1.1 	A bill for an act
1.2 	relating to taxation; providing a subtraction from
1.3 	taxable income for costs incurred for certain
1.4 	purchases of wind-generated electricity; amending
1.5 	Minnesota Statutes 2004, section 290.01, subdivisions
1.6 	19b, 19d.
1.7 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.8 	Section 1. Minnesota Statutes 2004, section 290.01,
1.9 	subdivision 19b, is amended to read:
1.10 		Subd. 19b.Subtractions from federal taxable income.  For
1.11 	individuals, estates, and trusts, there shall be subtracted from
1.12 	federal taxable income:
1.13 	(1) interest income on obligations of any authority,
1.14 	commission, or instrumentality of the United States to the
1.15 	extent includable in taxable income for federal income tax
1.16 	purposes but exempt from state income tax under the laws of the
1.17 	United States;
1.18 	(2) if included in federal taxable income, the amount of
1.19 	any overpayment of income tax to Minnesota or to any other
1.20 	state, for any previous taxable year, whether the amount is
1.21 	received as a refund or as a credit to another taxable year's
1.22 	income tax liability;
1.23 	(3) the amount paid to others, less the amount used to
1.24 	claim the credit allowed under section 290.0674, not to exceed
1.25 	$1,625 for each qualifying child in grades kindergarten to 6 and
1.26 	$2,500 for each qualifying child in grades 7 to 12, for tuition,
2.1 	textbooks, and transportation of each qualifying child in
2.2 	attending an elementary or secondary school situated in
2.3 	Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin,
2.4 	wherein a resident of this state may legally fulfill the state's
2.5 	compulsory attendance laws, which is not operated for profit,
2.6 	and which adheres to the provisions of the Civil Rights Act of
2.7 	1964 and chapter 363A.  For the purposes of this clause,
2.8 	"tuition" includes fees or tuition as defined in section
2.9 	290.0674, subdivision 1, clause (1).  As used in this clause,
2.10 	"textbooks" includes books and other instructional materials and
2.11 	equipment purchased or leased for use in elementary and
2.12 	secondary schools in teaching only those subjects legally and
2.13 	commonly taught in public elementary and secondary schools in
2.14 	this state.  Equipment expenses qualifying for deduction
2.15 	includes expenses as defined and limited in section 290.0674,
2.16 	subdivision 1, clause (3).  "Textbooks" does not include
2.17 	instructional books and materials used in the teaching of
2.18 	religious tenets, doctrines, or worship, the purpose of which is
2.19 	to instill such tenets, doctrines, or worship, nor does it
2.20 	include books or materials for, or transportation to,
2.21 	extracurricular activities including sporting events, musical or
2.22 	dramatic events, speech activities, driver's education, or
2.23 	similar programs.  For purposes of the subtraction provided by
2.24 	this clause, "qualifying child" has the meaning given in section
2.25 	32(c)(3) of the Internal Revenue Code;
2.26 	(4) income as provided under section 290.0802;
2.27 	(5) to the extent included in federal adjusted gross
2.28 	income, income realized on disposition of property exempt from
2.29 	tax under section 290.491;
2.30 	(6) to the extent included in federal taxable income,
2.31 	postservice benefits for youth community service under section
2.32 	124D.42 for volunteer service under United States Code, title
2.33 	42, sections 12601 to 12604;
2.34 	(7) to the extent not deducted in determining federal
2.35 	taxable income by an individual who does not itemize deductions
2.36 	for federal income tax purposes for the taxable year, an amount
3.1 	equal to 50 percent of the excess of charitable contributions
3.2 	allowable as a deduction for the taxable year under section
3.3 	170(a) of the Internal Revenue Code over $500;
3.4 	(8) for taxable years beginning before January 1, 2008, the
3.5 	amount of the federal small ethanol producer credit allowed
3.6 	under section 40(a)(3) of the Internal Revenue Code which is
3.7 	included in gross income under section 87 of the Internal
3.8 	Revenue Code;
3.9 	(9) for individuals who are allowed a federal foreign tax
3.10 	credit for taxes that do not qualify for a credit under section
3.11 	290.06, subdivision 22, an amount equal to the carryover of
3.12 	subnational foreign taxes for the taxable year, but not to
3.13 	exceed the total subnational foreign taxes reported in claiming
3.14 	the foreign tax credit.  For purposes of this clause, "federal
3.15 	foreign tax credit" means the credit allowed under section 27 of
3.16 	the Internal Revenue Code, and "carryover of subnational foreign
3.17 	taxes" equals the carryover allowed under section 904(c) of the
3.18 	Internal Revenue Code minus national level foreign taxes to the
3.19 	extent they exceed the federal foreign tax credit;
3.20 	(10) in each of the five tax years immediately following
3.21 	the tax year in which an addition is required under subdivision
3.22 	19a, clause (7), an amount equal to one-fifth of the delayed
3.23 	depreciation.  For purposes of this clause, "delayed
3.24 	depreciation" means the amount of the addition made by the
3.25 	taxpayer under subdivision 19a, clause (7), minus the positive
3.26 	value of any net operating loss under section 172 of the
3.27 	Internal Revenue Code generated for the tax year of the
3.28 	addition.  The resulting delayed depreciation cannot be less
3.29 	than zero; and 
3.30 	(11) job opportunity building zone income as provided under
3.31 	section 469.316; and 
3.32 	(12) the amount paid by the taxpayer to a utility as an
3.33 	additional rate amount determined under section 216B.169,
3.34 	subdivision 2, for the purchase of renewable and high-efficiency
3.35 	energy.
3.36 	
EFFECTIVE DATE. This section is effective for taxable
4.1 	years beginning after December 31, 2005.

4.2 	Sec. 2. Minnesota Statutes 2004, section 290.01,
4.3 	subdivision 19d, is amended to read:
4.4 		Subd. 19d.Corporations; modifications decreasing federal
4.5 	taxable income.  For corporations, there shall be subtracted
4.6 	from federal taxable income after the increases provided in
4.7 	subdivision 19c:
4.8 	(1) the amount of foreign dividend gross-up added to gross
4.9 	income for federal income tax purposes under section 78 of the
4.10 	Internal Revenue Code;
4.11 	(2) the amount of salary expense not allowed for federal
4.12 	income tax purposes due to claiming the federal jobs credit
4.13 	under section 51 of the Internal Revenue Code;
4.14 	(3) any dividend (not including any distribution in
4.15 	liquidation) paid within the taxable year by a national or state
4.16 	bank to the United States, or to any instrumentality of the
4.17 	United States exempt from federal income taxes, on the preferred
4.18 	stock of the bank owned by the United States or the
4.19 	instrumentality;
4.20 	(4) amounts disallowed for intangible drilling costs due to
4.21 	differences between this chapter and the Internal Revenue Code
4.22 	in taxable years beginning before January 1, 1987, as follows:
4.23 	(i) to the extent the disallowed costs are represented by
4.24 	physical property, an amount equal to the allowance for
4.25 	depreciation under Minnesota Statutes 1986, section 290.09,
4.26 	subdivision 7, subject to the modifications contained in
4.27 	subdivision 19e; and
4.28 	(ii) to the extent the disallowed costs are not represented
4.29 	by physical property, an amount equal to the allowance for cost
4.30 	depletion under Minnesota Statutes 1986, section 290.09,
4.31 	subdivision 8;
4.32 	(5) the deduction for capital losses pursuant to sections
4.33 	1211 and 1212 of the Internal Revenue Code, except that:
4.34 	(i) for capital losses incurred in taxable years beginning
4.35 	after December 31, 1986, capital loss carrybacks shall not be
4.36 	allowed;
5.1 	(ii) for capital losses incurred in taxable years beginning
5.2 	after December 31, 1986, a capital loss carryover to each of the
5.3 	15 taxable years succeeding the loss year shall be allowed;
5.4 	(iii) for capital losses incurred in taxable years
5.5 	beginning before January 1, 1987, a capital loss carryback to
5.6 	each of the three taxable years preceding the loss year, subject
5.7 	to the provisions of Minnesota Statutes 1986, section 290.16,
5.8 	shall be allowed; and
5.9 	(iv) for capital losses incurred in taxable years beginning
5.10 	before January 1, 1987, a capital loss carryover to each of the
5.11 	five taxable years succeeding the loss year to the extent such
5.12 	loss was not used in a prior taxable year and subject to the
5.13 	provisions of Minnesota Statutes 1986, section 290.16, shall be
5.14 	allowed;
5.15 	(6) an amount for interest and expenses relating to income
5.16 	not taxable for federal income tax purposes, if (i) the income
5.17 	is taxable under this chapter and (ii) the interest and expenses
5.18 	were disallowed as deductions under the provisions of section
5.19 	171(a)(2), 265 or 291 of the Internal Revenue Code in computing
5.20 	federal taxable income;
5.21 	(7) in the case of mines, oil and gas wells, other natural
5.22 	deposits, and timber for which percentage depletion was
5.23 	disallowed pursuant to subdivision 19c, clause (11), a
5.24 	reasonable allowance for depletion based on actual cost.  In the
5.25 	case of leases the deduction must be apportioned between the
5.26 	lessor and lessee in accordance with rules prescribed by the
5.27 	commissioner.  In the case of property held in trust, the
5.28 	allowable deduction must be apportioned between the income
5.29 	beneficiaries and the trustee in accordance with the pertinent
5.30 	provisions of the trust, or if there is no provision in the
5.31 	instrument, on the basis of the trust's income allocable to
5.32 	each;
5.33 	(8) for certified pollution control facilities placed in
5.34 	service in a taxable year beginning before December 31, 1986,
5.35 	and for which amortization deductions were elected under section
5.36 	169 of the Internal Revenue Code of 1954, as amended through
6.1 	December 31, 1985, an amount equal to the allowance for
6.2 	depreciation under Minnesota Statutes 1986, section 290.09,
6.3 	subdivision 7;
6.4 	(9) amounts included in federal taxable income that are due
6.5 	to refunds of income, excise, or franchise taxes based on net
6.6 	income or related minimum taxes paid by the corporation to
6.7 	Minnesota, another state, a political subdivision of another
6.8 	state, the District of Columbia, or a foreign country or
6.9 	possession of the United States to the extent that the taxes
6.10 	were added to federal taxable income under section 290.01,
6.11 	subdivision 19c, clause (1), in a prior taxable year;
6.12 	(10) 80 percent of royalties, fees, or other like income
6.13 	accrued or received from a foreign operating corporation or a
6.14 	foreign corporation which is part of the same unitary business
6.15 	as the receiving corporation;
6.16 	(11) income or gains from the business of mining as defined
6.17 	in section 290.05, subdivision 1, clause (a), that are not
6.18 	subject to Minnesota franchise tax;
6.19 	(12) the amount of handicap access expenditures in the
6.20 	taxable year which are not allowed to be deducted or capitalized
6.21 	under section 44(d)(7) of the Internal Revenue Code;
6.22 	(13) the amount of qualified research expenses not allowed
6.23 	for federal income tax purposes under section 280C(c) of the
6.24 	Internal Revenue Code, but only to the extent that the amount
6.25 	exceeds the amount of the credit allowed under section 290.068;
6.26 	(14) the amount of salary expenses not allowed for federal
6.27 	income tax purposes due to claiming the Indian employment credit
6.28 	under section 45A(a) of the Internal Revenue Code;
6.29 	(15) the amount of any refund of environmental taxes paid
6.30 	under section 59A of the Internal Revenue Code;
6.31 	(16) for taxable years beginning before January 1, 2008,
6.32 	the amount of the federal small ethanol producer credit allowed
6.33 	under section 40(a)(3) of the Internal Revenue Code which is
6.34 	included in gross income under section 87 of the Internal
6.35 	Revenue Code;
6.36 	(17) for a corporation whose foreign sales corporation, as
7.1 	defined in section 922 of the Internal Revenue Code, constituted
7.2 	a foreign operating corporation during any taxable year ending
7.3 	before January 1, 1995, and a return was filed by August 15,
7.4 	1996, claiming the deduction under section 290.21, subdivision
7.5 	4, for income received from the foreign operating corporation,
7.6 	an amount equal to 1.23 multiplied by the amount of income
7.7 	excluded under section 114 of the Internal Revenue Code,
7.8 	provided the income is not income of a foreign operating
7.9 	company;
7.10 	(18) any decrease in subpart F income, as defined in
7.11 	section 952(a) of the Internal Revenue Code, for the taxable
7.12 	year when subpart F income is calculated without regard to the
7.13 	provisions of section 614 of Public Law 107-147; and 
7.14 	(19) in each of the five tax years immediately following
7.15 	the tax year in which an addition is required under subdivision
7.16 	19c, clause (16), an amount equal to one-fifth of the delayed
7.17 	depreciation.  For purposes of this clause, "delayed
7.18 	depreciation" means the amount of the addition made by the
7.19 	taxpayer under subdivision 19c, clause (16).  The resulting
7.20 	delayed depreciation cannot be less than zero; and 
7.21 	(20) the amount paid by the taxpayer to a utility as an
7.22 	additional rate amount determined under section 216B.169,
7.23 	subdivision 2, for the purchase of renewable and high-efficiency
7.24 	energy.
7.25 	
EFFECTIVE DATE. This section is effective for taxable
7.26 	years beginning after December 31, 2005.