1.1 	A bill for an act
1.2 	relating to the military; providing funding for
1.3 	certain National Guard incentive programs; providing
1.4 	funding for a World War II veterans memorial and the
1.5 	maintenance and improvement of veterans homes;
1.6 	providing certain income tax benefits; appropriating
1.7 	money; amending Minnesota Statutes 2004, sections
1.8 	289A.02, subdivision 7; 290.01, subdivisions 19, 19b,
1.9 	31; 290.06, subdivision 2c; 290.091, subdivision 2;
1.10 	290A.03, subdivision 15; 291.005, subdivision 1.
1.11 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.12 	ARTICLE 1
1.13 	NATIONAL GUARD FUNDING

1.14 	Section 1. APPROPRIATION.
 1.15 	(a) $3,850,000 is appropriated in fiscal year 2006 and
1.16 	$3,850,000 is appropriated in fiscal year 2007 from the general
1.17 	fund to the adjutant general to provide the additional amount
1.18 	necessary for full funding of the tuition reimbursement program
1.19 	in Minnesota Statutes, section 192.501, subdivision 2.
1.20 	(b) $1,500,000 is appropriated in fiscal year 2006 and
1.21 	$1,500,000 is appropriated in fiscal year 2007 from the general
1.22 	fund to the adjutant general to provide for reenlistment bonuses
1.23 	under Minnesota Statutes, section 192.501, subdivision 1b.

1.24 	ARTICLE 2
1.25 	BONDING

1.26 	Section 1. APPROPRIATION.
 1.27 	(a) $670,000 is appropriated from the bond proceeds fund to
1.28 	the commissioner of administration for the construction of a
2.1 	World War II veterans memorial on the Capitol Mall.  The design
2.2 	is subject to approval by the Capitol Area Architectural and
2.3 	Planning Board.
2.4 	(b) $6,306,000 is appropriated from the bond proceeds fund
2.5 	to the Veterans Homes Board for the maintenance and improvement
2.6 	of Minnesota's veterans homes, including $6,000,000 for asset
2.7 	preservation and $306,000 for the Luverne Veterans Home dementia
2.8 	unit common area.

2.9 	Sec. 2. BOND SALE.
 2.10 	To provide the money appropriated in this act from the bond
2.11 	proceeds fund, the commissioner of finance shall sell and issue
2.12 	bonds of the state in an amount up to $6,976,000 in the manner,
2.13 	upon the terms, and with the effect prescribed by Minnesota
2.14 	Statutes, sections 16A.631 to 16A.675, and by the Minnesota
2.15 	Constitution, article XI, sections 4 to 7.

2.16 	Sec. 3. EFFECTIVE DATE.
 2.17 	Sections 1 and 2 are effective the day following final
2.18 	enactment.

2.19 	ARTICLE 3
2.20 	INCOME TAX

2.21 	Section 1. Minnesota Statutes 2004, section 289A.02,
2.22 	subdivision 7, is amended to read:
2.23 		Subd. 7.Internal revenue code.  Unless specifically
2.24 	defined otherwise, "Internal Revenue Code" means the Internal
2.25 	Revenue Code of 1986, as amended through June 15 November 15,
2.26 	2003.
2.27 	
EFFECTIVE DATE. This section is effective for actions
2.28 	required on or after November 11, 2003.

2.29 	Sec. 2. Minnesota Statutes 2004, section 290.01,
2.30 	subdivision 19, is amended to read:
2.31 		Subd. 19.Net income.  The term "net income" means the
2.32 	federal taxable income, as defined in section 63 of the Internal
2.33 	Revenue Code of 1986, as amended through the date named in this
2.34 	subdivision, incorporating the federal effective dates of
2.35 	changes to the Internal Revenue Code and any elections made by
2.36 	the taxpayer in accordance with the Internal Revenue Code in
3.1 	determining federal taxable income for federal income tax
3.2 	purposes, and with the modifications provided in subdivisions
3.3 	19a to 19f.
3.4 	In the case of a regulated investment company or a fund
3.5 	thereof, as defined in section 851(a) or 851(g) of the Internal
3.6 	Revenue Code, federal taxable income means investment company
3.7 	taxable income as defined in section 852(b)(2) of the Internal
3.8 	Revenue Code, except that:
3.9 	(1) the exclusion of net capital gain provided in section
3.10 	852(b)(2)(A) of the Internal Revenue Code does not apply;
3.11 	(2) the deduction for dividends paid under section
3.12 	852(b)(2)(D) of the Internal Revenue Code must be applied by
3.13 	allowing a deduction for capital gain dividends and
3.14 	exempt-interest dividends as defined in sections 852(b)(3)(C)
3.15 	and 852(b)(5) of the Internal Revenue Code; and
3.16 	(3) the deduction for dividends paid must also be applied
3.17 	in the amount of any undistributed capital gains which the
3.18 	regulated investment company elects to have treated as provided
3.19 	in section 852(b)(3)(D) of the Internal Revenue Code.
3.20 	The net income of a real estate investment trust as defined
3.21 	and limited by section 856(a), (b), and (c) of the Internal
3.22 	Revenue Code means the real estate investment trust taxable
3.23 	income as defined in section 857(b)(2) of the Internal Revenue
3.24 	Code.
3.25 	The net income of a designated settlement fund as defined
3.26 	in section 468B(d) of the Internal Revenue Code means the gross
3.27 	income as defined in section 468B(b) of the Internal Revenue
3.28 	Code.
3.29 	The provisions of sections 1113(a), 1117, 1206(a), 1313(a),
3.30 	1402(a), 1403(a), 1443, 1450, 1501(a), 1605, 1611(a), 1612,
3.31 	1616, 1617, 1704(l), and 1704(m) of the Small Business Job
3.32 	Protection Act, Public Law 104-188, the provisions of Public Law
3.33 	104-117, the provisions of sections 313(a) and (b)(1), 602(a),
3.34 	913(b), 941, 961, 971, 1001(a) and (b), 1002, 1003, 1012, 1013,
3.35 	1014, 1061, 1062, 1081, 1084(b), 1086, 1087, 1111(a), 1131(b)
3.36 	and (c), 1211(b), 1213, 1530(c)(2), 1601(f)(5) and (h), and
4.1 	1604(d)(1) of the Taxpayer Relief Act of 1997, Public Law
4.2 	105-34, the provisions of section 6010 of the Internal Revenue
4.3 	Service Restructuring and Reform Act of 1998, Public Law
4.4 	105-206, the provisions of section 4003 of the Omnibus
4.5 	Consolidated and Emergency Supplemental Appropriations Act,
4.6 	1999, Public Law 105-277, and the provisions of section 318 of
4.7 	the Consolidated Appropriation Act of 2001, Public Law 106-554,
4.8 	shall become effective at the time they become effective for
4.9 	federal purposes.
4.10 	The Internal Revenue Code of 1986, as amended through
4.11 	December 31, 1996 November 15, 2003, shall be in effect for
4.12 	taxable years beginning after December 31, 1996 at the same time
4.13 	it becomes effective for federal purposes.
4.14 	The provisions of sections 202(a) and (b), 221(a), 225,
4.15 	312, 313, 913(a), 934, 962, 1004, 1005, 1052, 1063, 1084(a) and
4.16 	(c), 1089, 1112, 1171, 1204, 1271(a) and (b), 1305(a), 1306,
4.17 	1307, 1308, 1309, 1501(b), 1502(b), 1504(a), 1505, 1527, 1528,
4.18 	1530, 1601(d), (e), (f), and (i) and 1602(a), (b), (c), and (e)
4.19 	of the Taxpayer Relief Act of 1997, Public Law 105-34, the
4.20 	provisions of sections 6004, 6005, 6012, 6013, 6015, 6016, 7002,
4.21 	and 7003 of the Internal Revenue Service Restructuring and
4.22 	Reform Act of 1998, Public Law 105-206, the provisions of
4.23 	section 3001 of the Omnibus Consolidated and Emergency
4.24 	Supplemental Appropriations Act, 1999, Public Law 105-277, the
4.25 	provisions of section 3001 of the Miscellaneous Trade and
4.26 	Technical Corrections Act of 1999, Public Law 106-36, and the
4.27 	provisions of section 316 of the Consolidated Appropriation Act
4.28 	of 2001, Public Law 106-554, shall become effective at the time
4.29 	they become effective for federal purposes.
4.30 	The Internal Revenue Code of 1986, as amended through
4.31 	December 31, 1997, shall be in effect for taxable years
4.32 	beginning after December 31, 1997.
4.33 	The provisions of sections 5002, 6009, 6011, and 7001 of
4.34 	the Internal Revenue Service Restructuring and Reform Act of
4.35 	1998, Public Law 105-206, the provisions of section 9010 of the
4.36 	Transportation Equity Act for the 21st Century, Public Law
5.1 	105-178, the provisions of sections 1004, 4002, and 5301 of the
5.2 	Omnibus Consolidation and Emergency Supplemental Appropriations
5.3 	Act, 1999, Public Law 105-277, the provision of section 303 of
5.4 	the Ricky Ray Hemophilia Relief Fund Act of 1998, Public Law
5.5 	105-369, the provisions of sections 532, 534, 536, 537, and 538
5.6 	of the Ticket to Work and Work Incentives Improvement Act of
5.7 	1999, Public Law 106-170, the provisions of the Installment Tax
5.8 	Correction Act of 2000, Public Law 106-573, and the provisions
5.9 	of section 309 of the Consolidated Appropriation Act of 2001,
5.10 	Public Law 106-554, shall become effective at the time they
5.11 	become effective for federal purposes.
5.12 	The Internal Revenue Code of 1986, as amended through
5.13 	December 31, 1998, shall be in effect for taxable years
5.14 	beginning after December 31, 1998.
5.15 	The provisions of the FSC Repeal and Extraterritorial
5.16 	Income Exclusion Act of 2000, Public Law 106-519, and the
5.17 	provision of section 412 of the Job Creation and Worker
5.18 	Assistance Act of 2002, Public Law 107-147, shall become
5.19 	effective at the time it became effective for federal purposes.
5.20 	The Internal Revenue Code of 1986, as amended through
5.21 	December 31, 1999, shall be in effect for taxable years
5.22 	beginning after December 31, 1999.  The provisions of sections
5.23 	306 and 401 of the Consolidated Appropriation Act of 2001,
5.24 	Public Law 106-554, and the provision of section 632(b)(2)(A) of
5.25 	the Economic Growth and Tax Relief Reconciliation Act of 2001,
5.26 	Public Law 107-16, and provisions of sections 101 and 402 of the
5.27 	Job Creation and Worker Assistance Act of 2002, Public Law
5.28 	107-147, shall become effective at the same time it became
5.29 	effective for federal purposes.
5.30 	The Internal Revenue Code of 1986, as amended through
5.31 	December 31, 2000, shall be in effect for taxable years
5.32 	beginning after December 31, 2000.  The provisions of sections
5.33 	659a and 671 of the Economic Growth and Tax Relief
5.34 	Reconciliation Act of 2001, Public Law 107-16, the provisions of
5.35 	sections 104, 105, and 111 of the Victims of Terrorism Tax
5.36 	Relief Act of 2001, Public Law 107-134, and the provisions of
6.1 	sections 201, 403, 413, and 606 of the Job Creation and Worker
6.2 	Assistance Act of 2002, Public Law 107-147, shall become
6.3 	effective at the same time it became effective for federal
6.4 	purposes.
6.5 	The Internal Revenue Code of 1986, as amended through March
6.6 	15, 2002, shall be in effect for taxable years beginning after
6.7 	December 31, 2001.
6.8 	The provisions of sections 101 and 102 of the Victims of
6.9 	Terrorism Tax Relief Act of 2001, Public Law 107-134, shall
6.10 	become effective at the same time it becomes effective for
6.11 	federal purposes.
6.12 	The Internal Revenue Code of 1986, as amended through June
6.13 	15, 2003, shall be in effect for taxable years beginning after
6.14 	December 31, 2002.  The provisions of section 201 of the Jobs
6.15 	and Growth Tax Relief and Reconciliation Act of 2003, H.R. 2, if
6.16 	it is enacted into law, are effective at the same time it became
6.17 	effective for federal purposes.
6.18 	Except as otherwise provided, references to the Internal
6.19 	Revenue Code in subdivisions 19a 19 to 19g 19f mean the code in
6.20 	effect for purposes of determining net income for the applicable
6.21 	year.
6.22 	
EFFECTIVE DATE. This section is effective the day
6.23 	following final enactment.

6.24 	Sec. 3. Minnesota Statutes 2004, section 290.01,
6.25 	subdivision 19b, is amended to read:
6.26 		Subd. 19b.Subtractions from federal taxable income.  For
6.27 	individuals, estates, and trusts, there shall be subtracted from
6.28 	federal taxable income:
6.29 	(1) interest income on obligations of any authority,
6.30 	commission, or instrumentality of the United States to the
6.31 	extent includable in taxable income for federal income tax
6.32 	purposes but exempt from state income tax under the laws of the
6.33 	United States;
6.34 	(2) if included in federal taxable income, the amount of
6.35 	any overpayment of income tax to Minnesota or to any other
6.36 	state, for any previous taxable year, whether the amount is
7.1 	received as a refund or as a credit to another taxable year's
7.2 	income tax liability;
7.3 	(3) the amount paid to others, less the amount used to
7.4 	claim the credit allowed under section 290.0674, not to exceed
7.5 	$1,625 for each qualifying child in grades kindergarten to 6 and
7.6 	$2,500 for each qualifying child in grades 7 to 12, for tuition,
7.7 	textbooks, and transportation of each qualifying child in
7.8 	attending an elementary or secondary school situated in
7.9 	Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin,
7.10 	wherein a resident of this state may legally fulfill the state's
7.11 	compulsory attendance laws, which is not operated for profit,
7.12 	and which adheres to the provisions of the Civil Rights Act of
7.13 	1964 and chapter 363A.  For the purposes of this clause,
7.14 	"tuition" includes fees or tuition as defined in section
7.15 	290.0674, subdivision 1, clause (1).  As used in this clause,
7.16 	"textbooks" includes books and other instructional materials and
7.17 	equipment purchased or leased for use in elementary and
7.18 	secondary schools in teaching only those subjects legally and
7.19 	commonly taught in public elementary and secondary schools in
7.20 	this state.  Equipment expenses qualifying for deduction
7.21 	includes expenses as defined and limited in section 290.0674,
7.22 	subdivision 1, clause (3).  "Textbooks" does not include
7.23 	instructional books and materials used in the teaching of
7.24 	religious tenets, doctrines, or worship, the purpose of which is
7.25 	to instill such tenets, doctrines, or worship, nor does it
7.26 	include books or materials for, or transportation to,
7.27 	extracurricular activities including sporting events, musical or
7.28 	dramatic events, speech activities, driver's education, or
7.29 	similar programs.  For purposes of the subtraction provided by
7.30 	this clause, "qualifying child" has the meaning given in section
7.31 	32(c)(3) of the Internal Revenue Code;
7.32 	(4) income as provided under section 290.0802;
7.33 	(5) to the extent included in federal adjusted gross
7.34 	income, income realized on disposition of property exempt from
7.35 	tax under section 290.491;
7.36 	(6) to the extent included in federal taxable income,
8.1 	postservice benefits for youth community service under section
8.2 	124D.42 for volunteer service under United States Code, title
8.3 	42, sections 12601 to 12604;
8.4 	(7) to the extent not deducted in determining federal
8.5 	taxable income by an individual who does not itemize deductions
8.6 	for federal income tax purposes for the taxable year, an amount
8.7 	equal to 50 percent of the excess of charitable contributions
8.8 	allowable as a deduction for the taxable year under section
8.9 	170(a) of the Internal Revenue Code over $500;
8.10 	(8) for taxable years beginning before January 1, 2008, the
8.11 	amount of the federal small ethanol producer credit allowed
8.12 	under section 40(a)(3) of the Internal Revenue Code which is
8.13 	included in gross income under section 87 of the Internal
8.14 	Revenue Code;
8.15 	(9) for individuals who are allowed a federal foreign tax
8.16 	credit for taxes that do not qualify for a credit under section
8.17 	290.06, subdivision 22, an amount equal to the carryover of
8.18 	subnational foreign taxes for the taxable year, but not to
8.19 	exceed the total subnational foreign taxes reported in claiming
8.20 	the foreign tax credit.  For purposes of this clause, "federal
8.21 	foreign tax credit" means the credit allowed under section 27 of
8.22 	the Internal Revenue Code, and "carryover of subnational foreign
8.23 	taxes" equals the carryover allowed under section 904(c) of the
8.24 	Internal Revenue Code minus national level foreign taxes to the
8.25 	extent they exceed the federal foreign tax credit;
8.26 	(10) in each of the five tax years immediately following
8.27 	the tax year in which an addition is required under subdivision
8.28 	19a, clause (7), an amount equal to one-fifth of the delayed
8.29 	depreciation.  For purposes of this clause, "delayed
8.30 	depreciation" means the amount of the addition made by the
8.31 	taxpayer under subdivision 19a, clause (7), minus the positive
8.32 	value of any net operating loss under section 172 of the
8.33 	Internal Revenue Code generated for the tax year of the
8.34 	addition.  The resulting delayed depreciation cannot be less
8.35 	than zero; and 
8.36 	(11) job opportunity building zone income as provided under
9.1 	section 469.316.;
9.2 	(12) the amount of compensation paid to members of the
9.3 	Minnesota National Guard or other reserve components of the
9.4 	United States military for active service performed in
9.5 	Minnesota, excluding compensation for services performed under
9.6 	the Active Guard Reserve (AGR) program.  For purposes of this
9.7 	clause, "active service" means (i) state active service as
9.8 	defined in section 190.05, subdivision 5a, clause (1); (ii)
9.9 	federally funded state active service as defined in section
9.10 	190.05, subdivision 5b; or (iii) federal active service as
9.11 	defined in section 190.05, subdivision 5c, but "active service"
9.12 	excludes services performed exclusively for purposes of basic
9.13 	combat training, advanced individual training, annual training,
9.14 	and periodic inactive duty training; special training
9.15 	periodically made available to reserve members; and service
9.16 	performed in accordance with section 190.08, subdivision 3; and 
9.17 	(13) to the extent included in federal taxable income,
9.18 	compensation paid to a service member as defined in United
9.19 	States Code, title 10, section 101(a)(5), for military service
9.20 	as defined in the Service Members Civil Relief Act, Public Law
9.21 	108-189, section 101(2), performed by a nonresident.  This
9.22 	subtraction does not apply to "retirement income" as defined in
9.23 	section 290.17, subdivision 2, paragraph (a), clause (3).
9.24 	
EFFECTIVE DATE. The subtraction allowed in clause (12) is
9.25 	effective for taxable years beginning after December 31, 2004,
9.26 	and the subtraction allowed in clause (13) is effective for
9.27 	taxable years beginning after December 31, 2002.

9.28 	Sec. 4. Minnesota Statutes 2004, section 290.01,
9.29 	subdivision 31, is amended to read:
9.30 		Subd. 31.Internal revenue code.  Unless specifically
9.31 	defined otherwise, "Internal Revenue Code" means the Internal
9.32 	Revenue Code of 1986, as amended through June 15 November 15,
9.33 	2003.
9.34 	
EFFECTIVE DATE. This section is effective the day
9.35 	following final enactment, except the changes incorporated by
9.36 	federal changes are effective at the same times as the changes
10.1 	were effective for federal purposes.

10.2 	Sec. 5. Minnesota Statutes 2004, section 290.06,
10.3 	subdivision 2c, is amended to read:
10.4 		Subd. 2c.Schedules of rates for individuals, estates,
10.5 	and trusts.  (a) The income taxes imposed by this chapter upon
10.6 	married individuals filing joint returns and surviving spouses
10.7 	as defined in section 2(a) of the Internal Revenue Code must be
10.8 	computed by applying to their taxable net income the following
10.9 	schedule of rates:
10.10 	(1) On the first $25,680, 5.35 percent;
10.11 	(2) On all over $25,680, but not over $102,030, 7.05
10.12 	percent;
10.13 	(3) On all over $102,030, 7.85 percent.
10.14 	Married individuals filing separate returns, estates, and
10.15 	trusts must compute their income tax by applying the above rates
10.16 	to their taxable income, except that the income brackets will be
10.17 	one-half of the above amounts.
10.18 	(b) The income taxes imposed by this chapter upon unmarried
10.19 	individuals must be computed by applying to taxable net income
10.20 	the following schedule of rates:
10.21 	(1) On the first $17,570, 5.35 percent;
10.22 	(2) On all over $17,570, but not over $57,710, 7.05
10.23 	percent;
10.24 	(3) On all over $57,710, 7.85 percent.
10.25 	(c) The income taxes imposed by this chapter upon unmarried
10.26 	individuals qualifying as a head of household as defined in
10.27 	section 2(b) of the Internal Revenue Code must be computed by
10.28 	applying to taxable net income the following schedule of rates:
10.29 	(1) On the first $21,630, 5.35 percent;
10.30 	(2) On all over $21,630, but not over $86,910, 7.05
10.31 	percent;
10.32 	(3) On all over $86,910, 7.85 percent.
10.33 	(d) In lieu of a tax computed according to the rates set
10.34 	forth in this subdivision, the tax of any individual taxpayer
10.35 	whose taxable net income for the taxable year is less than an
10.36 	amount determined by the commissioner must be computed in
11.1 	accordance with tables prepared and issued by the commissioner
11.2 	of revenue based on income brackets of not more than $100.  The
11.3 	amount of tax for each bracket shall be computed at the rates
11.4 	set forth in this subdivision, provided that the commissioner
11.5 	may disregard a fractional part of a dollar unless it amounts to
11.6 	50 cents or more, in which case it may be increased to $1.
11.7 	(e) An individual who is not a Minnesota resident for the
11.8 	entire year must compute the individual's Minnesota income tax
11.9 	as provided in this subdivision.  After the application of the
11.10 	nonrefundable credits provided in this chapter, the tax
11.11 	liability must then be multiplied by a fraction in which:
11.12 	(1) the numerator is the individual's Minnesota source
11.13 	federal adjusted gross income as defined in section 62 of the
11.14 	Internal Revenue Code and increased by the additions required
11.15 	under section 290.01, subdivision 19a, clauses (1), (5), and
11.16 	(6), and reduced by the subtraction under section 290.01,
11.17 	subdivision 19b, clause (11), and the Minnesota assignable
11.18 	portion of the subtraction for United States government interest
11.19 	under section 290.01, subdivision 19b, clause (1), and the
11.20 	subtraction under clause (13),after applying the allocation and
11.21 	assignability provisions of section 290.081, clause (a), or
11.22 	290.17; and
11.23 	(2) the denominator is the individual's federal adjusted
11.24 	gross income as defined in section 62 of the Internal Revenue
11.25 	Code of 1986, increased by the amounts specified in section
11.26 	290.01, subdivision 19a, clauses (1), (5), and (6), and reduced
11.27 	by the amounts specified in section 290.01, subdivision 19b,
11.28 	clauses (1) and ,(11), and (13).
11.29 	
EFFECTIVE DATE. This section is effective for taxable
11.30 	years beginning after December 31, 2004.

11.31 	Sec. 6. Minnesota Statutes 2004, section 290.091,
11.32 	subdivision 2, is amended to read:
11.33 		Subd. 2.Definitions.  For purposes of the tax imposed by
11.34 	this section, the following terms have the meanings given:
11.35 	(a) "Alternative minimum taxable income" means the sum of
11.36 	the following for the taxable year:
12.1 	(1) the taxpayer's federal alternative minimum taxable
12.2 	income as defined in section 55(b)(2) of the Internal Revenue
12.3 	Code;
12.4 	(2) the taxpayer's itemized deductions allowed in computing
12.5 	federal alternative minimum taxable income, but excluding:
12.6 	(i) the charitable contribution deduction under section 170
12.7 	of the Internal Revenue Code to the extent that the deduction
12.8 	exceeds 1.0 percent of adjusted gross income, as defined in
12.9 	section 62 of the Internal Revenue Code;
12.10 	(ii) the medical expense deduction;
12.11 	(iii) the casualty, theft, and disaster loss deduction; and
12.12 	(iv) the impairment-related work expenses of a disabled
12.13 	person;
12.14 	(3) for depletion allowances computed under section 613A(c)
12.15 	of the Internal Revenue Code, with respect to each property (as
12.16 	defined in section 614 of the Internal Revenue Code), to the
12.17 	extent not included in federal alternative minimum taxable
12.18 	income, the excess of the deduction for depletion allowable
12.19 	under section 611 of the Internal Revenue Code for the taxable
12.20 	year over the adjusted basis of the property at the end of the
12.21 	taxable year (determined without regard to the depletion
12.22 	deduction for the taxable year);
12.23 	(4) to the extent not included in federal alternative
12.24 	minimum taxable income, the amount of the tax preference for
12.25 	intangible drilling cost under section 57(a)(2) of the Internal
12.26 	Revenue Code determined without regard to subparagraph (E);
12.27 	(5) to the extent not included in federal alternative
12.28 	minimum taxable income, the amount of interest income as
12.29 	provided by section 290.01, subdivision 19a, clause (1); and
12.30 	(6) the amount of addition required by section 290.01,
12.31 	subdivision 19a, clause (7);
12.32 	less the sum of the amounts determined under the following:
12.33 	(1) interest income as defined in section 290.01,
12.34 	subdivision 19b, clause (1);
12.35 	(2) an overpayment of state income tax as provided by
12.36 	section 290.01, subdivision 19b, clause (2), to the extent
13.1 	included in federal alternative minimum taxable income;
13.2 	(3) the amount of investment interest paid or accrued
13.3 	within the taxable year on indebtedness to the extent that the
13.4 	amount does not exceed net investment income, as defined in
13.5 	section 163(d)(4) of the Internal Revenue Code.  Interest does
13.6 	not include amounts deducted in computing federal adjusted gross
13.7 	income; and
13.8 	(4) amounts subtracted from federal taxable income as
13.9 	provided by section 290.01, subdivision 19b, clauses (10) and ,
13.10 	(11), and (12).
13.11 	In the case of an estate or trust, alternative minimum
13.12 	taxable income must be computed as provided in section 59(c) of
13.13 	the Internal Revenue Code.
13.14 	(b) "Investment interest" means investment interest as
13.15 	defined in section 163(d)(3) of the Internal Revenue Code.
13.16 	(c) "Tentative minimum tax" equals 6.4 percent of
13.17 	alternative minimum taxable income after subtracting the
13.18 	exemption amount determined under subdivision 3.
13.19 	(d) "Regular tax" means the tax that would be imposed under
13.20 	this chapter (without regard to this section and section
13.21 	290.032), reduced by the sum of the nonrefundable credits
13.22 	allowed under this chapter.
13.23 	(e) "Net minimum tax" means the minimum tax imposed by this
13.24 	section.
13.25 	
EFFECTIVE DATE. This section is effective for tax years
13.26 	beginning after December 31, 2004.

13.27 	Sec. 7. Minnesota Statutes 2004, section 290A.03,
13.28 	subdivision 15, is amended to read:
13.29 		Subd. 15.Internal revenue code.  "Internal Revenue Code"
13.30 	means the Internal Revenue Code of 1986, as amended through June 
13.31 	November 15, 2003.
13.32 	
EFFECTIVE DATE. This section is effective the day
13.33 	following final enactment, except the changes to household
13.34 	income generated by federal changes to federal adjusted gross
13.35 	income are effective at the same times the federal changes are
13.36 	effective.

14.1 	Sec. 8. Minnesota Statutes 2004, section 291.005,
14.2 	subdivision 1, is amended to read:
14.3 		Subdivision 1.Scope.  Unless the context otherwise
14.4 	clearly requires, the following terms used in this chapter shall
14.5 	have the following meanings:
14.6 	(1) "Federal gross estate" means the gross estate of a
14.7 	decedent as valued and otherwise determined for federal estate
14.8 	tax purposes by federal taxing authorities pursuant to the
14.9 	provisions of the Internal Revenue Code.
14.10 	(2) "Minnesota gross estate" means the federal gross estate
14.11 	of a decedent after (a) excluding therefrom any property
14.12 	included therein which has its situs outside Minnesota, and (b)
14.13 	including therein any property omitted from the federal gross
14.14 	estate which is includable therein, has its situs in Minnesota,
14.15 	and was not disclosed to federal taxing authorities.
14.16 	(3) "Personal representative" means the executor,
14.17 	administrator or other person appointed by the court to
14.18 	administer and dispose of the property of the decedent.  If
14.19 	there is no executor, administrator or other person appointed,
14.20 	qualified, and acting within this state, then any person in
14.21 	actual or constructive possession of any property having a situs
14.22 	in this state which is included in the federal gross estate of
14.23 	the decedent shall be deemed to be a personal representative to
14.24 	the extent of the property and the Minnesota estate tax due with
14.25 	respect to the property.
14.26 	(4) "Resident decedent" means an individual whose domicile
14.27 	at the time of death was in Minnesota.
14.28 	(5) "Nonresident decedent" means an individual whose
14.29 	domicile at the time of death was not in Minnesota.
14.30 	(6) "Situs of property" means, with respect to real
14.31 	property, the state or country in which it is located; with
14.32 	respect to tangible personal property, the state or country in
14.33 	which it was normally kept or located at the time of the
14.34 	decedent's death; and with respect to intangible personal
14.35 	property, the state or country in which the decedent was
14.36 	domiciled at death.
15.1 	(7) "Commissioner" means the commissioner of revenue or any
15.2 	person to whom the commissioner has delegated functions under
15.3 	this chapter.
15.4 	(8) "Internal Revenue Code" means the United States
15.5 	Internal Revenue Code of 1986, as amended through December 31,
15.6 	2002 November 15, 2003.
15.7 	
EFFECTIVE DATE. This section is effective for estates of
15.8 	decedents dying after January 31, 2003.