SF 14

Introduction - 80th Legislature, 1997 3rd Special Session

Posted on 12/15/2009 12:00 a.m.

  1.1                          A bill for an act
  1.2             relating to taxation; imposing a capital gains tax on 
  1.3             sales of interests in professional sports franchises; 
  1.4             proposing coding for new law in Minnesota Statutes, 
  1.5             chapter 290. 
  1.6   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.7      Section 1.  [290.0911] [CAPITAL GAINS FROM SPORTS 
  1.8   FRANCHISES.] 
  1.9      Subdivision 1.  [TAX IMPOSED.] A tax is imposed on 
  1.10  individuals, estates, trusts, and corporations equal to 28 
  1.11  percent of the net capital gain on sport franchise property.  
  1.12  This tax is in addition to all other taxes imposed by this 
  1.13  chapter. 
  1.14     Subd. 2.  [SPORT FRANCHISE PROPERTY.] For purposes of this 
  1.15  section, "sport franchise property" means an ownership interest 
  1.16  in a major league baseball, national football league, national 
  1.17  hockey league, or national basketball association franchise that 
  1.18  plays or played its home games in this state at any time the 
  1.19  taxpayer held the ownership interest.  An ownership interest may 
  1.20  be either a direct or indirect ownership interest, including 
  1.21  direct ownership of the franchise rights in the taxpayer's name 
  1.22  or ownership by the taxpayer of common or preferred stock, 
  1.23  shares, partnership interests, membership interests, or any 
  1.24  other equity ownership interests in a corporation, partnership, 
  1.25  limited partnership, limited liability partnership, or any other 
  2.1   entity that owned the franchise rights at the time the taxpayer 
  2.2   sold or exchanged the interest. 
  2.3      Subd. 3.  [SPECIAL BASIS RULES; CALCULATION.] For purposes 
  2.4   of calculating net capital gain under this section, the 
  2.5   following rules apply: 
  2.6      (1) basis in the property must be determined under the 
  2.7   provisions of the Internal Revenue Code, except that for 
  2.8   property acquired from a decedent the basis must be determined 
  2.9   under section 1015 of the Internal Revenue Code (gift basis); 
  2.10  and 
  2.11     (2) only gain or loss on sport franchise property may be 
  2.12  taken into account. 
  2.13     Subd. 4.  [APPORTIONMENT RULES FOR MULTISTATE GAIN.] If the 
  2.14  franchise that subjects gain on the property to tax under this 
  2.15  section operated for part of the holding period in this state as 
  2.16  the location it played its home games and part of the holding 
  2.17  period in another state as the location of its home games, the 
  2.18  gain must be apportioned to determine the net gain, based on the 
  2.19  number of years operated in Minnesota as the location of its 
  2.20  home games and the number of years operated outside Minnesota as 
  2.21  the location of its home games. 
  2.22     Subd. 5.  [EXEMPTION TO PREVENT MULTIPLE LAYER TAX.] The 
  2.23  tax under this section does not apply to the sale or exchange of 
  2.24  an ownership interest in a sports franchise by the taxpayer, if 
  2.25  the entity directly owning the franchise rights previously sold 
  2.26  or exchanged the rights or ownership interest and paid the tax 
  2.27  under this section on the gain. 
  2.28     Subd. 6.  [CREDITS DO NOT APPLY.] The tax may not be 
  2.29  reduced by the credits under sections 290.06, 290.091, and 
  2.30  290.0921. 
  2.31     Sec. 2.  [EFFECTIVE DATE.] 
  2.32     Section 1 is effective for gains realized on sales or 
  2.33  exchanges closed after November 14, 1997, for taxable years 
  2.34  beginning after December 31, 1996.