1.1 	A bill for an act
1.2 	relating to taxation; providing an individual income
1.3 	and corporate franchise tax credit for qualifying
1.4 	investments in dairy operations; amending Minnesota
1.5 	Statutes 2004, section 290.06, by adding a subdivision.
1.6 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.7 	Section 1. Minnesota Statutes 2004, section 290.06, is
1.8 	amended by adding a subdivision to read:
1.9 		Subd. 32.Dairy investment credit. (a) A dairy
1.10 	investment credit is allowed against the tax computed under this
1.11 	section equal to the credit amount in the table, based on the
1.12 	amount paid or incurred by an eligible taxpayer, during the
1.13 	taxable year, or a reduced amount as determined by the
1.14 	commissioner under paragraphs (e) to (g), for qualifying
1.15 	expenditures:
1.16 	Amount of
1.17 	   qualifying expenditures Credit amount 
1.18 	up to $500,000 ten percent of
1.19 	                                    qualifying expenditures 
1.20 	over $500,000, but not $50,000, plus nine percent
1.21 	    more than $600,000 of the amount of qualified
1.22 	                                    expenditures in excess of
1.23 	                                    $500,000 
1.24 	over $600,000, but not $59,000, plus seven percent
1.25 	    more than $700,000 of the amount of qualified
1.26 	                                    expenditures in excess of
1.27 	                                    $600,000 
1.28 	over $700,000, but not $66,000, plus five percent
1.29 	    more than $800,000 of the amount of qualified
1.30 	                                    expenditures in excess of
1.31 	                                    $700,000 
2.1 	over $800,000, but not $71,000, plus three percent
2.2 	    more than $900,000 of the amount of qualified
2.3 	                                    expenditures in excess of
2.4 	                                    $800,000 
2.5 	over $900,000, but not $74,000, plus one percent
2.6 	    more than $1,000,000 of the amount of qualified
2.7 	                                    expenditures in excess of
2.8 	                                    $900,000 
2.9 	$1,000,000 or more $75,000 
2.10 	(b) "Qualifying expenditures," for purposes of this
2.11 	subdivision, means the expenses incurred for dairy animals for
2.12 	the acquisition, construction, or improvement of buildings or
2.13 	facilities, or the acquisition of equipment, for dairy animal
2.14 	housing, confinement, animal feeding, milk production, and waste
2.15 	management, including, but not limited to, the following:
2.16 	(1) freestall barns;
2.17 	(2) fences;
2.18 	(3) watering facilities;
2.19 	(4) feed storage and handling equipment;
2.20 	(5) milking parlors;
2.21 	(6) robotic equipment;
2.22 	(7) scales;
2.23 	(8) milk storage and cooling facilities;
2.24 	(9) bulk tanks;
2.25 	(10) manure handling equipment and storage facilities;
2.26 	(11) digesters;
2.27 	(12) equipment used to produce energy;
2.28 	(13) pastures; and 
2.29 	(14) on-farm processing.
2.30 	Qualified expenditures do not include any amounts deducted under
2.31 	section 162 of the Internal Revenue Code in computing federal
2.32 	taxable income.
2.33 	(c) The credit is limited to the liability for tax, as
2.34 	computed under this section for the taxable year.  If the amount
2.35 	of the credit determined under this section for any taxable year
2.36 	exceeds this limitation, the excess is a dairy investment credit
2.37 	carryover to each of the 15 succeeding taxable years.  The
2.38 	entire amount of the excess unused credit for the taxable year
3.1 	is carried first to the earliest of the taxable years to which
3.2 	the credit may be carried and then to each successive year to
3.3 	which the credit may be carried.  The amount of the unused
3.4 	credit which may be added under this paragraph shall not exceed
3.5 	the taxpayer's liability for tax less the dairy investment
3.6 	credit for the taxable year.
3.7 	(d) For a partnership or S corporation, the maximum amount
3.8 	of the credit applies to the entity, not the individual partner
3.9 	or shareholder.
3.10 	(e) To be eligible for the dairy investment credit in this
3.11 	subdivision, a taxpayer must, not later than January 31 of the
3.12 	year following the taxable year, provide to the commissioner on
3.13 	forms provided by the commissioner a statement of the qualifying
3.14 	expenditures that the taxpayer intends to claim for the taxable
3.15 	year.
3.16 	(f) The commissioner shall determine if the credit intended
3.17 	to be claimed by all taxpayers under paragraph (e) exceeds the
3.18 	maximum amount available for dairy investment credits in that
3.19 	tax year as determined in paragraph (g).  If the intended claims
3.20 	are less than the maximum amount available for credits, the
3.21 	commissioner shall notify eligible taxpayers that they may file
3.22 	returns using the full credit calculated under the table in
3.23 	paragraph (a).  If intended claims exceed the maximum amount
3.24 	available for credits, the commissioner shall determine for each
3.25 	taxpayer a prorated credit amount and, not later than February
3.26 	15, inform the taxpayer of that amount.
3.27 	(g) The following amounts are available for dairy
3.28 	investment credit claims in the fiscal years indicated:
3.29 	(1) fiscal year 2006, $2,900,000;
3.30 	(2) fiscal year 2007, $3,500,000; and 
3.31 	(3) fiscal year 2008 and thereafter, $4,000,000.
3.32 	
EFFECTIVE DATE. This section is effective for taxable
3.33 	years beginning after December 31, 2004.