the purpose of which is to instill such tenets, doctrines, or 
  9.29  worship, nor does it include books or materials for, or 
  9.30  transportation to, extracurricular activities including sporting 
  9.31  events, musical or dramatic events, speech activities, driver's 
  9.32  education, or similar programs.  In order to qualify for the 
  9.33  subtraction under this clause the taxpayer must elect to itemize 
  9.34  deductions under section 63(e) of the Internal Revenue Code; 
  9.35     (4) to the extent included in federal taxable income, 
  9.36  distributions from a qualified governmental pension plan, an 
 10.1   individual retirement account, simplified employee pension, or 
 10.2   qualified plan covering a self-employed person that represent a 
 10.3   return of contributions that were included in Minnesota gross 
 10.4   income in the taxable year for which the contributions were made 
 10.5   but were deducted or were not included in the computation of 
 10.6   federal adjusted gross income.  The distribution shall be 
 10.7   allocated first to return of contributions until the 
 10.8   contributions included in Minnesota gross income have been 
 10.9   exhausted.  This subtraction applies only to contributions made 
 10.10  in a taxable year prior to 1985; 
 10.11     (5) income as provided under section 290.0802; 
 10.12     (6) the amount of unrecovered accelerated cost recovery 
 10.13  system deductions allowed under subdivision 19g; 
 10.14     (7) to the extent included in federal adjusted gross 
 10.15  income, income realized on disposition of property exempt from 
 10.16  tax under section 290.491; ~~and~~ 
 10.17     (8) to the extent not deducted in determining federal 
 10.18  taxable income, the amount paid for health insurance of 
 10.19  self-employed individuals as determined under section 162(l) of 
 10.20  the Internal Revenue Code, except that the 25 percent limit does 
 10.21  not apply.  If the taxpayer deducted insurance payments under 
 10.22  section 213 of the Internal Revenue Code of 1986, the 
 10.23  subtraction under this clause must be reduced by the lesser of: 
 10.24     (i) the total itemized deductions allowed under section 
 10.25  63(d) of the Internal Revenue Code, less state, local, and 
 10.26  foreign income taxes deductible under section 164 of the 
 10.27  Internal Revenue Code and the standard deduction under section 
 10.28  63(c) of the Internal Revenue Code; or 
 10.29     (ii) the lesser of (A) the amount of insurance qualifying 
 10.30  as "medical care" under section 213(d) of the Internal Revenue 
 10.31  Code to the extent not deducted under section 162(1) of the 
 10.32  Internal Revenue Code or excluded from income or (B) the total 
 10.33  amount deductible for medical care under section 213(a); and 
 10.34     (9) to the extent included in federal taxable income for 
 10.35  the taxable year, contributions to and investment income 
 10.36  attributable to medical care savings accounts, as defined in 
 11.1   section 62Q.45. 
 11.2      Sec. 9.  Minnesota Statutes 1994, section 290.01, 
 11.3   subdivision 19d, is amended to read: 
 11.4      Subd. 19d.  [CORPORATIONS; MODIFICATIONS DECREASING FEDERAL 
 11.5   TAXABLE INCOME.] For corporations, there shall be subtracted 
 11.6   from federal taxable income after the increases provided in 
 11.7   subdivision 19c:  
 11.8      (1) the amount of foreign dividend gross-up added to gross 
 11.9   income for federal income tax purposes under section 78 of the 
 11.10  Internal Revenue Code; 
 11.11     (2) the amount of salary expense not allowed for federal 
 11.12  income tax purposes due to claiming the federal jobs credit 
 11.13  under section 51 of the Internal Revenue Code; 
 11.14     (3) any dividend (not including any distribution in 
 11.15  liquidation) paid within the taxable year by a national or state 
 11.16  bank to the United States, or to any instrumentality of the 
 11.17  United States exempt from federal income taxes, on the preferred 
 11.18  stock of the bank owned by the United States or the 
 11.19  instrumentality; 
 11.20     (4) amounts disallowed for intangible drilling costs due to 
 11.21  differences between this chapter and the Internal Revenue Code 
 11.22  in taxable years beginning before January 1, 1987, as follows: 
 11.23     (i) to the extent the disallowed costs are represented by 
 11.24  physical property, an amount equal to the allowance for 
 11.25  depreciation under Minnesota Statutes 1986, section 290.09, 
 11.26  subdivision 7, subject to the modifications contained in 
 11.27  subdivision 19e; and 
 11.28     (ii) to the extent the disallowed costs are not represented 
 11.29  by physical property, an amount equal to the allowance for cost 
 11.30  depletion under Minnesota Statutes 1986, section 290.09, 
 11.31  subdivision 8; 
 11.32     (5) the deduction for capital losses pursuant to sections 
 11.33  1211 and 1212 of the Internal Revenue Code, except that: 
 11.34     (i) for capital losses incurred in taxable years beginning 
 11.35  after December 31, 1986, capital loss carrybacks shall not be 
 11.36  allowed; 
 12.1      (ii) for capital losses incurred in taxable years beginning 
 12.2   after December 31, 1986, a capital loss carryover to each of the 
 12.3   15 taxable years succeeding the loss year shall be allowed; 
 12.4      (iii) for capital losses incurred in taxable years 
 12.5   beginning before January 1, 1987, a capital loss carryback to 
 12.6   each of the three taxable years preceding the loss year, subject 
 12.7   to the provisions of Minnesota Statutes 1986, section 290.16, 
 12.8   shall be allowed; and 
 12.9      (iv) for capital losses incurred in taxable years beginning 
 12.10  before January 1, 1987, a capital loss carryover to each of the 
 12.11  five taxable years succeeding the loss year to the extent such 
 12.12  loss was not used in a prior taxable year and subject to the 
 12.13  provisions of Minnesota Statutes 1986, section 290.16, shall be 
 12.14  allowed; 
 12.15     (6) an amount for interest and expenses relating to income 
 12.16  not taxable for federal income tax purposes, if (i) the income 
 12.17  is taxable under this chapter and (ii) the interest and expenses 
 12.18  were disallowed as deductions under the provisions of section 
 12.19  171(a)(2), 265 or 291 of the Internal Revenue Code in computing 
 12.20  federal taxable income; 
 12.21     (7) in the case of mines, oil and gas wells, other natural 
 12.22  deposits, and timber for which percentage depletion was 
 12.23  disallowed pursuant to subdivision 19c, clause (11), a 
 12.24  reasonable allowance for depletion based on actual cost.  In the 
 12.25  case of leases the deduction must be apportioned between the 
 12.26  lessor and lessee in accordance with rules prescribed by the 
 12.27  commissioner.  In the case of property held in trust, the 
 12.28  allowable deduction must be apportioned between the income 
 12.29  beneficiaries and the trustee in accordance with the pertinent 
 12.30  provisions of the trust, or if there is no provision in the 
 12.31  instrument, on the basis of the trust's income allocable to 
 12.32  each; 
 12.33     (8) for certified pollution control facilities placed in 
 12.34  service in a taxable year beginning before December 31, 1986, 
 12.35  and for which amortization deductions were elected under section 
 12.36  169 of the Internal Revenue Code of 1954, as amended through 
 13.1   December 31, 1985, an amount equal to the allowance for 
 13.2   depreciation under Minnesota Statutes 1986, section 290.09, 
 13.3   subdivision 7; 
 13.4      (9) the amount included in federal taxable income 
 13.5   attributable to the credits provided in Minnesota Statutes 1986, 
 13.6   section 273.1314, subdivision 9, or Minnesota Statutes, section 
 13.7   469.171, subdivision 6; 
 13.8      (10) amounts included in federal taxable income that are 
 13.9   due to refunds of income, excise, or franchise taxes based on 
 13.10  net income or related minimum taxes paid by the corporation to 
 13.11  Minnesota, another state, a political subdivision of another 
 13.12  state, the District of Columbia, or a foreign country or 
 13.13  possession of the United States to the extent that the taxes 
 13.14  were added to federal taxable income under section 290.01, 
 13.15  subdivision 19c, clause (1), in a prior taxable year; 
 13.16     (11) the following percentage of royalties, fees, or other 
 13.17  like income accrued or received from a foreign operating 
 13.18  corporation or a foreign corporation which is part of the same 
 13.19  unitary business as the receiving corporation: 
 13.20        Taxable Year 
 13.21        Beginning After .......... Percentage 
 13.22        December 31, 1988 ........ 50 percent 
 13.23        December 31, 1990 ........ 80 percent;    
 13.24     (12) income or gains from the business of mining as defined 
 13.25  in section 290.05, subdivision 1, clause (a), that are not 
 13.26  subject to Minnesota franchise tax; 
 13.27     (13) the amount of handicap access expenditures in the 
 13.28  taxable year which are not allowed to be deducted or capitalized 
 13.29  under section 44(d)(7) of the Internal Revenue Code of 1986; 
 13.30     (14) the amount of qualified research expenses not allowed 
 13.31  for federal income tax purposes under section 280C(c) of the 
 13.32  Internal Revenue Code, but only to the extent that the amount 
 13.33  exceeds the amount of the credit allowed under section 290.068; 
 13.34  ~~and~~ 
 13.35     (15) the amount of salary expenses not allowed for federal 
 13.36  income tax purposes due to claiming the Indian employment credit 
 14.1   under section 45A(a) of the Internal Revenue Code of 1986, as 
 14.2   amended through December 31, 1993; and 
 14.3      (16) to the extent included in federal taxable income for 
 14.4   the taxable year, investment income attributable to a medical 
 14.5   care savings account, as defined in section 62Q.45. 
 14.6      Sec. 10.  [EFFECTIVE DATE.] 
 14.7      Sections 1 to 9 are effective for taxable years beginning 
 14.8   after December 31, 1995.