1.1 	A bill for an act
1.2 	relating to taxation; making policy, technical, administrative, enforcement, and 
1.3 	other changes to individual income, corporate franchise, estate, sales and use, 
1.4 	property, insurance, and other taxes and tax-related provisions; conforming to 
1.5 	changes made to the Internal Revenue Code;amending Minnesota Statutes 
1.6 	2010, sections 270C.01, by adding subdivisions; 270C.03, subdivision 1; 
1.7 	275.025; 276.112; 289A.02, subdivision 7, as amended; 289A.08, subdivision 
1.8 	3; 289A.60, by adding a subdivision; 290.01, subdivisions 7, 19, as amended, 
1.9 	19a, as amended, 19b, 19c, as amended, 19d, 22, 29, 31, as amended; 290.014, 
1.10 	subdivision 5; 290.05, subdivision 1; 290.06, subdivisions 2c, 2d, 22; 290.0671, 
1.11 	subdivision 1; 290.0675, subdivision 1; 290.068, subdivisions 1, 2; 290.0921, 
1.12 	subdivisions 1, 2, 3, 6; 290.0922, subdivisions 1, 2; 290.093; 290.095, 
1.13 	subdivisions 2, 3; 290.17, subdivisions 1, 2, 3, 4; 290.191, subdivisions 2, 
1.14 	5; 290.21, subdivision 4; 290.9201, subdivision 11; 290A.03, subdivision 
1.15 	15, as amended; 290A.04, subdivision 2h; 291.005, subdivision 1; 297A.61, 
1.16 	subdivisions 3, 25, 27, by adding subdivisions; 297A.64, subdivision 1; 
1.17 	297A.66, by adding subdivisions; 297A.668, by adding a subdivision; 297A.70, 
1.18 	subdivision 6; 297A.94; 297B.03; 297I.01, subdivisions 9, 16, by adding 
1.19 	subdivisions; 297I.05, subdivisions 7, 12; 297I.20, subdivision 1; 297I.30, 
1.20 	subdivisions 1, 2; proposing coding for new law in Minnesota Statutes, chapters 
1.21 	270C; 275; 290; repealing Minnesota Statutes 2010, sections 290.01, subdivision 
1.22 	6b; 290.0678; 290.9201, subdivision 3; 297F.14, subdivision 4; 297I.05, 
1.23 	subdivisions 9, 10; Minnesota Rules, part 8130.0500, subpart 2.
1.24 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.25 	ARTICLE 1
1.26 	CORPORATE FRANCHISE, INDIVIDUAL INCOME, AND ESTATE TAXES

1.27 	Section 1. Minnesota Statutes 2010, section 270C.01, is amended by adding a 
1.28 	subdivision to read:
1.29 		Subd. 12.Nontax purpose. Nontax purpose means the taxpayer's purpose for 
1.30 	entering into a transaction other than the acquisition of the tax effects of the transaction. 
2.1 	Nontax purposes include a business, investment, or other nontax purpose for entering 
2.2 	into a transaction.

2.3 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
2.4 	December 31, 2010.

2.5 	Sec. 2. Minnesota Statutes 2010, section 270C.01, is amended by adding a subdivision 
2.6 	to read:
2.7 		Subd. 13.Economic substance. Economic substance means a transaction has an 
2.8 	objective and substantial net effect on the taxpayer's economic position and beneficial 
2.9 	interest and the taxpayer has a substantial nontax purpose, apart from tax effects, for 
2.10 	entering into such transaction or series of transactions.

2.11 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
2.12 	December 31, 2010.

2.13 	Sec. 3. Minnesota Statutes 2010, section 270C.01, is amended by adding a subdivision 
2.14 	to read:
2.15 		Subd. 14.Tax effects. The tax effects of a transaction means the state and local tax 
2.16 	effects arising from the application of the laws of any state or local unit of government to 
2.17 	the form of the transaction, and the federal tax effects resulting from the transaction that 
2.18 	affect federal taxable income as defined in section 63 of the Internal Revenue Code, or 
2.19 	both.

2.20 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
2.21 	December 31, 2010.

2.22 	Sec. 4. Minnesota Statutes 2010, section 270C.01, is amended by adding a subdivision 
2.23 	to read:
2.24 		Subd. 15.Transaction. Transaction means any transaction or series of transactions, 
2.25 	including any fact or set of facts, material to the reduction, deferral, nonrecognition, 
2.26 	escape, avoidance, evasion, or any similar result of any tax or income, or the creation 
2.27 	of any loss, deduction, or credit.

2.28 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
2.29 	December 31, 2010.

2.30 	Sec. 5. Minnesota Statutes 2010, section 270C.03, subdivision 1, is amended to read:
3.1 		Subdivision 1.Powers and duties. The commissioner shall have and exercise 
3.2 	the following powers and duties:
3.3 	(1) administer and enforce the assessment and collection of taxes;
3.4 	(2) make determinations, corrections, and assessments with respect to taxes, 
3.5 	including interest, additions to taxes, and assessable penalties;
3.6 	(3) administer the tax laws according to the substance of a transaction, not the form 
3.7 	of a transaction; in administering these laws, the commissioner must disregard the tax 
3.8 	effects of a transaction that does not have economic substance and nontax purpose;
3.9 	(3)(4) use statistical or other sampling techniques consistent with generally accepted 
3.10 	auditing standards in examining returns or records and making assessments;
3.11 	(4)(5) investigate the tax laws of other states and countries, and formulate and 
3.12 	submit to the legislature such legislation as the commissioner may deem expedient 
3.13 	to prevent evasions of state revenue laws and to secure just and equal taxation and 
3.14 	improvement in the system of state revenue laws;
3.15 	(5)(6) consult and confer with the governor upon the subject of taxation, the 
3.16 	administration of the laws in regard thereto, and the progress of the work of the 
3.17 	department, and furnish the governor, from time to time, such assistance and information 
3.18 	as the governor may require relating to tax matters;
3.19 	(6)(7) execute and administer any agreement with the secretary of the treasury or the 
3.20 	Bureau of Alcohol, Tobacco, Firearms and Explosives in the Department of Justice of the 
3.21 	United States or a representative of another state regarding the exchange of information 
3.22 	and administration of the state revenue laws;
3.23 	(7)(8) require town, city, county, and other public officers to report information 
3.24 	as to the collection of taxes received from licenses and other sources, and such other 
3.25 	information as may be needful in the work of the commissioner, in such form as the 
3.26 	commissioner may prescribe;
3.27 	(8)(9) authorize the use of unmarked motor vehicles to conduct seizures or criminal 
3.28 	investigations pursuant to the commissioner's authority;
3.29 	(9)(10) maintain toll-free telephone access for taxpayer assistance for calls from 
3.30 	locations within the state; and
3.31 	(10)(11) exercise other powers and authority and perform other duties required of or 
3.32 	imposed upon the commissioner by law.

3.33 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
3.34 	December 31, 2010.

3.35 	Sec. 6. [270C.331] CRITERIA FOR ASSESSMENT.
4.1 	(a) In determining whether a taxpayer has a nontax purpose for entering into a 
4.2 	transaction pursuant to section 270C.03, subdivision 1, clause (3), the commissioner may 
4.3 	determine that a transaction has a nontax purpose only if:
4.4 	(1) the expected results of a transaction are that the present value of the reasonably 
4.5 	expected pretax profit from the transaction is substantial in relation to the present value 
4.6 	of the expected net tax benefits that would be allowed if the transaction or series of 
4.7 	transactions were respected;
4.8 	(2) the reasonably expected pretax profit from the transaction or series of transactions 
4.9 	exceeds a risk-free rate of return;
4.10 	(3) the nontax purpose is the taxpayer's primary motivation for entering into the 
4.11 	transaction; and
4.12 	(4) the form of the transaction is a reasonable means of attaining that purpose.
4.13 	Fees and other transaction expenses and foreign taxes must be taken into account as 
4.14 	expenses in determining pretax profit. The acquisition of a financial accounting benefit is 
4.15 	a nontax purpose only if the financial accounting benefit is unrelated to the expected tax 
4.16 	effects of a transaction.
4.17 	(b) To overcome the presumption in section 270C.33, subdivision 6, that an order of 
4.18 	the commissioner disallowing the tax effects of a transaction because the commissioner 
4.19 	has determined that the transaction does not have a nontax purpose and economic 
4.20 	substance is correct and valid, the taxpayer must prove the existence of a nontax purpose 
4.21 	and economic substance with clear and convincing evidence.

4.22 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
4.23 	December 31, 2010.

4.24 	Sec. 7. Minnesota Statutes 2010, section 289A.08, subdivision 3, is amended to read:
4.25 		Subd. 3.Corporations. (a) A corporation that is subject to the state's jurisdiction to 
4.26 	tax under section 290.014, subdivision 5, must file a return, except that a foreign operating 
4.27 	corporation as defined in section 290.01, subdivision 6b, is not required to file a return.
4.28 	(b) Members of a unitary business that are required to file a combined report on one 
4.29 	return must designate a member of the unitary business to be responsible for tax matters, 
4.30 	including the filing of returns, the payment of taxes, additions to tax, penalties, interest, 
4.31 	or any other payment, and for the receipt of refunds of taxes or interest paid in excess of 
4.32 	taxes lawfully due. The designated member must be a member of the unitary business that 
4.33 	is filing the single combined report and either:
4.34 	(1) a corporation that is subject to the taxes imposed by chapter 290; or
4.35 	(2) a corporation that is not subject to the taxes imposed by chapter 290:
5.1 	(i) Such corporation consents by filing the return as a designated member under this 
5.2 	clause to remit taxes, penalties, interest, or additions to tax due from the members of the 
5.3 	unitary business subject to tax, and receive refunds or other payments on behalf of other 
5.4 	members of the unitary business. The member designated under this clause is a "taxpayer" 
5.5 	for the purposes of this chapter and chapter 270C, and is liable for any liability imposed 
5.6 	on the unitary business under this chapter and chapter 290.
5.7 	(ii) If the state does not otherwise have the jurisdiction to tax the member designated 
5.8 	under this clause, consenting to be the designated member does not create the jurisdiction 
5.9 	to impose tax on the designated member, other than as described in item (i).
5.10 	(iii) The member designated under this clause must apply for a business tax account 
5.11 	identification number.
5.12 	(c) The commissioner shall adopt rules for the filing of one return on behalf of the 
5.13 	members of an affiliated group of corporations that are required to file a combined report. 
5.14 	All members of an affiliated group that are required to file a combined report must file one 
5.15 	return on behalf of the members of the group under rules adopted by the commissioner.
5.16 	(d) If a corporation claims on a return that it has paid tax in excess of the amount of 
5.17 	taxes lawfully due, that corporation must include on that return information necessary for 
5.18 	payment of the tax in excess of the amount lawfully due by electronic means.

5.19 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
5.20 	December 31, 2010.

5.21 	Sec. 8. Minnesota Statutes 2010, section 289A.60, is amended by adding a subdivision 
5.22 	to read:
5.23 		Subd. 27a.Noneconomic substance transaction understatement penalty. (a) If a 
5.24 	taxpayer has a transaction without economic substance and nontax purpose as defined in 
5.25 	section 270C.01, a penalty equal to 20 percent of the amount of the disclosed noneconomic 
5.26 	substance transaction understatement must be added to the tax. This subdivision applies to 
5.27 	any income or item that is attributable to any transaction or series of transactions without 
5.28 	economic substance and nontax purpose under section 270C.01.
5.29 	(b) If a taxpayer has a transaction without economic substance and nontax purpose 
5.30 	as defined in section 270C.01, in the case of any portion of an underpayment which is 
5.31 	attributable to one or more nondisclosed noneconomic substance transactions, a penalty 
5.32 	equal to 40 percent of the noneconomic substance transaction understatement must be 
5.33 	added to the tax.
5.34 	(c) For purposes of this subdivision, the term "nondisclosed noneconomic substance 
5.35 	transaction" means a transaction described in section 270C.03, subdivision 1, clause (3), 
6.1 	with respect to which the relevant facts affecting the tax treatment are not adequately 
6.2 	disclosed in the return nor in a statement attached to the return.
6.3 	(d) In no event shall any amendment or supplement to a return of tax be taken into 
6.4 	account for purposes of this subdivision to reduce the noneconomic substance transaction 
6.5 	understatement if the amendment or supplement is filed after the date the taxpayer is first 
6.6 	contacted by the commissioner regarding examination of the return.
6.7 	(e) For purposes of this subdivision, "noneconomic substance transaction 
6.8 	understatement" means the product of:
6.9 	(1) the amount of the increase, if any, in taxable income that results from a difference 
6.10 	between the proper tax treatment of an item to which section 270C.03, subdivision 1, 
6.11 	clause (3) applies and the taxpayer's treatment of that item as shown on the taxpayer's tax 
6.12 	return. For purposes of this clause, any reduction of the excess of deductions allowed for 
6.13 	the taxable year over gross income for that year, and any reduction in the amount of 
6.14 	capital losses which would, without regard to section 1211 of the Internal Revenue Code, 
6.15 	be allowed for that year, must be treated as an increase in taxable income; and
6.16 	(2) the highest rate of tax imposable on the taxpayer under section 290.06 determined 
6.17 	without regard to the understatement.
6.18 	(f) If the noneconomic substance transaction understatement penalty is imposed 
6.19 	under this subdivision, the noneconomic substance transaction understatement penalty 
6.20 	applies in lieu of the penalties imposed under subdivision 27.

6.21 	EFFECTIVE DATE. This section is effective for noneconomic substance 
6.22 	transaction understatements assessed after December 31, 2012.

6.23 	Sec. 9. Minnesota Statutes 2010, section 290.01, subdivision 7, is amended to read:
6.24 		Subd. 7.Resident. (a) The term "resident" means any individual domiciled 
6.25 	in Minnesota, except that an individual is not a "resident" for the period of time that 
6.26 	the individual is a "qualified individual" as defined in section 911(d)(1) of the Internal 
6.27 	Revenue Code, if the qualified individual notifies the county within three months of 
6.28 	moving out of the country that homestead status be revoked for the Minnesota residence 
6.29 	of the qualified individual, and the property is not classified as a homestead while the 
6.30 	individual remains a qualified individual.
6.31 	(b) "Resident" also means any individual domiciled outside the state who maintains 
6.32 	a place of abode in the state and spends in the aggregate more than one-half of the tax 
6.33 	year in Minnesota, unless:
6.34 	(1) the individual or the spouse of the individual is in the armed forces of the United 
6.35 	States; or
7.1 	(2) the individual is covered under the reciprocity provisions in section 290.081.
7.2 	For purposes of this subdivision, presence within the state for any part of a calendar 
7.3 	day constitutes a day spent in the state. Individuals shall keep adequate records to 
7.4 	substantiate the days spent outside the state.
7.5 	The term "abode" means a dwelling maintained by an individual, whether or not 
7.6 	owned by the individual and whether or not occupied by the individual, and includes a 
7.7 	dwelling place owned or leased by the individual's spouse and a dwelling place owned by 
7.8 	the individual or spouse of the individual that is leased to a person with a relationship to 
7.9 	the individual or their spouse described in section 267(b) of the Internal Revenue Code.
7.10 	(c) Neither the commissioner nor any court shall consider charitable contributions 
7.11 	made by an individual within or without the state in determining if the individual is 
7.12 	domiciled in Minnesota.
7.13 	(d) "Part-year resident" means an individual domiciled outside the state, who is not a 
7.14 	resident of the state under paragraph (b), who maintains a place of abode in the state for 
7.15 	more than one-half of the tax year, and spends in the aggregate more than 60 days in the 
7.16 	state during the period the individual was domiciled outside the state unless:
7.17 	(1) the individual or spouse of the individual is in the armed forces of the United 
7.18 	States; or
7.19 	(2) the individual is covered under the reciprocity provisions in section 290.081.
7.20 	For the purposes of this paragraph, a day spent in Minnesota for the primary purpose 
7.21 	of receiving medical treatment by the taxpayer, or the spouse, child, or parent of the 
7.22 	taxpayer, is not treated as a day spent in Minnesota. Medical treatment is treatment as 
7.23 	defined in section 213(d)(1)(A) of the Internal Revenue Code.

7.24 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
7.25 	December 31, 2010, except days spent in Minnesota prior to the date of enactment are not 
7.26 	counted as days spent in Minnesota for purposes of paragraph (d).

7.27 	Sec. 10. Minnesota Statutes 2010, section 290.01, subdivision 19b, is amended to read:
7.28 		Subd. 19b.Subtractions from federal taxable income. For individuals, estates, 
7.29 	and trusts, there shall be subtracted from federal taxable income:
7.30 	(1) net interest income on obligations of any authority, commission, or 
7.31 	instrumentality of the United States to the extent includable in taxable income for federal 
7.32 	income tax purposes but exempt from state income tax under the laws of the United States;
7.33 	(2) if included in federal taxable income, the amount of any overpayment of income 
7.34 	tax to Minnesota or to any other state, for any previous taxable year, whether the amount 
7.35 	is received as a refund or as a credit to another taxable year's income tax liability;
8.1 	(3) the amount paid to others, less the amount used to claim the credit allowed under 
8.2 	section 290.0674, not to exceed $1,625 for each qualifying child in grades kindergarten 
8.3 	to 6 and $2,500 for each qualifying child in grades 7 to 12, for tuition, textbooks, and 
8.4 	transportation of each qualifying child in attending an elementary or secondary school 
8.5 	situated in Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, wherein a 
8.6 	resident of this state may legally fulfill the state's compulsory attendance laws, which 
8.7 	is not operated for profit, and which adheres to the provisions of the Civil Rights Act 
8.8 	of 1964 and chapter 363A. For the purposes of this clause, "tuition" includes fees or 
8.9 	tuition as defined in section 290.0674, subdivision 1, clause (1). As used in this clause, 
8.10 	"textbooks" includes books and other instructional materials and equipment purchased 
8.11 	or leased for use in elementary and secondary schools in teaching only those subjects 
8.12 	legally and commonly taught in public elementary and secondary schools in this state. 
8.13 	Equipment expenses qualifying for deduction includes expenses as defined and limited in 
8.14 	section 290.0674, subdivision 1, clause (3). "Textbooks" does not include instructional 
8.15 	books and materials used in the teaching of religious tenets, doctrines, or worship, the 
8.16 	purpose of which is to instill such tenets, doctrines, or worship, nor does it include books 
8.17 	or materials for, or transportation to, extracurricular activities including sporting events, 
8.18 	musical or dramatic events, speech activities, driver's education, or similar programs. No 
8.19 	deduction is permitted for any expense the taxpayer incurred in using the taxpayer's or 
8.20 	the qualifying child's vehicle to provide such transportation for a qualifying child. For 
8.21 	purposes of the subtraction provided by this clause, "qualifying child" has the meaning 
8.22 	given in section 32(c)(3) of the Internal Revenue Code;
8.23 	(4) income as provided under section 290.0802;
8.24 	(5) to the extent included in federal adjusted gross income, income realized on 
8.25 	disposition of property exempt from tax under section 290.491;
8.26 	(6) to the extent not deducted or not deductible pursuant to section 408(d)(8)(E) 
8.27 	of the Internal Revenue Code in determining federal taxable income by an individual 
8.28 	who does not itemize deductions for federal income tax purposes for the taxable year, an 
8.29 	amount equal to 50 percent of the excess of charitable contributions over $500 allowable 
8.30 	as a deduction for the taxable year under section 170(a) of the Internal Revenue Code, 
8.31 	under the provisions of Public Law 109-1 and Public Law 111-126;
8.32 	(7) for individuals who are allowed a federal foreign tax credit for taxes that do not 
8.33 	qualify for a credit under section 290.06, subdivision 22, an amount equal to the carryover 
8.34 	of subnational foreign taxes for the taxable year, but not to exceed the total subnational 
8.35 	foreign taxes reported in claiming the foreign tax credit. For purposes of this clause, 
8.36 	"federal foreign tax credit" means the credit allowed under section 27 of the Internal 
9.1 	Revenue Code, and "carryover of subnational foreign taxes" equals the carryover allowed 
9.2 	under section 904(c) of the Internal Revenue Code minus national level foreign taxes to 
9.3 	the extent they exceed the federal foreign tax credit;
9.4 	(8) in each of the five tax years immediately following the tax year in which an 
9.5 	addition is required under subdivision 19a, clause (7), or 19c, clause (15) (14), in the case 
9.6 	of a shareholder of a corporation that is an S corporation, an amount equal to one-fifth 
9.7 	of the delayed depreciation. For purposes of this clause, "delayed depreciation" means 
9.8 	the amount of the addition made by the taxpayer under subdivision 19a, clause (7), or 
9.9 	subdivision 19c, clause (15) (14), in the case of a shareholder of an S corporation, minus 
9.10 	the positive value of any net operating loss under section 172 of the Internal Revenue 
9.11 	Code generated for the tax year of the addition. The resulting delayed depreciation 
9.12 	cannot be less than zero;
9.13 	(9) job opportunity building zone income as provided under section 469.316;
9.14 	(10) to the extent included in federal taxable income, the amount of compensation 
9.15 	paid to members of the Minnesota National Guard or other reserve components of the 
9.16 	United States military for active service performed in Minnesota, excluding compensation 
9.17 	for services performed under the Active Guard Reserve (AGR) program. For purposes of 
9.18 	this clause, "active service" means (i) state active service as defined in section 190.05, 
9.19 	subdivision 5a, clause (1); (ii) federally funded state active service as defined in section 
9.20 	190.05, subdivision 5b; or (iii) federal active service as defined in section 190.05, 
9.21 	subdivision 5c, but "active service" excludes service performed in accordance with section 
9.22 	190.08, subdivision 3;
9.23 	(11) to the extent included in federal taxable income, the amount of compensation 
9.24 	paid to Minnesota residents who are members of the armed forces of the United States or 
9.25 	United Nations for active duty performed outside Minnesota under United States Code, 
9.26 	title 10, section 101(d); United States Code, title 32, section 101(12); or the authority of 
9.27 	the United Nations;
9.28 	(12) an amount, not to exceed $10,000, equal to qualified expenses related to a 
9.29 	qualified donor's donation, while living, of one or more of the qualified donor's organs 
9.30 	to another person for human organ transplantation. For purposes of this clause, "organ" 
9.31 	means all or part of an individual's liver, pancreas, kidney, intestine, lung, or bone marrow; 
9.32 	"human organ transplantation" means the medical procedure by which transfer of a human 
9.33 	organ is made from the body of one person to the body of another person; "qualified 
9.34 	expenses" means unreimbursed expenses for both the individual and the qualified donor 
9.35 	for (i) travel, (ii) lodging, and (iii) lost wages net of sick pay, except that such expenses 
9.36 	may be subtracted under this clause only once; and "qualified donor" means the individual 
10.1 	or the individual's dependent, as defined in section 152 of the Internal Revenue Code. An 
10.2 	individual may claim the subtraction in this clause for each instance of organ donation for 
10.3 	transplantation during the taxable year in which the qualified expenses occur;
10.4 	(13) in each of the five tax years immediately following the tax year in which an 
10.5 	addition is required under subdivision 19a, clause (8), or 19c, clause (16) (15), in the case 
10.6 	of a shareholder of a corporation that is an S corporation, an amount equal to one-fifth 
10.7 	of the addition made by the taxpayer under subdivision 19a, clause (8), or 19c, clause 
10.8 	(16) (15), in the case of a shareholder of a corporation that is an S corporation, minus the 
10.9 	positive value of any net operating loss under section 172 of the Internal Revenue Code 
10.10 	generated for the tax year of the addition. If the net operating loss exceeds the addition for 
10.11 	the tax year, a subtraction is not allowed under this clause;
10.12 	(14) to the extent included in federal taxable income, compensation paid to a service 
10.13 	member as defined in United States Code, title 10, section 101(a)(5), for military service 
10.14 	as defined in the Servicemembers Civil Relief Act, Public Law 108-189, section 101(2);
10.15 	(15) international economic development zone income as provided under section 
10.16 	469.325;
10.17 	(16) to the extent included in federal taxable income, the amount of national service 
10.18 	educational awards received from the National Service Trust under United States Code, 
10.19 	title 42, sections 12601 to 12604, for service in an approved Americorps National Service 
10.20 	program; and
10.21 	(17) to the extent included in federal taxable income, discharge of indebtedness 
10.22 	income resulting from reacquisition of business indebtedness included in federal taxable 
10.23 	income under section 108(i) of the Internal Revenue Code. This subtraction applies only 
10.24 	to the extent that the income was included in net income in a prior year as a result of the 
10.25 	addition under section 290.01, subdivision 19a, clause (16).

10.26 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
10.27 	December 31, 2010.

10.28 	Sec. 11. Minnesota Statutes 2010, section 290.01, subdivision 19c, as amended by 
10.29 	Laws 2011, chapter 8, section 4, is amended to read:
10.30 		Subd. 19c.Corporations; additions to federal taxable income. For corporations, 
10.31 	there shall be added to federal taxable income:
10.32 	(1) the amount of any deduction taken for federal income tax purposes for income, 
10.33 	excise, or franchise taxes based on net income or related minimum taxes, including but not 
10.34 	limited to the tax imposed under section 290.0922, paid by the corporation to Minnesota, 
11.1 	another state, a political subdivision of another state, the District of Columbia, or any 
11.2 	foreign country or possession of the United States;
11.3 	(2) interest not subject to federal tax upon obligations of: the United States, its 
11.4 	possessions, its agencies, or its instrumentalities; the state of Minnesota or any other 
11.5 	state, any of its political or governmental subdivisions, any of its municipalities, or any 
11.6 	of its governmental agencies or instrumentalities; the District of Columbia; or Indian 
11.7 	tribal governments;
11.8 	(3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal 
11.9 	Revenue Code;
11.10 	(4) the amount of any net operating loss deduction taken for federal income tax 
11.11 	purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss 
11.12 	deduction under section 810 of the Internal Revenue Code;
11.13 	(5) the amount of any special deductions taken for federal income tax purposes 
11.14 	under sections 241 to 247 and 965 of the Internal Revenue Code;
11.15 	(6) losses from the business of mining, as defined in section 290.05, subdivision 1, 
11.16 	clause (a), that are not subject to Minnesota income tax;
11.17 	(7) the amount of any capital losses deducted for federal income tax purposes under 
11.18 	sections 1211 and 1212 of the Internal Revenue Code;
11.19 	(8) the exempt foreign trade income of a foreign sales corporation under sections 
11.20 	921(a) and 291 of the Internal Revenue Code;
11.21 	(9) the amount of percentage depletion deducted under sections 611 through 614 and 
11.22 	291 of the Internal Revenue Code;
11.23 	(10) for certified pollution control facilities placed in service in a taxable year 
11.24 	beginning before December 31, 1986, and for which amortization deductions were elected 
11.25 	under section 169 of the Internal Revenue Code of 1954, as amended through December 
11.26 	31, 1985, the amount of the amortization deduction allowed in computing federal taxable 
11.27 	income for those facilities;
11.28 	(11) the amount of any deemed dividend from a foreign operating corporation 
11.29 	determined pursuant to section 290.17, subdivision 4, paragraph (g). The deemed dividend 
11.30 	shall be reduced by the amount of the addition to income required by clauses (20), (21), 
11.31 	(22), and (23);
11.32 	(12) (11) the amount of a partner's pro rata share of net income which does not flow 
11.33 	through to the partner because the partnership elected to pay the tax on the income under 
11.34 	section 6242(a)(2) of the Internal Revenue Code;
11.35 	(13) (12) the amount of net income excluded under section 114 of the Internal 
11.36 	Revenue Code;
12.1 	(14) (13) any increase in subpart F income, as defined in section 952(a) of the 
12.2 	Internal Revenue Code, for the taxable year when subpart F income is calculated without 
12.3 	regard to the provisions of Division C, title III, section 303(b) of Public Law 110-343;
12.4 	(15) (14) 80 percent of the depreciation deduction allowed under section 
12.5 	168(k)(1)(A) and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if 
12.6 	the taxpayer has an activity that in the taxable year generates a deduction for depreciation 
12.7 	under section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable 
12.8 	year that the taxpayer is not allowed to claim for the taxable year, "the depreciation 
12.9 	allowed under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess 
12.10 	of the depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A) 
12.11 	over the amount of the loss from the activity that is not allowed in the taxable year. In 
12.12 	succeeding taxable years when the losses not allowed in the taxable year are allowed, the 
12.13 	depreciation under section 168(k)(1)(A) and (k)(4)(A) is allowed;
12.14 	(16) (15) 80 percent of the amount by which the deduction allowed by section 179 of 
12.15 	the Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal 
12.16 	Revenue Code of 1986, as amended through December 31, 2003;
12.17 	(17) (16) to the extent deducted in computing federal taxable income, the amount of 
12.18 	the deduction allowable under section 199 of the Internal Revenue Code;
12.19 	(18) (17) the exclusion allowed under section 139A of the Internal Revenue Code 
12.20 	for federal subsidies for prescription drug plans;
12.21 	(19) (18) the amount of expenses disallowed under section 290.10, subdivision 2;
12.22 	(20) an amount equal to the interest and intangible expenses, losses, and costs paid, 
12.23 	accrued, or incurred by any member of the taxpayer's unitary group to or for the benefit 
12.24 	of a corporation that is a member of the taxpayer's unitary business group that qualifies 
12.25 	as a foreign operating corporation. For purposes of this clause, intangible expenses and 
12.26 	costs include:
12.27 	(i) expenses, losses, and costs for, or related to, the direct or indirect acquisition, 
12.28 	use, maintenance or management, ownership, sale, exchange, or any other disposition of 
12.29 	intangible property;
12.30 	(ii) losses incurred, directly or indirectly, from factoring transactions or discounting 
12.31 	transactions;
12.32 	(iii) royalty, patent, technical, and copyright fees;
12.33 	(iv) licensing fees; and
12.34 	(v) other similar expenses and costs.
13.1 	For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent 
13.2 	applications, trade names, trademarks, service marks, copyrights, mask works, trade 
13.3 	secrets, and similar types of intangible assets.
13.4 	This clause does not apply to any item of interest or intangible expenses or costs paid, 
13.5 	accrued, or incurred, directly or indirectly, to a foreign operating corporation with respect 
13.6 	to such item of income to the extent that the income to the foreign operating corporation 
13.7 	is income from sources without the United States as defined in subtitle A, chapter 1, 
13.8 	subchapter N, part 1, of the Internal Revenue Code;
13.9 	(21) except as already included in the taxpayer's taxable income pursuant to clause 
13.10 	(20), any interest income and income generated from intangible property received or 
13.11 	accrued by a foreign operating corporation that is a member of the taxpayer's unitary 
13.12 	group. For purposes of this clause, income generated from intangible property includes:
13.13 	(i) income related to the direct or indirect acquisition, use, maintenance or 
13.14 	management, ownership, sale, exchange, or any other disposition of intangible property;
13.15 	(ii) income from factoring transactions or discounting transactions;
13.16 	(iii) royalty, patent, technical, and copyright fees;
13.17 	(iv) licensing fees; and
13.18 	(v) other similar income.
13.19 	For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent 
13.20 	applications, trade names, trademarks, service marks, copyrights, mask works, trade 
13.21 	secrets, and similar types of intangible assets.
13.22 	This clause does not apply to any item of interest or intangible income received or accrued 
13.23 	by a foreign operating corporation with respect to such item of income to the extent that 
13.24 	the income is income from sources without the United States as defined in subtitle A, 
13.25 	chapter 1, subchapter N, part 1, of the Internal Revenue Code;
13.26 	(22) the dividends attributable to the income of a foreign operating corporation that 
13.27 	is a member of the taxpayer's unitary group in an amount that is equal to the dividends 
13.28 	paid deduction of a real estate investment trust under section 561(a) of the Internal 
13.29 	Revenue Code for amounts paid or accrued by the real estate investment trust to the 
13.30 	foreign operating corporation;
13.31 	(23) the income of a foreign operating corporation that is a member of the taxpayer's 
13.32 	unitary group in an amount that is equal to gains derived from the sale of real or personal 
13.33 	property located in the United States;
13.34 	(24) (19) for taxable years beginning before January 1, 2010, and after December 
13.35 	31, 2010, the additional amount allowed as a deduction for donation of computer 
14.1 	technology and equipment under section 170(e)(6) of the Internal Revenue Code, to the 
14.2 	extent deducted from taxable income; and
14.3 	(25) (20) discharge of indebtedness income resulting from reacquisition of business 
14.4 	indebtedness and deferred under section 108(i) of the Internal Revenue Code.

14.5 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
14.6 	December 31, 2010.

14.7 	Sec. 12. Minnesota Statutes 2010, section 290.01, subdivision 19d, is amended to read:
14.8 		Subd. 19d.Corporations; modifications decreasing federal taxable income. For 
14.9 	corporations, there shall be subtracted from federal taxable income after the increases 
14.10 	provided in subdivision 19c:
14.11 	(1) the amount of foreign dividend gross-up added to gross income for federal 
14.12 	income tax purposes under section 78 of the Internal Revenue Code;
14.13 	(2) the amount of salary expense not allowed for federal income tax purposes due to 
14.14 	claiming the work opportunity credit under section 51 of the Internal Revenue Code;
14.15 	(3) any dividend (not including any distribution in liquidation) paid within the 
14.16 	taxable year by a national or state bank to the United States, or to any instrumentality of 
14.17 	the United States exempt from federal income taxes, on the preferred stock of the bank 
14.18 	owned by the United States or the instrumentality;
14.19 	(4) amounts disallowed for intangible drilling costs due to differences between 
14.20 	this chapter and the Internal Revenue Code in taxable years beginning before January 
14.21 	1, 1987, as follows:
14.22 	(i) to the extent the disallowed costs are represented by physical property, an amount 
14.23 	equal to the allowance for depreciation under Minnesota Statutes 1986, section 290.09, 
14.24 	subdivision 7, subject to the modifications contained in subdivision 19e; and
14.25 	(ii) to the extent the disallowed costs are not represented by physical property, an 
14.26 	amount equal to the allowance for cost depletion under Minnesota Statutes 1986, section 
14.27 	290.09, subdivision 8;
14.28 	(5) the deduction for capital losses pursuant to sections 1211 and 1212 of the 
14.29 	Internal Revenue Code, except that:
14.30 	(i) for capital losses incurred in taxable years beginning after December 31, 1986, 
14.31 	capital loss carrybacks shall not be allowed;
14.32 	(ii) for capital losses incurred in taxable years beginning after December 31, 1986, 
14.33 	a capital loss carryover to each of the 15 taxable years succeeding the loss year shall be 
14.34 	allowed;
15.1 	(iii) for capital losses incurred in taxable years beginning before January 1, 1987, a 
15.2 	capital loss carryback to each of the three taxable years preceding the loss year, subject to 
15.3 	the provisions of Minnesota Statutes 1986, section 290.16, shall be allowed; and
15.4 	(iv) for capital losses incurred in taxable years beginning before January 1, 1987, 
15.5 	a capital loss carryover to each of the five taxable years succeeding the loss year to the 
15.6 	extent such loss was not used in a prior taxable year and subject to the provisions of 
15.7 	Minnesota Statutes 1986, section 290.16, shall be allowed;
15.8 	(6) an amount for interest and expenses relating to income not taxable for federal 
15.9 	income tax purposes, if (i) the income is taxable under this chapter and (ii) the interest and 
15.10 	expenses were disallowed as deductions under the provisions of section 171(a)(2), 265 or 
15.11 	291 of the Internal Revenue Code in computing federal taxable income;
15.12 	(7) in the case of mines, oil and gas wells, other natural deposits, and timber for 
15.13 	which percentage depletion was disallowed pursuant to subdivision 19c, clause (9), a 
15.14 	reasonable allowance for depletion based on actual cost. In the case of leases the deduction 
15.15 	must be apportioned between the lessor and lessee in accordance with rules prescribed 
15.16 	by the commissioner. In the case of property held in trust, the allowable deduction must 
15.17 	be apportioned between the income beneficiaries and the trustee in accordance with the 
15.18 	pertinent provisions of the trust, or if there is no provision in the instrument, on the basis 
15.19 	of the trust's income allocable to each;
15.20 	(8) for certified pollution control facilities placed in service in a taxable year 
15.21 	beginning before December 31, 1986, and for which amortization deductions were elected 
15.22 	under section 169 of the Internal Revenue Code of 1954, as amended through December 
15.23 	31, 1985, an amount equal to the allowance for depreciation under Minnesota Statutes 
15.24 	1986, section 290.09, subdivision 7;
15.25 	(9) amounts included in federal taxable income that are due to refunds of income, 
15.26 	excise, or franchise taxes based on net income or related minimum taxes paid by the 
15.27 	corporation to Minnesota, another state, a political subdivision of another state, the 
15.28 	District of Columbia, or a foreign country or possession of the United States to the extent 
15.29 	that the taxes were added to federal taxable income under section 290.01, subdivision 19c, 
15.30 	clause (1), in a prior taxable year;
15.31 	(10) 80 percent of royalties, fees, or other like income accrued or received from a 
15.32 	foreign operating corporation or a foreign corporation which is part of the same unitary 
15.33 	business as the receiving corporation, unless the income resulting from such payments or 
15.34 	accruals is income from sources within the United States as defined in subtitle A, chapter 
15.35 	1, subchapter N, part 1, of the Internal Revenue Code;
16.1 	(11)(10) income or gains from the business of mining as defined in section 290.05, 
16.2 	subdivision 1, clause (a), that are not subject to Minnesota franchise tax;
16.3 	(12)(11) the amount of disability access expenditures in the taxable year which are 
16.4 	not allowed to be deducted or capitalized under section 44(d)(7) of the Internal Revenue 
16.5 	Code;
16.6 	(13)(12) the amount of qualified research expenses not allowed for federal income 
16.7 	tax purposes under section 280C(c) of the Internal Revenue Code, but only to the extent 
16.8 	that the amount exceeds the amount of the credit allowed under section 290.068;
16.9 	(14)(13) the amount of salary expenses not allowed for federal income tax purposes 
16.10 	due to claiming the Indian employment credit under section 45A(a) of the Internal 
16.11 	Revenue Code;
16.12 	(15)(14) for a corporation whose foreign sales corporation, as defined in section 
16.13 	922 of the Internal Revenue Code, constituted a foreign operating corporation during any 
16.14 	taxable year ending before January 1, 1995, and a return was filed by August 15, 1996, 
16.15 	claiming the deduction under section 290.21, subdivision 4, for income received from 
16.16 	the foreign operating corporation, an amount equal to 1.23 multiplied by the amount of 
16.17 	income excluded under section 114 of the Internal Revenue Code, provided the income is 
16.18 	not income of a foreign operating company;
16.19 	(16)(15) any decrease in subpart F income, as defined in section 952(a) of the 
16.20 	Internal Revenue Code, for the taxable year when subpart F income is calculated without 
16.21 	regard to the provisions of Division C, title III, section 303(b) of Public Law 110-343;
16.22 	(17)(16) in each of the five tax years immediately following the tax year in which an 
16.23 	addition is required under subdivision 19c, clause (15) (14), an amount equal to one-fifth 
16.24 	of the delayed depreciation. For purposes of this clause, "delayed depreciation" means the 
16.25 	amount of the addition made by the taxpayer under subdivision 19c, clause (15) (14). The 
16.26 	resulting delayed depreciation cannot be less than zero;
16.27 	(18)(17) in each of the five tax years immediately following the tax year in which an 
16.28 	addition is required under subdivision 19c, clause (16) (15), an amount equal to one-fifth 
16.29 	of the amount of the addition; and
16.30 	(19)(18) to the extent included in federal taxable income, discharge of indebtedness 
16.31 	income resulting from reacquisition of business indebtedness included in federal taxable 
16.32 	income under section 108(i) of the Internal Revenue Code. This subtraction applies only 
16.33 	to the extent that the income was included in net income in a prior year as a result of the 
16.34 	addition under section 290.01, subdivision 19c, clause (25) (20).

16.35 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
16.36 	December 31, 2010.

17.1 	Sec. 13. Minnesota Statutes 2010, section 290.01, subdivision 22, is amended to read:
17.2 		Subd. 22.Taxable net income. For tax years beginning after December 31, 1986, 
17.3 	the term "taxable net income" means:
17.4 	(1) for resident individuals the same as net income;
17.5 	(2) for individuals who were not residents of Minnesota for the entire year, the same 
17.6 	as net income except that the tax is imposed only on the Minnesota apportioned share of 
17.7 	that income as determined pursuant to section 290.06, subdivision 2c, paragraph (e);
17.8 	(3) for all other taxpayers, the part of net income that is allocable to Minnesota by 
17.9 	assignment or apportionment under one or more of sections 290.17, 290.191, 290.20,
17.10 	290.341, and 290.36.
17.11 	For tax years beginning before January 1, 1987, the term "taxable net income" 
17.12 	means the net income assignable to this state pursuant to sections 290.17 to 290.20. For 
17.13 	corporations, taxable net income is then reduced by the deductions contained in section 
17.14 	290.21.

17.15 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
17.16 	December 31, 2010.

17.17 	Sec. 14. Minnesota Statutes 2010, section 290.01, subdivision 29, is amended to read:
17.18 		Subd. 29.Taxable income. The term "taxable income" means:
17.19 	(1) for individuals, estates, and trusts, the same as taxable net income;
17.20 	(2) for corporations, including insurance companies, the taxable net income less
17.21 	(i) the net operating loss deduction under section 290.095;
17.22 	(ii) the dividends received deduction under section 290.21, subdivision 4;
17.23 	(iii) the exemption for operating in a job opportunity building zone under section 
17.24 	469.317;
17.25 	(iv) the exemption for operating in a biotechnology and health sciences industry 
17.26 	zone under section 469.337; and
17.27 	(v) the exemption for operating in an international economic development zone 
17.28 	under section 469.326.

17.29 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
17.30 	December 31, 2010.

17.31 	Sec. 15. Minnesota Statutes 2010, section 290.014, subdivision 5, is amended to read:
17.32 		Subd. 5.Corporations. Except as provided in section 290.015, corporations are 
17.33 	subject to the return filing requirements and to tax as provided in this chapter if the 
18.1 	corporation so exercises its franchise as to engage in such contacts with this state as to 
18.2 	cause part of the income of the corporation to be: 
18.3 	(1) allocable to this state under section 290.17, 290.191, 290.20, 290.341, or 290.36; 
18.4 	(2) taxed to the corporation under the Internal Revenue Code (or not taxed under the 
18.5 	Internal Revenue Code by reason of its character but of a character which is taxable under 
18.6 	this chapter) in its capacity as a beneficiary of an estate with income allocable to this state 
18.7 	under section 290.17, 290.191, or 290.20 and the income, taking into account the income 
18.8 	character provisions of section 662(b) of the Internal Revenue Code, would be allocable to 
18.9 	this state under section 290.17, 290.191, or 290.20 if realized by the corporation directly 
18.10 	from the source from which realized by the estate; 
18.11 	(3) taxed to the corporation under the Internal Revenue Code (or not taxed under 
18.12 	the Internal Revenue Code by reason of its character but of a character which is taxable 
18.13 	under this chapter) in its capacity as a beneficiary or grantor or other person treated as a 
18.14 	substantial owner of a trust with income allocable to this state under section 290.17, 
18.15 	290.191, or 290.20 and the income, taking into account the income character provisions of 
18.16 	section 652(b), 662(b), or 664(b) of the Internal Revenue Code, would be allocable to this 
18.17 	state under section 290.17, 290.191, or 290.20 if realized by the corporation directly from 
18.18 	the source from which realized by the trust; or 
18.19 	(4) taxed to the corporation under the Internal Revenue Code (or not taxed under the 
18.20 	Internal Revenue Code by reason of its character but of a character which is taxable under 
18.21 	this chapter) in its capacity as a limited or general partner in a partnership with income 
18.22 	allocable to this state under section 290.17, 290.191, or 290.20 and the income, taking into 
18.23 	account the income character provisions of section 702(b) of the Internal Revenue Code, 
18.24 	would be allocable to this state under section 290.17, 290.191, or 290.20 if realized by the 
18.25 	corporation directly from the source from which realized by the partnership. 

18.26 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
18.27 	December 31, 2010.

18.28 	Sec. 16. Minnesota Statutes 2010, section 290.05, subdivision 1, is amended to read:
18.29 		Subdivision 1.Exempt entities. The following corporations, individuals, estates, 
18.30 	trusts, and organizations shall be exempted from taxation under this chapter, provided 
18.31 	that every such person or corporation claiming exemption under this chapter, in whole 
18.32 	or in part, must establish to the satisfaction of the commissioner the taxable status of 
18.33 	any income or activity:
18.34 	(a) corporations, individuals, estates, and trusts engaged in the business of mining 
18.35 	or producing iron ore and other ores the mining or production of which is subject to 
19.1 	the occupation tax imposed by section 298.01; but if any such corporation, individual, 
19.2 	estate, or trust engages in any other business or activity or has income from any property 
19.3 	not used in such business it shall be subject to this tax computed on the net income from 
19.4 	such property or such other business or activity. Royalty shall not be considered as income 
19.5 	from the business of mining or producing iron ore within the meaning of this section;
19.6 	(b) the United States of America, the state of Minnesota or any political subdivision 
19.7 	of either agencies or instrumentalities, whether engaged in the discharge of governmental 
19.8 	or proprietary functions; and
19.9 	(c) any insurance company. that is domiciled in a state or country other than 
19.10 	Minnesota that imposes retaliatory taxes, fines, deposits, penalties, licenses, or fees 
19.11 	and that does not grant, on a reciprocal basis, exemption from such retaliatory taxes to 
19.12 	insurance companies or their agents domiciled in Minnesota. "Retaliatory taxes" has the 
19.13 	meaning provided in section 297I.05, subdivision 11; and
19.14 	(d) town and farmer's mutual insurance companies.

19.15 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
19.16 	December 31, 2010.

19.17 	Sec. 17. Minnesota Statutes 2010, section 290.06, subdivision 2c, is amended to read:
19.18 		Subd. 2c.Schedules of rates for individuals, estates, and trusts. (a) The income 
19.19 	taxes imposed by this chapter upon married individuals filing joint returns and surviving 
19.20 	spouses as defined in section 2(a) of the Internal Revenue Code must be computed by 
19.21 	applying to their taxable net income the following schedule of rates:
19.22 	(1) On the first $25,680 $33,770, 5.35 percent;
19.23 	(2) On all over $25,680 $33,770, but not over $102,030 $134,170, 7.05 percent;
19.24 	(3) On all over $102,030 $134,170, but not over $150,000, 7.85 percent.;
19.25 	(4) On all over $150,000, 10.95 percent.
19.26 	Married individuals filing separate returns, estates, and trusts must compute their 
19.27 	income tax by applying the above rates to their taxable income, except that the income 
19.28 	brackets will be one-half of the above amounts.
19.29 	(b) The income taxes imposed by this chapter upon unmarried individuals must be 
19.30 	computed by applying to taxable net income the following schedule of rates:
19.31 	(1) On the first $17,570 $23,100, 5.35 percent;
19.32 	(2) On all over $17,570 $23,100, but not over $57,710 $75,890, 7.05 percent;
19.33 	(3) On all over $57,710 $75,890, but not over $85,000, 7.85 percent.;
19.34 	(4) On all over $85,000, 10.95 percent.
20.1 	(c) The income taxes imposed by this chapter upon unmarried individuals qualifying 
20.2 	as a head of household as defined in section 2(b) of the Internal Revenue Code must be 
20.3 	computed by applying to taxable net income the following schedule of rates:
20.4 	(1) On the first $21,630 $28,440, 5.35 percent;
20.5 	(2) On all over $21,630 $28,440, but not over $86,910 $114,290, 7.05 percent;
20.6 	(3) On all over $86,910 $114,290, but not over $130,000, 7.85 percent.;
20.7 	(4) On all over $130,000, 10.95 percent.
20.8 	(d) In lieu of a tax computed according to the rates set forth in this subdivision, the 
20.9 	tax of any individual taxpayer whose taxable net income for the taxable year is less than 
20.10 	an amount determined by the commissioner must be computed in accordance with tables 
20.11 	prepared and issued by the commissioner of revenue based on income brackets of not 
20.12 	more than $100. The amount of tax for each bracket shall be computed at the rates set 
20.13 	forth in this subdivision, provided that the commissioner may disregard a fractional part of 
20.14 	a dollar unless it amounts to 50 cents or more, in which case it may be increased to $1.
20.15 	(e) An individual who is not a Minnesota resident for the entire year must compute 
20.16 	the individual's Minnesota income tax as provided in this subdivision. After the 
20.17 	application of the nonrefundable credits provided in this chapter, the tax liability must 
20.18 	then be multiplied by a fraction in which:
20.19 	(1) the numerator is the individual's Minnesota source federal adjusted gross income 
20.20 	as defined in section 62 of the Internal Revenue Code and increased by the additions 
20.21 	required under section 290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), (9), (12), 
20.22 	(13), (16), and (17), and reduced by the Minnesota assignable portion of the subtraction 
20.23 	for United States government interest under section 290.01, subdivision 19b, clause 
20.24 	(1), and the subtractions under section 290.01, subdivision 19b, clauses (8), (9), (13), 
20.25 	(14), (15), and (17), after applying the allocation and assignability provisions of section 
20.26 	290.081, clause (a), or 290.17; and
20.27 	(2) the denominator is the individual's federal adjusted gross income as defined in 
20.28 	section 62 of the Internal Revenue Code of 1986, increased by the amounts specified in 
20.29 	section 290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), (9), (12), (13), (16), and 
20.30 	(17), and reduced by the amounts specified in section 290.01, subdivision 19b, clauses (1), 
20.31 	(8), (9), (13), (14), (15), and (17).

20.32 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
20.33 	December 31, 2010.

20.34 	Sec. 18. Minnesota Statutes 2010, section 290.06, subdivision 2d, is amended to read:
21.1 		Subd. 2d.Inflation adjustment of brackets. (a) For taxable years beginning after 
21.2 	December 31, 2000 2011, the minimum and maximum dollar amounts for each rate 
21.3 	bracket for which a tax is imposed in subdivision 2c shall be adjusted for inflation by the 
21.4 	percentage determined under paragraph (b). For the purpose of making the adjustment as 
21.5 	provided in this subdivision all of the rate brackets provided in subdivision 2c shall be the 
21.6 	rate brackets as they existed for taxable years beginning after December 31, 1999 2010, 
21.7 	and before January 1, 2001 2012. The rate applicable to any rate bracket must not be 
21.8 	changed. The dollar amounts setting forth the tax shall be adjusted to reflect the changes 
21.9 	in the rate brackets. The rate brackets as adjusted must be rounded to the nearest $10 
21.10 	amount. If the rate bracket ends in $5, it must be rounded up to the nearest $10 amount.
21.11 	(b) The commissioner shall adjust the rate brackets and by the percentage determined 
21.12 	pursuant to the provisions of section 1(f) of the Internal Revenue Code, except that in 
21.13 	section 1(f)(3)(B) the word "1999" "2010" shall be substituted for the word "1992." For 
21.14 	2001 2012, the commissioner shall then determine the percent change from the 12 months 
21.15 	ending on August 31, 1999 2010, to the 12 months ending on August 31, 2000 2011, and 
21.16 	in each subsequent year, from the 12 months ending on August 31, 1999 2010, to the 12 
21.17 	months ending on August 31 of the year preceding the taxable year. The determination of 
21.18 	the commissioner pursuant to this subdivision shall not be considered a "rule" and shall 
21.19 	not be subject to the Administrative Procedure Act contained in chapter 14.
21.20 	No later than December 15 of each year, the commissioner shall announce the 
21.21 	specific percentage that will be used to adjust the tax rate brackets.

21.22 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
21.23 	December 31, 2011.

21.24 	Sec. 19. Minnesota Statutes 2010, section 290.06, subdivision 22, is amended to read:
21.25 		Subd. 22.Credit for taxes paid to another state. (a) A taxpayer who is liable for 
21.26 	taxes based on net income to another state, as provided in paragraphs (b) through (f), 
21.27 	upon income allocated or apportioned to Minnesota, is entitled to a credit for the tax paid 
21.28 	to another state if the tax is actually paid in the taxable year or a subsequent taxable 
21.29 	year. A taxpayer who is a resident of this state pursuant to section 290.01, subdivision 
21.30 	7, paragraph (b) or (d), and who is subject to income tax as a resident in the state of 
21.31 	the individual's domicile is not allowed this credit unless the state of domicile does not 
21.32 	allow a similar credit.
21.33 	(b) For an individual, estate, or trust, the credit is determined by multiplying the tax 
21.34 	payable under this chapter by the ratio derived by dividing the income subject to tax in the 
21.35 	other state that is also subject to tax in Minnesota while a resident of Minnesota by the 
22.1 	taxpayer's federal adjusted gross income, as defined in section 62 of the Internal Revenue 
22.2 	Code, modified by the addition required by section 290.01, subdivision 19a, clause (1), 
22.3 	and the subtraction allowed by section 290.01, subdivision 19b, clause (1), to the extent 
22.4 	the income is allocated or assigned to Minnesota under sections 290.081 and 290.17.
22.5 	(c) If the taxpayer is an athletic team that apportions all of its income under section 
22.6 	290.17, subdivision 5, the credit is determined by multiplying the tax payable under this 
22.7 	chapter by the ratio derived from dividing the total net income subject to tax in the other 
22.8 	state by the taxpayer's Minnesota taxable income.
22.9 	(d) The credit determined under paragraph (b) or (c) shall not exceed the amount of 
22.10 	tax so paid to the other state on the gross income earned within the other state subject to 
22.11 	tax under this chapter, nor shall the allowance of the credit reduce the taxes paid under 
22.12 	this chapter to an amount less than what would be assessed if such income amount was 
22.13 	excluded from taxable net income.
22.14 	(e) In the case of the tax assessed on a lump-sum distribution under section 
22.15 	290.032, the credit allowed under paragraph (a) is the tax assessed by the other state on 
22.16 	the lump-sum distribution that is also subject to tax under section 290.032, and shall 
22.17 	not exceed the tax assessed under section 290.032. To the extent the total lump-sum 
22.18 	distribution defined in section 290.032, subdivision 1, includes lump-sum distributions 
22.19 	received in prior years or is all or in part an annuity contract, the reduction to the tax on 
22.20 	the lump-sum distribution allowed under section 290.032, subdivision 2, includes tax paid 
22.21 	to another state that is properly apportioned to that distribution.
22.22 	(f) If a Minnesota resident reported an item of income to Minnesota and is assessed 
22.23 	tax in such other state on that same income after the Minnesota statute of limitations 
22.24 	has expired, the taxpayer shall receive a credit for that year under paragraph (a), 
22.25 	notwithstanding any statute of limitations to the contrary. The claim for the credit must 
22.26 	be submitted within one year from the date the taxes were paid to the other state. The 
22.27 	taxpayer must submit sufficient proof to show entitlement to a credit.
22.28 	(g) For the purposes of this subdivision, a resident shareholder of a corporation 
22.29 	treated as an "S" corporation under section 290.9725, must be considered to have paid 
22.30 	a tax imposed on the shareholder in an amount equal to the shareholder's pro rata share 
22.31 	of any net income tax paid by the S corporation to another state. For the purposes of the 
22.32 	preceding sentence, the term "net income tax" means any tax imposed on or measured by 
22.33 	a corporation's net income.
22.34 	(h) For the purposes of this subdivision, a resident partner of an entity taxed as 
22.35 	a partnership under the Internal Revenue Code must be considered to have paid a tax 
22.36 	imposed on the partner in an amount equal to the partner's pro rata share of any net income 
23.1 	tax paid by the partnership to another state. For purposes of the preceding sentence, 
23.2 	the term "net income" tax means any tax imposed on or measured by a partnership's 
23.3 	net income.
23.4 	(i) For the purposes of this subdivision, "another state":
23.5 	(1) includes:
23.6 	(i) the District of Columbia; and
23.7 	(ii) a province or territory of Canada; but
23.8 	(2) excludes Puerto Rico and the several territories organized by Congress.
23.9 	(j) The limitations on the credit in paragraphs (b), (c), and (d), are imposed on a 
23.10 	state by state basis.
23.11 	(k) For a tax imposed by a province or territory of Canada, the tax for purposes of 
23.12 	this subdivision is the excess of the tax over the amount of the foreign tax credit allowed 
23.13 	under section 27 of the Internal Revenue Code. In determining the amount of the foreign 
23.14 	tax credit allowed, the net income taxes imposed by Canada on the income are deducted 
23.15 	first. Any remaining amount of the allowable foreign tax credit reduces the provincial or 
23.16 	territorial tax that qualifies for the credit under this subdivision.

23.17 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
23.18 	December 31, 2010.

23.19 	Sec. 20. Minnesota Statutes 2010, section 290.068, subdivision 1, is amended to read:
23.20 		Subdivision 1.Credit allowed. A corporation, partners in a partnership, or 
23.21 	shareholders in a corporation treated as an "S" corporation under section 290.9725 are 
23.22 	allowed a credit against the tax computed under this chapter for the taxable year equal to:
23.23 	(a) ten15 percent of the first $2,000,000 of the excess (if any) of
23.24 	(1) the qualified research expenses for the taxable year, over
23.25 	(2) the base amount; and
23.26 	(b) 2.5 percent on all of such excess expenses over $2,000,000.

23.27 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
23.28 	December 31, 2010.

23.29 	Sec. 21. Minnesota Statutes 2010, section 290.068, subdivision 2, is amended to read:
23.30 		Subd. 2.Definitions. For purposes of this section, the following terms have the 
23.31 	meanings given.
23.32 	(a) "Qualified research expenses" means (i) qualified research expenses and basic 
23.33 	research payments as defined in section 41(b) and (e) of the Internal Revenue Code, except 
24.1 	it does not include expenses incurred for qualified research or basic research conducted 
24.2 	outside the state of Minnesota pursuant to section 41(d) and (e) of the Internal Revenue 
24.3 	Code; and (ii) contributions to a nonprofit corporation established and operated pursuant 
24.4 	to the provisions of chapter 317A for the purpose of promoting the establishment and 
24.5 	expansion of business in this state, provided the contributions are invested by the nonprofit 
24.6 	corporation for the purpose of providing funds for small, technologically innovative 
24.7 	enterprises in Minnesota during the early stages of their development.
24.8 	(b) "Qualified research" means qualified research as defined in section 41(d) of the 
24.9 	Internal Revenue Code, except that the term does not include qualified research conducted 
24.10 	outside the state of Minnesota.
24.11 	(c) "Base amount" means base amount as defined in section 41(c) of the Internal 
24.12 	Revenue Code, except that the average annual gross receipts must be calculated using 
24.13 	Minnesota sales or receipts under section 290.191 and the definitions contained in clauses 
24.14 	(a) and (b) shall apply. If a taxpayer does not have records to substantiate the aggregate 
24.15 	qualified research expenses for the taxable years beginning after December 31, 1983, and 
24.16 	before January 1, 1989, and is not a start-up company to which Internal Revenue Code, 
24.17 	section 41(c)(3)(B), applies, the taxpayer may use a fixed base percentage of 16 percent.

24.18 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
24.19 	December 31, 2010.

24.20 	Sec. 22. Minnesota Statutes 2010, section 290.0921, subdivision 1, is amended to read:
24.21 		Subdivision 1.Tax imposed. In addition to the taxes computed under this chapter 
24.22 	without regard to this section, the franchise tax imposed on corporations includes a tax 
24.23 	equal to the excess, if any, for the taxable year of:
24.24 	(1) 5.8 percent of Minnesota alternative minimum taxable income less the credit 
24.25 	allowed under section 290.341, subdivision 3; over
24.26 	(2) the tax imposed under section 290.06, subdivision 1, without regard to this 
24.27 	section.

24.28 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
24.29 	December 31, 2010.

24.30 	Sec. 23. Minnesota Statutes 2010, section 290.0921, subdivision 2, is amended to read:
24.31 		Subd. 2.Definitions. (a) For purposes of this section, the following terms have 
24.32 	the meanings given them.
25.1 	(b) "Alternative minimum taxable net income" is alternative minimum taxable 
25.2 	income,
25.3 	(1) less the exemption amount, and
25.4 	(2) apportioned or allocated to Minnesota under section 290.17, 290.191, or 290.20.
25.5 	(c) The "exemption amount" is $40,000, reduced, but not below zero, by 25 percent 
25.6 	of the excess of alternative minimum taxable income over $150,000.
25.7 	(d) "Minnesota alternative minimum taxable income" is alternative minimum taxable 
25.8 	net income, less the deductions for alternative tax net operating loss under subdivision 
25.9 	4; and dividends received under subdivision 6. The sum of the deductions under this 
25.10 	paragraph may not exceed 90 percent of alternative minimum taxable net income. This 
25.11 	limitation does not apply to:
25.12 	(1) a deduction for dividends paid to or received from a corporation which is subject 
25.13 	to tax under section 290.341 or 290.36 and which is a member of an affiliated group of 
25.14 	corporations as defined by the Internal Revenue Code; or
25.15 	(2) a deduction for dividends received from a property and casualty insurer as 
25.16 	defined under section 60A.60, subdivision 8, which is a member of an affiliated group 
25.17 	of corporations as defined by the Internal Revenue Code and either: (i) the dividend is 
25.18 	eliminated in consolidation under Treasury Regulation 1.1502-14(a), as amended through 
25.19 	December 31, 1989; or (ii) the dividend is deducted under an election under section 
25.20 	243(b) of the Internal Revenue Code.

25.21 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
25.22 	December 31, 2010.

25.23 	Sec. 24. Minnesota Statutes 2010, section 290.0921, subdivision 3, is amended to read:
25.24 		Subd. 3.Alternative minimum taxable income. "Alternative minimum taxable 
25.25 	income" is Minnesota net income as defined in section 290.01, subdivision 19, and 
25.26 	includes the adjustments and tax preference items in sections 56, 57, 58, and 59(d), (e), 
25.27 	(f), and (h) of the Internal Revenue Code. If a corporation files a separate company 
25.28 	Minnesota tax return, the minimum tax must be computed on a separate company basis. 
25.29 	If a corporation is part of a tax group filing a unitary return, the minimum tax must be 
25.30 	computed on a unitary basis. The following adjustments must be made.
25.31 	(1) For purposes of the depreciation adjustments under section 56(a)(1) and 
25.32 	56(g)(4)(A) of the Internal Revenue Code, the basis for depreciable property placed in 
25.33 	service in a taxable year beginning before January 1, 1990, is the adjusted basis for federal 
25.34 	income tax purposes, including any modification made in a taxable year under section 
26.1 	290.01, subdivision 19e, or Minnesota Statutes 1986, section 290.09, subdivision 7, 
26.2 	paragraph (c).
26.3 	For taxable years beginning after December 31, 2000, the amount of any remaining 
26.4 	modification made under section 290.01, subdivision 19e, or Minnesota Statutes 1986, 
26.5 	section 290.09, subdivision 7, paragraph (c), not previously deducted is a depreciation 
26.6 	allowance in the first taxable year after December 31, 2000.
26.7 	(2) The portion of the depreciation deduction allowed for federal income tax 
26.8 	purposes under section 168(k) of the Internal Revenue Code that is required as an addition 
26.9 	under section 290.01, subdivision 19c, clause (15) (14), is disallowed in determining 
26.10 	alternative minimum taxable income.
26.11 	(3) The subtraction for depreciation allowed under section 290.01, subdivision 
26.12 	19d, clause (17) (16), is allowed as a depreciation deduction in determining alternative 
26.13 	minimum taxable income.
26.14 	(4) The alternative tax net operating loss deduction under sections 56(a)(4) and 56(d) 
26.15 	of the Internal Revenue Code does not apply.
26.16 	(5) The special rule for certain dividends under section 56(g)(4)(C)(ii) of the Internal 
26.17 	Revenue Code does not apply.
26.18 	(6) The special rule for dividends from section 936 companies under section 
26.19 	56(g)(4)(C)(iii) does not apply.
26.20 	(7) The tax preference for depletion under section 57(a)(1) of the Internal Revenue 
26.21 	Code does not apply.
26.22 	(8) The tax preference for intangible drilling costs under section 57(a)(2) of the 
26.23 	Internal Revenue Code must be calculated without regard to subparagraph (E) and the 
26.24 	subtraction under section 290.01, subdivision 19d, clause (4).
26.25 	(9) The tax preference for tax exempt interest under section 57(a)(5) of the Internal 
26.26 	Revenue Code does not apply.
26.27 	(10) The tax preference for charitable contributions of appreciated property under 
26.28 	section 57(a)(6) of the Internal Revenue Code does not apply.
26.29 	(11) For purposes of calculating the tax preference for accelerated depreciation or 
26.30 	amortization on certain property placed in service before January 1, 1987, under section 
26.31 	57(a)(7) of the Internal Revenue Code, the deduction allowable for the taxable year is the 
26.32 	deduction allowed under section 290.01, subdivision 19e.
26.33 	For taxable years beginning after December 31, 2000, the amount of any remaining 
26.34 	modification made under section 290.01, subdivision 19e, not previously deducted is a 
26.35 	depreciation or amortization allowance in the first taxable year after December 31, 2004.
27.1 	(12) For purposes of calculating the adjustment for adjusted current earnings in 
27.2 	section 56(g) of the Internal Revenue Code, the term "alternative minimum taxable 
27.3 	income" as it is used in section 56(g) of the Internal Revenue Code, means alternative 
27.4 	minimum taxable income as defined in this subdivision, determined without regard to the 
27.5 	adjustment for adjusted current earnings in section 56(g) of the Internal Revenue Code.
27.6 	(13) For purposes of determining the amount of adjusted current earnings under 
27.7 	section 56(g)(3) of the Internal Revenue Code, no adjustment shall be made under section 
27.8 	56(g)(4) of the Internal Revenue Code with respect to (i) the amount of foreign dividend 
27.9 	gross-up subtracted as provided in section 290.01, subdivision 19d, clause (1), or (ii) the 
27.10 	amount of refunds of income, excise, or franchise taxes subtracted as provided in section 
27.11 	290.01, subdivision 19d, clause (9), or (iii) the amount of royalties, fees or other like 
27.12 	income subtracted as provided in section 290.01, subdivision 19d, clause (10).
27.13 	(14) Alternative minimum taxable income excludes the income from operating in a 
27.14 	job opportunity building zone as provided under section 469.317.
27.15 	(15) Alternative minimum taxable income excludes the income from operating in a 
27.16 	biotechnology and health sciences industry zone as provided under section 469.337.
27.17 	(16) Alternative minimum taxable income excludes the income from operating in an 
27.18 	international economic development zone as provided under section 469.326.
27.19 	Items of tax preference must not be reduced below zero as a result of the 
27.20 	modifications in this subdivision.

27.21 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
27.22 	December 31, 2010.

27.23 	Sec. 25. Minnesota Statutes 2010, section 290.0921, subdivision 6, is amended to read:
27.24 		Subd. 6.Dividends received. (a) A deduction is allowed from alternative 
27.25 	minimum taxable net income equal to the deduction for dividends received under section 
27.26 	290.21, subdivision 4, for purposes of calculating taxable income under section 290.01, 
27.27 	subdivision 29.
27.28 	(b) The amount of the deduction must not exceed 90 percent of alternative minimum 
27.29 	taxable net income.
27.30 	This limitation does not apply to:
27.31 	(1) dividends paid to or received from a corporation which is subject to tax under 
27.32 	section 290.341 or 290.36 and which is a member of an affiliated group of corporations as 
27.33 	defined by the Internal Revenue Code; or
27.34 	(2) dividends received from a property and casualty insurer as defined under 
27.35 	section 60A.60, subdivision 8, which is a member of an affiliated group of corporations 
28.1 	as defined by the Internal Revenue Code and either: (i) the dividend is eliminated in 
28.2 	consolidation under Treasury Regulation 1.1502-14(a), as amended through December 
28.3 	31, 1989; or (ii) the dividend is deducted under an election under section 243(b) of the 
28.4 	Internal Revenue Code.

28.5 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
28.6 	December 31, 2010.

28.7 	Sec. 26. Minnesota Statutes 2010, section 290.0922, subdivision 1, is amended to read:
28.8 		Subdivision 1.Imposition. (a) In addition to the tax imposed by this chapter without 
28.9 	regard to this section, the franchise tax imposed on a corporation required to file under 
28.10 	section 289A.08, subdivision 3, other than a corporation treated as an "S" corporation 
28.11 	under section 290.9725 for the taxable year includes a tax equal to the following amounts:

28.12
28.13	If the sum of the corporation's Minnesota 
property, payrolls, and sales or receipts is:
		the tax equals: 
	
28.14			less than 
	$
	500,000
		$
	0
		
28.15		$
	500,000
	to
	$
	999,999
		$
	100
		
28.16		$
	1,000,000
	to
	$
	4,999,999
		$
	300
		
28.17		$
	5,000,000
	to
	$
	9,999,999
		$
	1,000
		
28.18		$
	10,000,000
	to
	$
	19,999,999
		$
	2,000
		
28.19		$
	20,000,000
	or 
	more
			$
	5,000
		
28.20			less than
		$
	890,000
		$
	0
		
28.21		$
	890,000 
	to
	$
	1,779,999
		$
	180
		
28.22		$
	1,780,000
	to
	$
	8,889,999
		$
	530
		
28.23		$
	8,890,000
	to
	$
	17,779,999
		$
	1,780
		
28.24		$
	17,800,000
	to
	$
	35,559,999
		$
	3,560
		
28.25		$
	35,560,000
	or
	more
			$
	8,890
		
28.26 	(b) A tax is imposed for each taxable year on a corporation required to file a return 
28.27 	under section 289A.12, subdivision 3, that is treated as an "S" corporation under section 
28.28 	290.9725 and on a partnership required to file a return under section 289A.12, subdivision 
28.29 	3, other than a partnership that derives over 80 percent of its income from farming. The 
28.30 	tax imposed under this paragraph is due on or before the due date of the return for the 
28.31 	taxpayer due under section 289A.18, subdivision 1. The commissioner shall prescribe 
28.32 	the return to be used for payment of this tax. The tax under this paragraph is equal to 
28.33 	the following amounts:

28.34
28.35
28.36
28.37	If the sum of the S corporation's 
or partnership's Minnesota 
property, payrolls, and sales or 
receipts is:
			the tax equals: 
	
28.38			less than
	$
	500,000
		$
	0
		
29.1		$
	500,000
	to
	$
	999,999
		$
	100
		
29.2		$
	1,000,000
	to
	$
	4,999,999
		$
	300
		
29.3		$
	5,000,000
	to
	$
	9,999,999
		$
	1,000
		
29.4		$
	10,000,000
	to
	$
	19,999,999
		$
	2,000
		
29.5		$
	20,000,000
	or
	more
			$
	5,000
		
29.6			less than
		$
	890,000
		$
	0
		
29.7		$
	890,000 
	to
	$
	1,779,999
		$
	180
		
29.8		$
	1,780,000
	to
	$
	8,889,999
		$
	530
		
29.9		$
	8,890,000
	to
	$
	17,779,999
		$
	1,780
		
29.10		$
	17,800,000
	to
	$
	35,559,999
		$
	3,560
		
29.11		$
	35,560,000
	or
	more
			$
	8,890
		
29.12 	(c) The commissioner shall adjust the dollar amounts of both the tax and the 
29.13 	property, payrolls, and sales or receipts thresholds in paragraphs (a) and (b) by the 
29.14 	percentage determined pursuant to the provisions of section 1(f) of the Internal Revenue 
29.15 	Code, except that in section 1(f)(3)(B) the word "2010" must be substituted for the word 
29.16 	"1992." For 2012, the commissioner shall then determine the percent change from the 12 
29.17 	months ending on August 31, 2010, to the 12 months ending on August 31, 2011, and in 
29.18 	each subsequent year, from the 12 months ending on August 31, 2010, to the 12 months 
29.19 	ending on August 31 of the year preceding the taxable year. The determination of the 
29.20 	commissioner pursuant to this subdivision is not a "rule" subject to the Administrative 
29.21 	Procedure Act contained in chapter 14. The tax amounts as adjusted must be rounded 
29.22 	to the nearest $10 amounts and the threshold amounts must be adjusted to the nearest 
29.23 	$10,000 amounts. For tax amounts that end in $5, the amount is rounded up to the nearest 
29.24 	$10 amount and for threshold amounts that end in $5,000, the amount is rounded up to 
29.25 	the nearest $10,000.

29.26 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
29.27 	December 31, 2010.

29.28 	Sec. 27. Minnesota Statutes 2010, section 290.0922, subdivision 2, is amended to read:
29.29 		Subd. 2.Exemptions. The following entities are exempt from the tax imposed 
29.30 	by this section:
29.31 	(1) corporations exempt from tax under section 290.05 other than insurance 
29.32 	companies exempt under subdivision 1, paragraphs (c) and (d);
29.33 	(2) real estate investment trusts;
29.34 	(3) regulated investment companies or a fund thereof; and
29.35 	(4) entities having a valid election in effect under section 860D(b) of the Internal 
29.36 	Revenue Code;
30.1 	(5) town and farmers' mutual insurance companies;
30.2 	(6) cooperatives organized under chapter 308A or 308B that provide housing 
30.3 	exclusively to persons age 55 and over and are classified as homesteads under section 
30.4 	273.124, subdivision 3;
30.5 	(7) an entity, if for the taxable year all of its property is located in a job opportunity 
30.6 	building zone designated under section 469.314 and all of its payroll is a job opportunity 
30.7 	building zone payroll under section 469.310; and
30.8 	(8) an entity, if for the taxable year all of its property is located in an international 
30.9 	economic development zone designated under section 469.322, and all of its payroll is 
30.10 	international economic development zone payroll under section 469.321. The exemption 
30.11 	under this clause applies to taxable years beginning during the duration of the international 
30.12 	economic development zone.
30.13 	Entities not specifically exempted by this subdivision are subject to tax under this 
30.14 	section, notwithstanding section 290.05.

30.15 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
30.16 	December 31, 2010.

30.17 	Sec. 28. Minnesota Statutes 2010, section 290.093, is amended to read:
30.18 	290.093 TAX COMPUTATION FOR MUTUAL SAVINGS BANKS 
30.19 	CONDUCTING LIFE INSURANCE BUSINESS.
30.20 	Mutual savings banks as defined in section 594 of the Internal Revenue Code are 
30.21 	subject to a tax consisting of the sum of the taxes determined under clauses (1) and (2).
30.22 	(1) a tax computed on the taxable income determined without regard to any items 
30.23 	of gross income or deductions properly allocable to the business of the life insurance 
30.24 	department, at the rates and in the manner for a corporation not engaged in the business of 
30.25 	issuing life insurance contracts as if this section did not apply; and
30.26 	(2) a tax computed on the income of the life insurance department determined 
30.27 	without regard to any items of gross income or deductions not properly allocable to the 
30.28 	department computed in the manner provided in section 290.341 and at the rate provided 
30.29 	in section 290.06.
30.30 	This section applies only if the life insurance department would, if it were treated 
30.31 	as a separate corporation, qualify as a life insurance company under section 816 of the 
30.32 	Internal Revenue Code.

30.33 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
30.34 	December 31, 2010.

31.1 	Sec. 29. Minnesota Statutes 2010, section 290.095, subdivision 2, is amended to read:
31.2 		Subd. 2.Defined and limited. (a) The term "net operating loss" as used in this 
31.3 	section shall mean a net operating loss as defined in section 172(c) or 810(a), in the case of 
31.4 	life insurance companies, of the Internal Revenue Code, with the modifications specified 
31.5 	in subdivision 4. The deductions provided in section 290.21and the modification provided 
31.6 	in section 290.01, subdivision 19d, clause (10), cannot be used in the determination of a 
31.7 	net operating loss. 
31.8 	(b) The term "net operating loss deduction" as used in this section means the 
31.9 	aggregate of the net operating loss carryovers to the taxable year, computed in accordance 
31.10 	with subdivision 3. The provisions of section 172(b) of the Internal Revenue Code relating 
31.11 	to the carryback of net operating losses, do not apply.

31.12 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
31.13 	December 31, 2010.

31.14 	Sec. 30. Minnesota Statutes 2010, section 290.095, subdivision 3, is amended to read:
31.15 		Subd. 3.Carryover. (a) A net operating loss incurred in a taxable year: (i) 
31.16 	beginning after December 31, 1986, shall be a net operating loss carryover to each of the 
31.17 	15 taxable years following the taxable year of such loss; (ii) beginning before January 1, 
31.18 	1987, shall be a net operating loss carryover to each of the five taxable years following the 
31.19 	taxable year of such loss subject to the provisions of Minnesota Statutes 1986, section 
31.20 	290.095; and (iii) beginning before January 1, 1987, shall be a net operating loss carryback 
31.21 	to each of the three taxable years preceding the loss year subject to the provisions of 
31.22 	Minnesota Statutes 1986, section 290.095. 
31.23 	(b) The entire amount of the net operating loss for any taxable year shall be carried to 
31.24 	the earliest of the taxable years to which such loss may be carried. The portion of such loss 
31.25 	which shall be carried to each of the other taxable years shall be the excess, if any, of the 
31.26 	amount of such loss over the sum of the taxable net income, adjusted by the modifications 
31.27 	specified in subdivision 4, for each of the taxable years to which such loss may be carried.
31.28 	(c) Where a corporation apportions its income under the provisions of section 
31.29 	290.191, the net operating loss deduction incurred in any taxable year shall be allowed 
31.30 	to the extent of the apportionment ratio of the loss year plus the excess loss assigned 
31.31 	by section 290.17, subdivision 2. The loss carryover is applied to income allocated to 
31.32 	Minnesota in the carryover year. 
31.33 	(d) The provisions of sections 381, 382, and 384 of the Internal Revenue Code apply 
31.34 	to carryovers in certain corporate acquisitions and special limitations on net operating loss 
32.1 	carryovers. The limitation amount determined under section 382 shall be applied to net 
32.2 	income, before apportionment, in each post change year to which a loss is carried.

32.3 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
32.4 	December 31, 2010.

32.5 	Sec. 31. Minnesota Statutes 2010, section 290.17, subdivision 1, is amended to read:
32.6 		Subdivision 1.Scope of allocation rules. (a) The income of resident individuals 
32.7 	is not subject to allocation outside this state. The allocation rules apply to nonresident 
32.8 	individuals, estates, trusts, nonresident partners of partnerships, nonresident shareholders 
32.9 	of corporations treated as "S" corporations under section 290.9725, and all corporations 
32.10 	not having such an election in effect. If a partnership or corporation would not otherwise 
32.11 	be subject to the allocation rules, but conducts a trade or business that is part of a 
32.12 	unitary business involving another legal entity that is subject to the allocation rules, the 
32.13 	partnership or corporation is subject to the allocation rules.
32.14 	(b) Expenses, losses, and other deductions (referred to collectively in this paragraph 
32.15 	as "deductions") must be allocated along with the item or class of gross income to which 
32.16 	they are definitely related for purposes of assignment under this section or apportionment 
32.17 	under section 290.191, 290.20, or 290.36. Deductions definitely related to any item of 
32.18 	gross income assigned under subdivision 2, paragraph (e), are assigned to the taxpayer's 
32.19 	domicile.
32.20 	(c) In the case of an individual who is a resident for only part of a taxable year, 
32.21 	the individual's income, gains, losses, and deductions from the distributive share of a 
32.22 	partnership, S corporation, trust, or estate are not subject to allocation outside this state 
32.23 	to the extent of the distributive share multiplied by a ratio, the numerator of which is 
32.24 	the number of days the individual was a resident of this state during the tax year of the 
32.25 	partnership, S corporation, trust, or estate, and the denominator of which is the number of 
32.26 	days in the taxable year of the partnership, S corporation, trust, or estate.
32.27 	(d) In the case of an individual who is a part-year resident as defined in section 
32.28 	290.01, subdivision 7, paragraph (d), income is assigned or allocated under subdivisions 
32.29 	2 and 3 except a pro rata share of income recognized while the individual maintains an 
32.30 	abode in Minnesota and is not assigned or allocated to the state under subdivision 2 or 
32.31 	3 is also assigned to the state. The pro rata share is the income not assigned to the state 
32.32 	under subdivision 2 or 3 multiplied by the ratio of the number of days physically present 
32.33 	in Minnesota while domiciled in another state during the tax year over the number of days 
32.34 	the individual maintains an abode in Minnesota while domiciled in another state.

33.1 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
33.2 	December 31, 2010.

33.3 	Sec. 32. Minnesota Statutes 2010, section 290.17, subdivision 2, is amended to read:
33.4 		Subd. 2.Income not derived from conduct of a trade or business. The income of 
33.5 	a taxpayer subject to the allocation rules that is not derived from the conduct income of a 
33.6 	trade or business must be assigned in accordance with paragraphs (a) to (f):
33.7 	(a)(1) Subject to paragraphs (a)(2) and (a)(3), income from wages as defined in 
33.8 	section 3401(a) and (f) of the Internal Revenue Code is assigned to this state if, and to the 
33.9 	extent that, the work of the employee is performed within it; all other income from such 
33.10 	sources is treated as income from sources without this state.
33.11 	Severance pay shall be considered income from labor or personal or professional 
33.12 	services.
33.13 	(2) In the case of an individual who is a nonresident of Minnesota and who is an 
33.14 	athlete or entertainer, income from compensation for labor or personal services performed 
33.15 	within this state shall be determined in the following manner:
33.16 	(i) The amount of income to be assigned to Minnesota for an individual who is a 
33.17 	nonresident salaried athletic team employee shall be determined by using a fraction in 
33.18 	which the denominator contains the total number of days in which the individual is under 
33.19 	a duty to perform for the employer, and the numerator is the total number of those days 
33.20 	spent in Minnesota. For purposes of this paragraph, off-season training activities, unless 
33.21 	conducted at the team's facilities as part of a team imposed program, are not included in 
33.22 	the total number of duty days. Bonuses earned as a result of play during the regular season 
33.23 	or for participation in championship, play-off, or all-star games must be allocated under 
33.24 	the formula. Signing bonuses are not subject to allocation under the formula if they are 
33.25 	not conditional on playing any games for the team, are payable separately from any other 
33.26 	compensation, and are nonrefundable; and
33.27 	(ii) The amount of income to be assigned to Minnesota for an individual who is a 
33.28 	nonresident, and who is an athlete or entertainer not listed in clause (i), for that person's 
33.29 	athletic or entertainment performance in Minnesota shall be determined by assigning to 
33.30 	this state all income from performances or athletic contests in this state.
33.31 	(3) For purposes of this section, amounts received by a nonresident as "retirement 
33.32 	income" as defined in section (b)(1) of the State Income Taxation of Pension Income 
33.33 	Act, Public Law 104-95, are not considered income derived from carrying on a trade 
33.34 	or business or from wages or other compensation for work an employee performed in 
33.35 	Minnesota, and are not taxable under this chapter.
34.1 	(b) Income or gains from tangible property located in this state that is not employed 
34.2 	in the business of the recipient of the income or gains must be assigned to this state.
34.3 	(c) Income or gains from intangible personal property not employed in the business 
34.4 	of the recipient of the income or gains must be assigned to this state if the recipient of the 
34.5 	income or gains is a resident of this state or is a resident trust or estate.
34.6 	Gain on the sale of a partnership interest is allocable to this state in the ratio of the 
34.7 	original cost of partnership tangible property in this state to the original cost of partnership 
34.8 	tangible property everywhere, determined at the time of the sale. If more than 50 percent 
34.9 	of the value of the partnership's assets consists of intangibles, gain or loss from the sale 
34.10 	of the partnership interest is allocated to this state in accordance with the sales factor of 
34.11 	the partnership for its first full tax period immediately preceding the tax period of the 
34.12 	partnership during which the partnership interest was sold.
34.13 	Gain on the sale of an interest in a single member limited liability company that 
34.14 	is disregarded for federal income tax purposes is allocable to this state as if the single 
34.15 	member limited liability company did not exist and the assets of the limited liability 
34.16 	company are personally owned by the sole member.
34.17 	Gain on the sale of goodwill or income from a covenant not to compete that is 
34.18 	connected with a business operating all or partially in Minnesota is allocated to this state 
34.19 	to the extent that the income from the business in the year preceding the year of sale was 
34.20 	assignable to Minnesota under subdivision 3.
34.21 	When an employer pays an employee for a covenant not to compete, the income 
34.22 	allocated to this state is in the ratio of the employee's service in Minnesota in the calendar 
34.23 	year preceding leaving the employment of the employer over the total services performed 
34.24 	by the employee for the employer in that year.
34.25 	(d) Income from winnings on a bet made by an individual while in Minnesota is 
34.26 	assigned to this state. In this paragraph, "bet" has the meaning given in section 609.75, 
34.27 	subdivision 2, as limited by section 609.75, subdivision 3, clauses (1), (2), and (3).
34.28 	(e) All items of gross income not covered in paragraphs (a) to (d) and not part of the 
34.29 	taxpayer's income from a trade or business shall be assigned to the taxpayer's domicile.
34.30 	(f) For the purposes of this section, working as an employee shall not be considered 
34.31 	to be conducting a trade or business.

34.32 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
34.33 	December 31, 2011.

34.34 	Sec. 33. Minnesota Statutes 2010, section 290.17, subdivision 3, is amended to read:
35.1 		Subd. 3.Trade or business income; general rule. All income of a trade or 
35.2 	business is subject to apportionment except nonbusiness income. Income derived from 
35.3 	carrying on of a trade or business must be assigned apportioned to this state if the trade or 
35.4 	business is conducted wholly within this state, assigned apportioned outside this state if 
35.5 	conducted wholly without this state and apportioned between this state and other states 
35.6 	and countries under this subdivision if conducted partly within and partly without this 
35.7 	state. For purposes of determining whether a trade or business is carried on exclusively 
35.8 	within or without this state:
35.9 	(a) A trade or business physically located exclusively within this state is nevertheless 
35.10 	carried on partly within and partly without this state if any of the principles set forth in 
35.11 	section 290.191 for the allocation of sales or receipts within or without this state when 
35.12 	applied to the taxpayer's situation result in the allocation of any sales or receipts without 
35.13 	this state.
35.14 	(b) A trade or business physically located exclusively without this state is 
35.15 	nevertheless carried on partly within and partly without this state if any of the principles 
35.16 	set forth in section 290.191 for the allocation of sales or receipts within or without this 
35.17 	state when applied to the taxpayer's situation result in the allocation of any sales or 
35.18 	receipts within this state. The jurisdiction to tax such a business under this chapter must 
35.19 	be determined in accordance with sections 290.014 and 290.015.

35.20 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
35.21 	December 31, 2011.

35.22 	Sec. 34. Minnesota Statutes 2010, section 290.17, subdivision 4, is amended to read:
35.23 		Subd. 4.Unitary business principle. (a) If a trade or business conducted wholly 
35.24 	within this state or partly within and partly without this state is part of a unitary business, 
35.25 	the entire income of the unitary business is subject to apportionment pursuant to section 
35.26 	290.191. Notwithstanding subdivision 2, paragraph (c), none of the income of a unitary 
35.27 	business is considered to be derived from any particular source and none may be allocated 
35.28 	to a particular place except as provided by the applicable apportionment formula. The 
35.29 	provisions of this subdivision do not apply to business income subject to subdivision 5, 
35.30 	income of an insurance company determined under section 290.341, or income of an 
35.31 	investment company determined under section 290.36.
35.32 	(b) The term "unitary business" means business activities or operations which 
35.33 	result in a flow of value between them. The term may be applied within a single legal 
35.34 	entity or between multiple entities and without regard to whether each entity is a sole 
35.35 	proprietorship, a corporation, a partnership or a trust.
36.1 	(c) Unity is presumed whenever there is unity of ownership, operation, and use, 
36.2 	evidenced by centralized management or executive force, centralized purchasing, 
36.3 	advertising, accounting, or other controlled interaction, but the absence of these 
36.4 	centralized activities will not necessarily evidence a nonunitary business. Unity is also 
36.5 	presumed when business activities or operations are of mutual benefit, dependent upon or 
36.6 	contributory to one another, either individually or as a group.
36.7 	(d) Where a business operation conducted in Minnesota is owned by a business 
36.8 	entity that carries on business activity outside the state different in kind from that 
36.9 	conducted within this state, and the other business is conducted entirely outside the state, it 
36.10 	is presumed that the two business operations are unitary in nature, interrelated, connected, 
36.11 	and interdependent unless it can be shown to the contrary.
36.12 	(e) Unity of ownership is not deemed to exist when a corporation is involved unless 
36.13 	that corporation is a member of a group of two or more business entities and more than 50 
36.14 	percent of the voting stock of each member of the group is directly or indirectly owned 
36.15 	by a common owner or by common owners, either corporate or noncorporate, or by one 
36.16 	or more of the member corporations of the group. For this purpose, the term "voting 
36.17 	stock" shall include membership interests of mutual insurance holding companies formed 
36.18 	under section 66A.40.
36.19 	(f) The net income and apportionment factors under section 290.191 or 290.20 of 
36.20 	foreign corporations and other foreign entities which are part of a unitary business shall not 
36.21 	be included in the net income or the apportionment factors of the unitary business, except 
36.22 	that foreign corporations or other foreign entities that are included on a federal income tax 
36.23 	return must be included on the combined report. Income of a foreign partnership or other 
36.24 	foreign entity treated as a partnership included in federal taxable income, as defined in 
36.25 	section 63 of the Internal Revenue Code of 1986, as amended through the date named in 
36.26 	section 290.01, subdivision 19, and the proportionate amount of apportionment factors, 
36.27 	must be included in the combined report. A foreign corporation or other foreign entity 
36.28 	which is not included on a combined report and which is required to file a return under this 
36.29 	chapter shall file on a separate return basis. The net income and apportionment factors 
36.30 	under section 290.191 or 290.20 of foreign operating corporations shall not be included in 
36.31 	the net income or the apportionment factors of the unitary business except as provided in 
36.32 	paragraph (g).
36.33 	(g) The adjusted net income of a foreign operating corporation shall be deemed to 
36.34 	be paid as a dividend on the last day of its taxable year to each shareholder thereof, in 
36.35 	proportion to each shareholder's ownership, with which such corporation is engaged in 
37.1 	a unitary business. Such deemed dividend shall be treated as a dividend under section 
37.2 	290.21, subdivision 4.
37.3 	Dividends actually paid by a foreign operating corporation to a corporate shareholder 
37.4 	which is a member of the same unitary business as the foreign operating corporation shall 
37.5 	be eliminated from the net income of the unitary business in preparing a combined report 
37.6 	for the unitary business. The adjusted net income of a foreign operating corporation 
37.7 	shall be its net income adjusted as follows:
37.8 	(1) any taxes paid or accrued to a foreign country, the commonwealth of Puerto 
37.9 	Rico, or a United States possession or political subdivision of any of the foregoing shall 
37.10 	be a deduction; and
37.11 	(2) the subtraction from federal taxable income for payments received from foreign 
37.12 	corporations or foreign operating corporations under section 290.01, subdivision 19d, 
37.13 	clause (10), shall not be allowed.
37.14 	If a foreign operating corporation incurs a net loss, neither income nor deduction 
37.15 	from that corporation shall be included in determining the net income of the unitary 
37.16 	business.
37.17 	(h) (g) For purposes of determining the net income of a unitary business and the 
37.18 	factors to be used in the apportionment of net income pursuant to section 290.191 or 
37.19 	290.20, there must be included only the income and apportionment factors of domestic 
37.20 	corporations or other domestic entities other than foreign operating corporations that are 
37.21 	determined to be part of the unitary business pursuant to this subdivision, notwithstanding 
37.22 	that foreign corporations or other foreign entities might be included in the unitary 
37.23 	business, except that foreign corporations or other foreign entities that are included on a 
37.24 	federal income tax return must be included on the combined report. Income of a foreign 
37.25 	partnership or other foreign entity treated as a partnership included in federal taxable 
37.26 	income, as defined in section 63 of the Internal Revenue Code of 1986, as amended 
37.27 	through the date named in section 290.01, subdivision 19, and the proportionate amount of 
37.28 	apportionment factors, must be included in the combined report.
37.29 	(i) Deductions for expenses, interest, or taxes otherwise allowable under this chapter 
37.30 	that are connected with or allocable against dividends, deemed dividends described 
37.31 	in paragraph (g), or royalties, fees, or other like income described in section 290.01, 
37.32 	subdivision 19d, clause (10), shall not be disallowed.
37.33 	(j) (h) Each corporation or other entity, except a sole proprietorship, that is part of 
37.34 	a unitary business must file combined reports as the commissioner determines. On the 
37.35 	reports, all intercompany transactions between entities included pursuant to paragraph 
37.36 	(h) (g) must be eliminated and the entire net income of the unitary business determined in 
38.1 	accordance with this subdivision is apportioned among the entities by using each entity's 
38.2 	Minnesota factors for apportionment purposes in the numerators of the apportionment 
38.3 	formula and the total factors for apportionment purposes of all entities included pursuant 
38.4 	to paragraph (h) (g) in the denominators of the apportionment formula. All sales of the 
38.5 	unitary business made within Minnesota pursuant to section 290.191 or 290.20 must be 
38.6 	included on the separate combined report of a corporation that is a member of the unitary 
38.7 	business and is subject to the jurisdiction of this state to impose tax under this chapter.
38.8 	(k) (i) If a corporation has been divested from a unitary business and is included in a 
38.9 	combined report for a fractional part of the common accounting period of the combined 
38.10 	report:
38.11 	(1) its income includable in the combined report is its income incurred for that part 
38.12 	of the year determined by proration or separate accounting; and
38.13 	(2) its sales, property, and payroll included in the apportionment formula must 
38.14 	be prorated or accounted for separately.

38.15 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
38.16 	December 31, 2010, except that the new language added to paragraph (f) and the new 
38.17 	language added to the new paragraph (g) are effective for taxable years beginning after 
38.18 	December 31, 2011.

38.19 	Sec. 35. Minnesota Statutes 2010, section 290.191, subdivision 2, is amended to read:
38.20 		Subd. 2.Apportionment formula of general application. (a) Except for those 
38.21 	trades or businesses required to use a different formula under subdivision 3 or section 
38.22 	290.341 or 290.36, and for those trades or businesses that receive permission to use some 
38.23 	other method under section 290.20 or under subdivision 4, a trade or business required 
38.24 	to apportion its net income must apportion its income to this state on the basis of the 
38.25 	percentage obtained by taking the sum of:
38.26 	(1) the percent for the sales factor under paragraph (b) of the percentage which 
38.27 	the sales made within this state in connection with the trade or business during the tax 
38.28 	period are of the total sales wherever made in connection with the trade or business during 
38.29 	the tax period;
38.30 	(2) the percent for the property factor under paragraph (b) of the percentage which 
38.31 	the total tangible property used by the taxpayer in this state in connection with the trade or 
38.32 	business during the tax period is of the total tangible property, wherever located, used by 
38.33 	the taxpayer in connection with the trade or business during the tax period; and
38.34 	(3) the percent for the payroll factor under paragraph (b) of the percentage which 
38.35 	the taxpayer's total payrolls paid or incurred in this state or paid in respect to labor 
39.1 	performed in this state in connection with the trade or business during the tax period are 
39.2 	of the taxpayer's total payrolls paid or incurred in connection with the trade or business 
39.3 	during the tax period.
39.4 	(b) For purposes of paragraph (a) and subdivision 3, the following percentages apply 
39.5 	for the taxable years specified:

39.6
39.7	Taxable years beginning 
during calendar year
		Sales factor 
percent
		Property factor 
percent
		Payroll factor
percent
	
39.8	2007
			78
			11
		11
	
39.9	2008
			81
			9.5
		9.5
	
39.10	2009
			84
			8
		8
	
39.11	2010
			87
			6.5
		6.5
	
39.12	2011
			90
			5
		5
	
39.13	2012
			93
			3.5
		3.5
	
39.14	2013
			96
			2
		2
	
39.15	2014 and later calendar years 
	100
			0
		0

39.16 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
39.17 	December 31, 2010.

39.18 	Sec. 36. Minnesota Statutes 2010, section 290.191, subdivision 5, is amended to read:
39.19 		Subd. 5.Determination of sales factor. For purposes of this section, the following 
39.20 	rules apply in determining the sales factor.
39.21 	(a) The sales factor includes all sales, gross earnings, or receipts received in the 
39.22 	ordinary course of the business, except that the following types of income are not included 
39.23 	in the sales factor:
39.24 	(1) interest;
39.25 	(2) dividends;
39.26 	(3) sales of capital assets as defined in section 1221 of the Internal Revenue Code;
39.27 	(4) sales of property used in the trade or business, except sales of leased property of 
39.28 	a type which is regularly sold as well as leased; and
39.29 	(5) sales of debt instruments as defined in section 1275(a)(1) of the Internal Revenue 
39.30 	Code or sales of stock; and.
39.31 	(6) royalties, fees, or other like income of a type which qualify for a subtraction from 
39.32 	federal taxable income under section 290.01, subdivision 19d(10).
39.33 	(b) Sales of tangible personal property are made within this state if the property is 
39.34 	received by a purchaser at a point within this state, and the taxpayer is taxable in this state, 
39.35 	regardless of the f.o.b. point, other conditions of the sale, or the ultimate destination 
39.36 	of the property.
40.1 	(c) Tangible personal property delivered to a common or contract carrier or foreign 
40.2 	vessel for delivery to a purchaser in another state or nation is a sale in that state or nation, 
40.3 	regardless of f.o.b. point or other conditions of the sale.
40.4 	(d) Notwithstanding paragraphs (b) and (c), when intoxicating liquor, wine, 
40.5 	fermented malt beverages, cigarettes, or tobacco products are sold to a purchaser who is 
40.6 	licensed by a state or political subdivision to resell this property only within the state of 
40.7 	ultimate destination, the sale is made in that state.
40.8 	(e) Sales made by or through a corporation that is qualified as a domestic 
40.9 	international sales corporation under section 992 of the Internal Revenue Code are not 
40.10 	considered to have been made within this state.
40.11 	(f) Sales, rents, royalties, and other income in connection with real property is 
40.12 	attributed to the state in which the property is located.
40.13 	(g) Receipts from the lease or rental of tangible personal property, including finance 
40.14 	leases and true leases, must be attributed to this state if the property is located in this 
40.15 	state and to other states if the property is not located in this state. Receipts from the 
40.16 	lease or rental of moving property including, but not limited to, motor vehicles, rolling 
40.17 	stock, aircraft, vessels, or mobile equipment are included in the numerator of the receipts 
40.18 	factor to the extent that the property is used in this state. The extent of the use of moving 
40.19 	property is determined as follows:
40.20 	(1) A motor vehicle is used wholly in the state in which it is registered.
40.21 	(2) The extent that rolling stock is used in this state is determined by multiplying 
40.22 	the receipts from the lease or rental of the rolling stock by a fraction, the numerator of 
40.23 	which is the miles traveled within this state by the leased or rented rolling stock and the 
40.24 	denominator of which is the total miles traveled by the leased or rented rolling stock.
40.25 	(3) The extent that an aircraft is used in this state is determined by multiplying the 
40.26 	receipts from the lease or rental of the aircraft by a fraction, the numerator of which is 
40.27 	the number of landings of the aircraft in this state and the denominator of which is the 
40.28 	total number of landings of the aircraft.
40.29 	(4) The extent that a vessel, mobile equipment, or other mobile property is used in 
40.30 	the state is determined by multiplying the receipts from the lease or rental of the property 
40.31 	by a fraction, the numerator of which is the number of days during the taxable year the 
40.32 	property was in this state and the denominator of which is the total days in the taxable year.
40.33 	(h) Royalties and other income not described in paragraph (a), clause (6), received 
40.34 	for the use of or for the privilege of using intangible property, including patents, 
40.35 	know-how, formulas, designs, processes, patterns, copyrights, trade names, service names, 
40.36 	franchises, licenses, contracts, customer lists, or similar items, must be attributed to the 
41.1 	state in which the property is used by the purchaser. If the property is used in more 
41.2 	than one state, the royalties or other income must be apportioned to this state pro rata 
41.3 	according to the portion of use in this state. If the portion of use in this state cannot be 
41.4 	determined, the royalties or other income must be excluded from both the numerator 
41.5 	and the denominator. Intangible property is used in this state if the purchaser uses the 
41.6 	intangible property or the rights therein in the regular course of its business operations in 
41.7 	this state, regardless of the location of the purchaser's customers.
41.8 	(i) Sales of intangible property are made within the state in which the property is 
41.9 	used by the purchaser. If the property is used in more than one state, the sales must be 
41.10 	apportioned to this state pro rata according to the portion of use in this state. If the 
41.11 	portion of use in this state cannot be determined, the sale must be excluded from both the 
41.12 	numerator and the denominator of the sales factor. Intangible property is used in this 
41.13 	state if the purchaser used the intangible property in the regular course of its business 
41.14 	operations in this state.
41.15 	(j) Receipts from the performance of services must be attributed to the state where 
41.16 	the services are received. For the purposes of this section, receipts from the performance 
41.17 	of services provided to a corporation, partnership, or trust may only be attributed to a state 
41.18 	where it has a fixed place of doing business. If the state where the services are received is 
41.19 	not readily determinable or is a state where the corporation, partnership, or trust receiving 
41.20 	the service does not have a fixed place of doing business, the services shall be deemed 
41.21 	to be received at the location of the office of the customer from which the services were 
41.22 	ordered in the regular course of the customer's trade or business. If the ordering office 
41.23 	cannot be determined, the services shall be deemed to be received at the office of the 
41.24 	customer to which the services are billed.
41.25 	(k) For the purposes of this subdivision and subdivision 6, paragraph (l), receipts 
41.26 	from management, distribution, or administrative services performed by a corporation 
41.27 	or trust for a fund of a corporation or trust regulated under United States Code, title 15, 
41.28 	sections 80a-1 through 80a-64, must be attributed to the state where the shareholder of 
41.29 	the fund resides. Under this paragraph, receipts for services attributed to shareholders are 
41.30 	determined on the basis of the ratio of: (1) the average of the outstanding shares in the 
41.31 	fund owned by shareholders residing within Minnesota at the beginning and end of each 
41.32 	year; and (2) the average of the total number of outstanding shares in the fund at the 
41.33 	beginning and end of each year. Residence of the shareholder, in the case of an individual, 
41.34 	is determined by the mailing address furnished by the shareholder to the fund. Residence 
41.35 	of the shareholder, when the shares are held by an insurance company as a depositor for 
41.36 	the insurance company policyholders, is the mailing address of the policyholders. In 
42.1 	the case of an insurance company holding the shares as a depositor for the insurance 
42.2 	company policyholders, if the mailing address of the policyholders cannot be determined 
42.3 	by the taxpayer, the receipts must be excluded from both the numerator and denominator. 
42.4 	Residence of other shareholders is the mailing address of the shareholder.

42.5 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
42.6 	December 31, 2010.

42.7 	Sec. 37. Minnesota Statutes 2010, section 290.21, subdivision 4, is amended to read:
42.8 		Subd. 4.Dividends received from another corporation. (a)(1) Eighty percent 
42.9 	of dividends received by a corporation during the taxable year from another corporation, 
42.10 	in which the recipient owns 20 percent or more of the stock, by vote and value, not 
42.11 	including stock described in section 1504(a)(4) of the Internal Revenue Code when the 
42.12 	corporate stock with respect to which dividends are paid does not constitute the stock in 
42.13 	trade of the taxpayer or would not be included in the inventory of the taxpayer, or does not 
42.14 	constitute property held by the taxpayer primarily for sale to customers in the ordinary 
42.15 	course of the taxpayer's trade or business, or when the trade or business of the taxpayer 
42.16 	does not consist principally of the holding of the stocks and the collection of the income 
42.17 	and gains therefrom; and
42.18 	(2)(i) the remaining 20 percent of dividends if the dividends received are the stock in 
42.19 	an affiliated company transferred in an overall plan of reorganization and the dividend 
42.20 	is eliminated in consolidation under Treasury Department Regulation 1.1502-14(a), as 
42.21 	amended through December 31, 1989;
42.22 	(ii) the remaining 20 percent of dividends if the dividends are received from a 
42.23 	corporation which is subject to tax under section 290.341 or290.36 and which is a 
42.24 	member of an affiliated group of corporations as defined by the Internal Revenue Code 
42.25 	and the dividend is eliminated in consolidation under Treasury Department Regulation 
42.26 	1.1502-14(a), as amended through December 31, 1989, or is deducted under an election 
42.27 	under section 243(b) of the Internal Revenue Code; or
42.28 	(iii) the remaining 20 percent of the dividends if the dividends are received from a 
42.29 	property and casualty insurer as defined under section 60A.60, subdivision 8, which is a 
42.30 	member of an affiliated group of corporations as defined by the Internal Revenue Code 
42.31 	and either: (A) the dividend is eliminated in consolidation under Treasury Regulation 
42.32 	1.1502-14(a), as amended through December 31, 1989; or (B) the dividend is deducted 
42.33 	under an election under section 243(b) of the Internal Revenue Code.
42.34 	(b) Seventy percent of dividends received by a corporation during the taxable year 
42.35 	from another corporation in which the recipient owns less than 20 percent of the stock, 
43.1 	by vote or value, not including stock described in section 1504(a)(4) of the Internal 
43.2 	Revenue Code when the corporate stock with respect to which dividends are paid does not 
43.3 	constitute the stock in trade of the taxpayer, or does not constitute property held by the 
43.4 	taxpayer primarily for sale to customers in the ordinary course of the taxpayer's trade or 
43.5 	business, or when the trade or business of the taxpayer does not consist principally of the 
43.6 	holding of the stocks and the collection of income and gain therefrom.
43.7 	(c) The dividend deduction provided in this subdivision shall be allowed only with 
43.8 	respect to dividends that are included in a corporation's Minnesota taxable net income 
43.9 	for the taxable year.
43.10 	The dividend deduction provided in this subdivision does not apply to a dividend 
43.11 	from a corporation which, for the taxable year of the corporation in which the distribution 
43.12 	is made or for the next preceding taxable year of the corporation, is a corporation exempt 
43.13 	from tax under section 501 of the Internal Revenue Code.
43.14 	The dividend deduction provided in this subdivision does not apply to a dividend 
43.15 	received from a real estate investment trust, as defined in section 856 of the Internal 
43.16 	Revenue Code.
43.17 	The dividend deduction provided in this subdivision applies to the amount of 
43.18 	regulated investment company dividends only to the extent determined under section 
43.19 	854(b) of the Internal Revenue Code.
43.20 	The dividend deduction provided in this subdivision shall not be allowed with 
43.21 	respect to any dividend for which a deduction is not allowed under the provisions of 
43.22 	section 246(c) of the Internal Revenue Code.
43.23 	(d) If dividends received by a corporation that does not have nexus with Minnesota 
43.24 	under the provisions of Public Law 86-272 are included as income on the return of 
43.25 	an affiliated corporation permitted or required to file a combined report under section 
43.26 	290.17, subdivision 4, or 290.34, subdivision 2, then for purposes of this subdivision the 
43.27 	determination as to whether the trade or business of the corporation consists principally 
43.28 	of the holding of stocks and the collection of income and gains therefrom shall be made 
43.29 	with reference to the trade or business of the affiliated corporation having a nexus with 
43.30 	Minnesota.
43.31 	(e) The deduction provided by this subdivision does not apply if the dividends are 
43.32 	paid by a FSC as defined in section 922 of the Internal Revenue Code.
43.33 	(f) If one or more of the members of the unitary group whose income is included on 
43.34 	the combined report received a dividend, the deduction under this subdivision for each 
43.35 	member of the unitary business required to file a return under this chapter is the product 
43.36 	of: (1) 100 percent of the dividends received by members of the group; (2) the percentage 
44.1 	allowed pursuant to paragraph (a) or (b); and (3) the percentage of the taxpayer's business 
44.2 	income apportionable to this state for the taxable year under section 290.191 or 290.20.

44.3 	EFFECTIVE DATE. The changes made to paragraph (a) are effective for taxable 
44.4 	years beginning after December 31, 2010, and the changes made to paragraph (c) are 
44.5 	effective for taxable years beginning after December 31, 2011.

44.6 	Sec. 38. [290.341] INSURANCE COMPANIES; REPORT OF NET INCOME; 
44.7 	COMPUTATION OF AMOUNT OF INCOME ALLOCABLE TO STATE.
44.8 		Subdivision 1.Computation of net income. (a) The net income of insurance 
44.9 	companies taxable under this chapter is computed as follows.
44.10 	(b) Each life insurance company must report to the commissioner the life insurance 
44.11 	company taxable net income as defined in section 801(b) of the Internal Revenue Code, 
44.12 	incorporating any elections made by the taxpayer in determining life insurance company 
44.13 	taxable income for federal income tax purposes.
44.14 	(c) Each insurance company other than a life insurance company must report to the 
44.15 	commissioner its federal taxable income as defined in section 832 of the Internal Revenue 
44.16 	Code, or its taxable investment income as defined in section 832 of the Internal Revenue 
44.17 	Code, incorporating any elections made by the taxpayer in accordance with the Internal 
44.18 	Revenue Code in determining federal taxable income or taxable investment income for 
44.19 	federal income tax purposes.
44.20 	(d) The life insurance company taxable net income, federal taxable income, or 
44.21 	taxable investment income so reported is subject to the modifications provided in section 
44.22 	290.01, subdivisions 19c to 19f.
44.23 		Subd. 2.Apportionment of taxable net income. (a) The commissioner shall 
44.24 	compute from net income the taxable net income of insurance companies by apportioning 
44.25 	to this state net income on the ratio of gross premiums collected by them during the 
44.26 	taxable year from old and new business within this state, including reinsurance premiums, 
44.27 	to the total gross premiums collected by them during that year from their entire old and 
44.28 	new business, including reinsurance premiums; the commissioner shall add to the taxable 
44.29 	net income so apportioned to this state the amount of any taxes on premiums paid by the 
44.30 	company by virtue of any law of this state, other than the surcharge on premiums imposed 
44.31 	by section 297I.06 and the surcharge imposed by section 168A.40, subdivision 3, which 
44.32 	shall have been deducted from gross income by the company in arriving at its total net 
44.33 	income under the provisions of section 810(b) or 832 of the Internal Revenue Code.
44.34 	(b) For purposes of determining the Minnesota apportionment percentage, premiums 
44.35 	from reinsurance contracts in connection with property in or liability arising out of 
45.1 	activity in, or in connection with the lives or health of Minnesota residents must be 
45.2 	attributed to Minnesota and premiums from reinsurance contracts in connection with 
45.3 	property in or liability arising out of activity in, or in connection with the lives or health of 
45.4 	non-Minnesota residents must be attributed outside of Minnesota. Reinsurance premiums 
45.5 	are presumed to be received for a Minnesota risk and are assigned to Minnesota, if:
45.6 	(1) the reinsurance contract is assumed for a company domiciled in Minnesota; and
45.7 	(2) the taxpayer, upon request of the commissioner, fails to provide reliable records 
45.8 	indicating the reinsured contract covered non-Minnesota risks.
45.9 	For purposes of this paragraph, "Minnesota risk" means coverage in connection with 
45.10 	property in or liability arising out of activity in Minnesota, or in connection with the lives 
45.11 	or health of Minnesota residents.
45.12 	(c) The apportionment method prescribed by paragraph (b) must be presumed to 
45.13 	fairly and correctly determine the taxpayer's taxable net income. If the method prescribed 
45.14 	in paragraph (b) does not fairly reflect all or any part of taxable net income, the taxpayer 
45.15 	may petition for or the commissioner may require the determination of taxable net 
45.16 	income by use of another method if that method fairly reflects taxable net income. A 
45.17 	petition within the meaning of this section must be filed by the taxpayer on a form as the 
45.18 	commissioner requires.
45.19 		Subd. 3.Credit. An insurance company shall receive a credit against the tax 
45.20 	computed under sections 290.06, subdivision 1, and 290.0921, equal to any taxes based 
45.21 	on premiums imposed by section 297I.05 and paid by the insurance company that are 
45.22 	attributable to the period for which the tax under this chapter is imposed.
45.23 		Subd. 4.Guaranty association assessment offset. (a) An insurance company may 
45.24 	offset against its corporate franchise tax liability under this chapter any amount paid 
45.25 	pursuant to assessments made for insolvencies which occur after December 31, 2010, 
45.26 	under chapter 60C, and any amount paid pursuant to assessments made after December 
45.27 	31, 2010, under chapter 61B, as follows.
45.28 	(b) Each such assessment must give rise to an amount of offset equal to 20 percent 
45.29 	of the amount of the assessment for each of the five calendar years following the year in 
45.30 	which the assessment was paid.
45.31 	(c) The amount of offset initially determined for each taxable year is the sum of the 
45.32 	amounts determined under paragraph (b) for that taxable year.
45.33 	(d) Each year the commissioner of revenue shall compare total guaranty association 
45.34 	assessments levied over the preceding five calendar years to the sum of all premium 
45.35 	tax and corporate franchise tax revenues collected from insurance companies without 
45.36 	reduction for any guaranty association assessment offset in the preceding calendar year, 
46.1 	referred to in this subdivision as "preceding year insurance tax revenues." If total guaranty 
46.2 	association assessments levied over the preceding five years exceed the preceding year 
46.3 	insurance tax revenues, insurance companies are allowed only a proportionate part of the 
46.4 	corporate franchise tax offset calculated under paragraph (c) for the current calendar 
46.5 	year. The proportionate part of the corporate franchise tax offset allowed in the current 
46.6 	calendar year is determined by multiplying the amount calculated under paragraph (c) by a 
46.7 	fraction, the numerator of which equals the preceding year insurance tax revenues and 
46.8 	the denominator of which equals total guaranty association assessments levied over the 
46.9 	preceding five-year period. The proportionate part of the premium tax offset that is not 
46.10 	allowed is carried forward to subsequent tax years and added to the amount of corporate 
46.11 	franchise tax offset calculated under paragraph (c) before application of the limitation 
46.12 	imposed by this paragraph. Any amount carried forward from prior years must be allowed 
46.13 	before allowance of the offset for the current year calculated under paragraph (c). The 
46.14 	corporate franchise tax offset limitation must be calculated separately for (1) insurance 
46.15 	companies subject to assessment under chapter 60C, and (2) insurance companies subject 
46.16 	to assessment under chapter 61B. When the corporate franchise tax offset is limited by 
46.17 	this provision, the commissioner of revenue shall notify affected insurance companies 
46.18 	before February 1 for purposes of filing premium and corporate franchise tax returns. The 
46.19 	guaranty associations created under chapters 60C and 61B must provide the commissioner 
46.20 	of revenue with the necessary information on guaranty association assessments. The 
46.21 	limitation in this paragraph is effective for offsets allowable in 2011 and thereafter.
46.22 	(e) If the offset determined by the application of paragraphs (b) and (c) exceeds the 
46.23 	greater of the insurance company's corporate franchise tax liability under this chapter prior 
46.24 	to allowance of the credit provided by subdivision 3 or its premium tax liability under 
46.25 	chapter 297I, then the insurance company may carry forward the excess, referred to in this 
46.26 	subdivision as the "carryforward credit," to subsequent taxable years. The carryforward 
46.27 	credit must be allowed as an offset against corporate franchise tax liability for the first 
46.28 	succeeding year to the extent that the corporate franchise tax liability for that year exceeds 
46.29 	the amount of the allowable offset for the year determined under paragraphs (b) and (c). 
46.30 	The carryforward credit must be reduced, but not below zero, by the greater of the amount 
46.31 	of the carryforward credit allowed as an offset against the corporate franchise tax pursuant 
46.32 	to this paragraph or the amount of the carryforward credit allowed as an offset against the 
46.33 	insurance company's premium tax liability under chapter 297I pursuant to section 297I.20, 
46.34 	subdivision 1, paragraph (b), clause (4). The remainder, if any, of the carryforward credit 
46.35 	must be carried forward to succeeding taxable years until the entire carryforward credit 
47.1 	has been credited against the insurance company's liability for corporate franchise tax 
47.2 	under this chapter and premium tax under chapter 297I.
47.3 	(f) A refund paid by the Minnesota life and health insurance guaranty association 
47.4 	to member insurers under section 61B.24, subdivision 6, with respect to an assessment 
47.5 	payment which has been offset against taxes must reduce the carryforward credit 
47.6 	determined under paragraph (e) and, if the refund exceeds the amount of the carryforward 
47.7 	credit, must be repaid by the insurers to the extent of the offset to the state in the manner 
47.8 	the commissioner of revenue requires.

47.9 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
47.10 	December 31, 2010.

47.11 	Sec. 39. Minnesota Statutes 2010, section 290.9201, subdivision 11, is amended to 
47.12 	read:
47.13 		Subd. 11.Exception Exemption from withholding for public speakers and tax.
 47.14 	The provisions of (a) Subdivisions 7 and 8 shall not be effective for do not apply to:
47.15 	(1) compensation paid to nonresident public speakers, if the compensation paid to 
47.16 	the speaker is less than $2,000 or is only a payment of the speaker's expenses.; or
47.17 	(2) compensation paid to an entertainment entity if the compensation paid to the 
47.18 	entertainment entity is less than $600.
47.19 	(b) Compensation paid to a public speaker or an entertainment entity that is not 
47.20 	subject to withholding tax under this subdivision is not subject to tax under subdivision 2 
47.21 	unless the total compensation received by the public speaker or entertainment entity in the 
47.22 	tax year exceeds the individual income tax filing requirements for a nonresident individual 
47.23 	under section 289A.08, subdivision 1, paragraph (a), clause (1).

47.24 	EFFECTIVE DATE. This section is effective for compensation paid or received 
47.25 	after December 31, 2011.

47.26 	Sec. 40. Minnesota Statutes 2010, section 291.005, subdivision 1, is amended to read:
47.27 		Subdivision 1.Scope. Unless the context otherwise clearly requires, the following 
47.28 	terms used in this chapter shall have the following meanings:
47.29 	(1) "Commissioner" means the commissioner of revenue or any person to whom the 
47.30 	commissioner has delegated functions under this chapter.
47.31 	(2) "Federal gross estate" means the gross estate of a decedent as required to be 
47.32 	valued and otherwise determined for federal estate tax purposes under the Internal 
47.33 	Revenue Code.
48.1 	(3) "Internal Revenue Code" means the United States Internal Revenue Code of 
48.2 	1986, as amended through March 18, 2010, but without regard to the provisions of 
48.3 	sections 501 and 901 of Public Law 107-16.
48.4 	(4) "Minnesota adjusted taxable estate" means federal adjusted taxable estate as 
48.5 	defined by section 2011(b)(3) of the Internal Revenue Code, increased by the amount of 
48.6 	deduction for state death taxes allowed under section 2058 of the Internal Revenue Code.
48.7 	(5) "Minnesota gross estate" means the federal gross estate of a decedent after (a) 
48.8 	excluding therefrom any property included therein which has its situs outside Minnesota, 
48.9 	and (b) including therein any property omitted from the federal gross estate which is 
48.10 	includable therein, has its situs in Minnesota, and was not disclosed to federal taxing 
48.11 	authorities.
48.12 	(6) "Nonresident decedent" means an individual whose domicile at the time of 
48.13 	death was not in Minnesota.
48.14 	(7) "Personal representative" means the executor, administrator or other person 
48.15 	appointed by the court to administer and dispose of the property of the decedent. If there 
48.16 	is no executor, administrator or other person appointed, qualified, and acting within this 
48.17 	state, then any person in actual or constructive possession of any property having a situs in 
48.18 	this state which is included in the federal gross estate of the decedent shall be deemed 
48.19 	to be a personal representative to the extent of the property and the Minnesota estate tax 
48.20 	due with respect to the property.
48.21 	(8) "Resident decedent" means an individual whose domicile at the time of death 
48.22 	was in Minnesota.
48.23 	(9) "Situs of property" means, with respect to real property, the state or country in 
48.24 	which it is located; with respect to tangible personal property, the state or country in which 
48.25 	it was normally kept or located at the time of the decedent's death; and with respect to 
48.26 	intangible personal property, the state or country in which the decedent was domiciled 
48.27 	at death. For a nonresident decedent with an ownership interest in a pass-through entity 
48.28 	with assets that include real or tangible personal property, situs of the real or tangible 
48.29 	personal property is determined as if the pass-through entity does not exist and the real 
48.30 	or tangible personal property is personally owned by the decedent. If the pass-through 
48.31 	entity is owned by a person or persons in addition to the decedent, ownership of the 
48.32 	property is attributed to the decedent in proportion to the decedent's capital ownership 
48.33 	share of the pass-through entity.
48.34 	(10) "Pass-through entity" includes the following: 
48.35 	(i) an entity electing S corporation status under section 1362 of the Internal Revenue 
48.36 	Code;
49.1 	(ii) an entity taxed as a partnership under subchapter K of the Internal Revenue Code;
49.2 	(iii) a single member limited liability company or similar entity, regardless of 
49.3 	whether it is taxed as an association or is disregarded for federal income tax purposes 
49.4 	under Code of Federal Regulations, title 26, section 301.7701-3; or
49.5 	(iv) a trust. 

49.6 	EFFECTIVE DATE. This section is effective for estates of decedents dying after 
49.7 	December 31, 2010.

49.8 	Sec. 41. Minnesota Statutes 2010, section 297I.20, subdivision 1, is amended to read:
49.9 		Subdivision 1.Guaranty association assessment offsets. (a) An insurance 
49.10 	company may offset against its premium tax liability to this state any amount paid 
49.11 	for assessments made for insolvencies which occur after July 31, 1994, under sections 
49.12 	60C.01 to 60C.22; and any amount paid for assessments made after July 31, 1994, under 
49.13 	Minnesota Statutes 1992, sections 61B.01 to 61B.16, or under sections 61B.18 to 61B.32
49.14 	as follows: 
49.15 	(1) Each such assessment shall give rise to an amount of offset equal to 20 percent 
49.16 	of the amount of the assessment for each of the five calendar years following the year in 
49.17 	which the assessment was paid.
49.18 	(2) The amount of offset initially determined for each taxable year is the sum of the 
49.19 	amounts determined under clause (1) for that taxable year.
49.20 	(b)(1) Each year the commissioner shall compare total guaranty association 
49.21 	assessments levied over the preceding five calendar years to the sum of all premium 
49.22 	tax and corporate franchise tax revenues collected from insurance companies, without 
49.23 	reduction for any guaranty association assessment offset in the preceding calendar year, 
49.24 	referred to in this subdivision as "preceding year insurance tax revenues."
49.25 	(2) If total guaranty association assessments levied over the preceding five years 
49.26 	exceed the preceding year insurance tax revenues, insurance companies must be allowed 
49.27 	only a proportionate part of the premium tax offset calculated under paragraph (a) for 
49.28 	the current calendar year.
49.29 	(3) The proportionate part of the premium tax offset allowed in the current calendar 
49.30 	year is determined by multiplying the amount calculated under paragraph (a) by a fraction. 
49.31 	The numerator of the fraction equals the preceding year insurance tax revenues, and its 
49.32 	denominator equals total guaranty association assessments levied over the preceding 
49.33 	five-year period.
49.34 	(4) The proportionate part of the premium tax offset that is not allowed must be 
49.35 	carried forward to subsequent tax years and added to the amount of premium tax offset 
50.1 	calculated under paragraph (a) prior to application of the limitation imposed by this 
50.2 	paragraph.
50.3 	(5) Any amount carried forward from prior years must be allowed before allowance 
50.4 	of the offset for the current year calculated under paragraph (a).
50.5 	(6) The premium tax offset limitation must be calculated separately for (i) insurance 
50.6 	companies subject to assessment under sections 60C.01 to 60C.22, and (ii) insurance 
50.7 	companies subject to assessment under Minnesota Statutes 1992, sections 61B.01 to 
50.8 	61B.16, or 61B.18 to 61B.32. 
50.9 	(7) When the premium tax offset is limited by this provision, the commissioner 
50.10 	shall notify affected insurance companies on a timely basis for purposes of completing 
50.11 	premium and corporate franchise tax returns.
50.12 	(8) The guaranty associations created under sections 60C.01 to 60C.22, Minnesota 
50.13 	Statutes 1992, sections 61B.01 to 61B.16, and 61B.18 to 61B.32, shall provide the 
50.14 	commissioner with the necessary information on guaranty association assessments. 
50.15 	(c)(1) If the offset determined by the application of paragraphs (a) and (b) exceeds 
50.16 	the greater of the insurance company's premium tax liability under this section or its 
50.17 	corporate franchise tax liability under chapter 290 prior to allowance of the credit for 
50.18 	premium taxes, then the insurance company may carry forward the excess, referred to in 
50.19 	this subdivision as the "carryforward credit" to subsequent taxable years.
50.20 	(2) The carryforward credit is allowed as an offset against premium tax liability for 
50.21 	the first succeeding year to the extent that the premium tax liability for that year exceeds 
50.22 	the amount of the allowable offset for the year determined under paragraphs (a) and (b).
50.23 	(3) The carryforward credit must be reduced, but not below zero, by the greater of 
50.24 	the amount of the carryforward credit allowed as an offset against the premium tax under 
50.25 	this paragraph or the amount of the carryforward credit allowed as an offset against the 
50.26 	insurance company's corporate franchise tax liability under section 290.341, subdivision 
50.27 	5. The remainder, if any, of the carryforward credit must be carried forward to succeeding 
50.28 	taxable years until the entire carryforward credit has been credited against the insurance 
50.29 	company's liability for premium tax under this chapter and corporate franchise tax under 
50.30 	chapter 290 if applicable for that taxable year.
50.31 	(d) When an insurer has offset against taxes its payment of an assessment of the 
50.32 	Minnesota Life and Health Guaranty Association, and the association pays the insurer 
50.33 	a refund with respect to the assessment under Minnesota Statutes 1992, section 61B.07, 
50.34 	subdivision 6, or 61B.24, subdivision 6, then the refund reduces the insurer's carryforward 
50.35 	credit under paragraph (c). If the refund exceeds the amount of the carryforward credit, 
51.1 	the excess amount must be repaid to the state by the insurers to the extent of the offset 
51.2 	in the manner the commissioner requires. 

51.3 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
51.4 	December 31, 2010.

51.5 	Sec. 42.  REPEALER.
 51.6 	(a) Minnesota Statutes 2010, section 290.01, subdivision 6b, is repealed.
51.7 	(b) Minnesota Statutes 2010, section 290.0678, is repealed.
51.8 	(c) Minnesota Statutes 2010, section 290.9201, subdivision 3, is repealed.

51.9 	EFFECTIVE DATE. Paragraph (a) is effective for taxable years beginning after 
51.10 	December 31, 2010. Paragraph (b) is effective for taxable years beginning after December 
51.11 	31, 2011. Paragraph (c) is effective for compensation received after December 31, 2011. 

51.12 	ARTICLE 2
51.13 	FEDERAL UPDATE

51.14 	Section 1. Minnesota Statutes 2010, section 289A.02, subdivision 7, as amended by 
51.15 	Laws 2011, chapter 8, section 1, is amended to read:
51.16 		Subd. 7.Internal Revenue Code. Unless specifically defined otherwise, for taxable 
51.17 	years beginning before January 1, 2010, and after December 31, 2010, "Internal Revenue 
51.18 	Code" means the Internal Revenue Code of 1986, as amended through March 18, 2010; 
51.19 	and for taxable years beginning after December 31, 2009, and before January 1, 2011, 
51.20 	"Internal Revenue Code" means the Internal Revenue Code of 1986, as amended through 
51.21 	December 31, 2010.

51.22 	EFFECTIVE DATE. This section is effective the day following final enactment.

51.23 	Sec. 2. Minnesota Statutes 2010, section 290.01, subdivision 19, as amended by Laws 
51.24 	2011, chapter 8, section 2, is amended to read:
51.25 		Subd. 19.Net income. The term "net income" means the federal taxable income, 
51.26 	as defined in section 63 of the Internal Revenue Code of 1986, as amended through the 
51.27 	date named in this subdivision, incorporating the federal effective dates of changes to the 
51.28 	Internal Revenue Code and any elections made by the taxpayer in accordance with the 
51.29 	Internal Revenue Code in determining federal taxable income for federal income tax 
51.30 	purposes, and with the modifications provided in subdivisions 19a to 19f.
52.1 	In the case of a regulated investment company or a fund thereof, as defined in section 
52.2 	851(a) or 851(g) of the Internal Revenue Code, federal taxable income means investment 
52.3 	company taxable income as defined in section 852(b)(2) of the Internal Revenue Code, 
52.4 	except that:
52.5 	(1) the exclusion of net capital gain provided in section 852(b)(2)(A) of the Internal 
52.6 	Revenue Code does not apply;
52.7 	(2) the deduction for dividends paid under section 852(b)(2)(D) of the Internal 
52.8 	Revenue Code must be applied by allowing a deduction for capital gain dividends and 
52.9 	exempt-interest dividends as defined in sections 852(b)(3)(C) and 852(b)(5) of the Internal 
52.10 	Revenue Code; and
52.11 	(3) the deduction for dividends paid must also be applied in the amount of any 
52.12 	undistributed capital gains which the regulated investment company elects to have treated 
52.13 	as provided in section 852(b)(3)(D) of the Internal Revenue Code.
52.14 	The net income of a real estate investment trust as defined and limited by section 
52.15 	856(a), (b), and (c) of the Internal Revenue Code means the real estate investment trust 
52.16 	taxable income as defined in section 857(b)(2) of the Internal Revenue Code.
52.17 	The net income of a designated settlement fund as defined in section 468B(d) of 
52.18 	the Internal Revenue Code means the gross income as defined in section 468B(b) of the 
52.19 	Internal Revenue Code.
52.20 	The Internal Revenue Code of 1986, as amended through March 18 December 31, 
52.21 	2010, shall be in effect for taxable years beginning after December 31, 1996, except 
52.22 	that for taxable years beginning after December 31, 2009, and before January 1, 2011, 
52.23 	"Internal Revenue Code" means the Internal Revenue Code of 1986, as amended through 
52.24 	December 31, 2010. The provisions of the act of January 22, 2010, Public Law 111-126, 
52.25 	to accelerate the benefits for charitable cash contributions for the relief of victims of the 
52.26 	Haitian earthquake, are effective at the same time it became effective for federal purposes 
52.27 	and apply to the subtraction under subdivision 19b, clause (6). The provisions of title II, 
52.28 	section 2112, of the act of September 27, 2010, Public Law 111-240, rollovers from 
52.29 	elective deferral plans to designated Roth accounts, are effective at the same time they 
52.30 	became effective for federal purposes and taxable rollovers are included in net income at 
52.31 	the same time they are included in gross income for federal purposes.
52.32 	Except as otherwise provided, references to the Internal Revenue Code in 
52.33 	subdivisions 19 to 19f mean the code in effect for purposes of determining net income for 
52.34 	the applicable year.

52.35 	EFFECTIVE DATE. This section is effective the day following final enactment.

53.1 	Sec. 3. Minnesota Statutes 2010, section 290.01, subdivision 19a, as amended by Laws 
53.2 	2011, chapter 8, section 3, is amended to read:
53.3 		Subd. 19a.Additions to federal taxable income. For individuals, estates, and 
53.4 	trusts, there shall be added to federal taxable income:
53.5 	(1)(i) interest income on obligations of any state other than Minnesota or a political 
53.6 	or governmental subdivision, municipality, or governmental agency or instrumentality 
53.7 	of any state other than Minnesota exempt from federal income taxes under the Internal 
53.8 	Revenue Code or any other federal statute; and
53.9 	(ii) exempt-interest dividends as defined in section 852(b)(5) of the Internal Revenue 
53.10 	Code, except:
53.11 	(A) the portion of the exempt-interest dividends exempt from state taxation under 
53.12 	the laws of the United States; and
53.13 	(B) the portion of the exempt-interest dividends derived from interest income 
53.14 	on obligations of the state of Minnesota or its political or governmental subdivisions, 
53.15 	municipalities, governmental agencies or instrumentalities, but only if the portion of the 
53.16 	exempt-interest dividends from such Minnesota sources paid to all shareholders represents 
53.17 	95 percent or more of the exempt-interest dividends, including any dividends exempt 
53.18 	under subitem (A), that are paid by the regulated investment company as defined in section 
53.19 	851(a) of the Internal Revenue Code, or the fund of the regulated investment company as 
53.20 	defined in section 851(g) of the Internal Revenue Code, making the payment; and
53.21 	(iii) for the purposes of items (i) and (ii), interest on obligations of an Indian tribal 
53.22 	government described in section 7871(c) of the Internal Revenue Code shall be treated as 
53.23 	interest income on obligations of the state in which the tribe is located;
53.24 	(2) the amount of income, sales and use, motor vehicle sales, or excise taxes paid or 
53.25 	accrued within the taxable year under this chapter and the amount of taxes based on net 
53.26 	income paid, sales and use, motor vehicle sales, or excise taxes paid to any other state or 
53.27 	to any province or territory of Canada, to the extent allowed as a deduction under section 
53.28 	63(d) of the Internal Revenue Code minus any addition that would have been required 
53.29 	under clause (20) if the taxpayer had claimed the standard deduction, but the addition may 
53.30 	not be more than the amount by which the itemized deductions as allowed under section 
53.31 	63(d) of the Internal Revenue Code exceeds the amount of the standard deduction as 
53.32 	defined in section 63(c) of the Internal Revenue Code, disregarding the amounts allowed 
53.33 	under sections 63(c)(1)(C) and 63(c)(1)(E) of the Internal Revenue Code. For the purpose 
53.34 	of this paragraph, the disallowance of itemized deductions under section 68 of the Internal 
53.35 	Revenue Code of 1986, income, sales and use, motor vehicle sales, or excise taxes are 
53.36 	the last itemized deductions disallowed;
54.1 	(3) the capital gain amount of a lump-sum distribution to which the special tax under 
54.2 	section 1122(h)(3)(B)(ii) of the Tax Reform Act of 1986, Public Law 99-514, applies;
54.3 	(4) the amount of income taxes paid or accrued within the taxable year under this 
54.4 	chapter and taxes based on net income paid to any other state or any province or territory 
54.5 	of Canada, to the extent allowed as a deduction in determining federal adjusted gross 
54.6 	income. For the purpose of this paragraph, income taxes do not include the taxes imposed 
54.7 	by sections 290.0922, subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729;
54.8 	(5) the amount of expense, interest, or taxes disallowed pursuant to section 290.10 
54.9 	other than expenses or interest used in computing net interest income for the subtraction 
54.10 	allowed under subdivision 19b, clause (1);
54.11 	(6) the amount of a partner's pro rata share of net income which does not flow 
54.12 	through to the partner because the partnership elected to pay the tax on the income under 
54.13 	section 6242(a)(2) of the Internal Revenue Code;
54.14 	(7) 80 percent of the depreciation deduction allowed under section 168(k) of the 
54.15 	Internal Revenue Code. For purposes of this clause, if the taxpayer has an activity that 
54.16 	in the taxable year generates a deduction for depreciation under section 168(k) and the 
54.17 	activity generates a loss for the taxable year that the taxpayer is not allowed to claim for 
54.18 	the taxable year, "the depreciation allowed under section 168(k)" for the taxable year is 
54.19 	limited to excess of the depreciation claimed by the activity under section 168(k) over the 
54.20 	amount of the loss from the activity that is not allowed in the taxable year. In succeeding 
54.21 	taxable years when the losses not allowed in the taxable year are allowed, the depreciation 
54.22 	under section 168(k) is allowed;
54.23 	(8) 80 percent of the amount by which the deduction allowed by section 179 of the 
54.24 	Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal 
54.25 	Revenue Code of 1986, as amended through December 31, 2003;
54.26 	(9) to the extent deducted in computing federal taxable income, the amount of the 
54.27 	deduction allowable under section 199 of the Internal Revenue Code;
54.28 	(10) for tax years beginning before January 1, 2013, the exclusion allowed under 
54.29 	section 139A of the Internal Revenue Code for federal subsidies for prescription drug 
54.30 	plans;
54.31 	(11) the amount of expenses disallowed under section 290.10, subdivision 2;
54.32 	(12) for taxable years beginning before January 1, 2010, and after December 31, 
54.33 	2010, the amount deducted for qualified tuition and related expenses under section 222 of 
54.34 	the Internal Revenue Code, to the extent deducted from gross income;
54.35 	(13) for taxable years beginning before January 1, 2010, and after December 31, 
54.36 	2010, the amount deducted for certain expenses of elementary and secondary school 
55.1 	teachers under section 62(a)(2)(D) of the Internal Revenue Code, to the extent deducted 
55.2 	from gross income;
55.3 	(14) the additional standard deduction for property taxes payable that is allowable 
55.4 	under section 63(c)(1)(C) of the Internal Revenue Code;
55.5 	(15) the additional standard deduction for qualified motor vehicle sales taxes 
55.6 	allowable under section 63(c)(1)(E) of the Internal Revenue Code;
55.7 	(16) discharge of indebtedness income resulting from reacquisition of business 
55.8 	indebtedness and deferred under section 108(i) of the Internal Revenue Code; and
55.9 	(17) the amount of unemployment compensation exempt from tax under section 
55.10 	85(c) of the Internal Revenue Code.; and
55.11 	(18) to the extent included in the computation of federal taxable income in taxable 
55.12 	years beginning after December 31, 2010, the amount of disallowed itemized deductions.
55.13 	(i) The amount of disallowed itemized deductions is equal to the lesser of:
55.14 	(A) three percent of the excess of the taxpayer's federal adjusted gross income 
55.15 	over the applicable amount; or 
55.16 	(B) 80 percent of the amount of the itemized deductions otherwise allowable to the 
55.17 	taxpayer under the Internal Revenue Code for the taxable year.
55.18 	(ii) The term "applicable amount" means $100,000, or $50,000 in the case of a 
55.19 	married individual filing a separate return. Each dollar amount shall be increased by 
55.20 	an amount equal to:
55.21 	(A) such dollar amount, multiplied by 
55.22 	(B) the cost-of-living adjustment determined under section 1(f)(3) of the Internal 
55.23 	Revenue Code for the calendar year in which the taxable year begins, by substituting 
55.24 	"calendar year 1990" for "calendar year 1992" in subparagraph (B) thereof.
55.25 	(iii) The term "itemized deductions" does not include:
55.26 	(A) the deduction for medical expenses under section 213 of the Internal Revenue 
55.27 	Code;
55.28 	(B) any deduction for investment interest as defined in section 163(d) of the Internal 
55.29 	Revenue Code; and
55.30 	(C) the deduction under section 165(a) of the Internal Revenue Code for casualty or 
55.31 	theft losses described in paragraph (2) or (3) of section 165(c) of the Internal Revenue 
55.32 	Code or for losses described in section 165(d) of the Internal Revenue Code;
55.33 	(19) to the extent included in federal taxable income in taxable years beginning after 
55.34 	December 31, 2010, the amount of disallowed personal exemptions for taxpayers with 
55.35 	federal adjusted gross income over the threshold amount.
56.1 	(i) The disallowed personal exemption amount is equal to the dollar amount of the 
56.2 	personal exemptions claimed by the taxpayer in the computation of federal taxable income 
56.3 	multiplied by the applicable percentage.
56.4 	(ii) "Applicable percentage" means two percentage points for each $2,500 (or 
56.5 	fraction thereof) by which the taxpayer's federal adjusted gross income for the taxable 
56.6 	year exceeds the threshold amount. In the case of a married individual filing a separate 
56.7 	return, the preceding sentence shall be applied by substituting "$1,250" for "$2,500." In no 
56.8 	event shall the applicable percentage exceed 100 percent.
56.9 	(iii) The term "threshold amount" means:
56.10 	(A) $150,000 in the case of a joint return or a surviving spouse;
56.11 	(B) $125,000 in the case of a head of a household;
56.12 	(C) $100,000 in the case of an individual who is not married and who is not a 
56.13 	surviving spouse or head of a household; and
56.14 	(D) $75,000 in the case of a married individual filing a separate return.
56.15 	(iv) The thresholds shall be increased by an amount equal to:
56.16 	(A) such dollar amount, multiplied by
56.17 	(B) the cost-of-living adjustment determined under section 1(f)(3) of the Internal 
56.18 	Revenue Code for the calendar year in which the taxable year begins, by substituting 
56.19 	"calendar year 1990" for "calendar year 1992" in subparagraph (B) thereof; and
56.20 	(20) to the extent deducted in the computation of federal taxable income, for taxable 
56.21 	years beginning after December 31, 2010, and before January 1, 2013, the difference 
56.22 	between the standard deduction allowed under section 63(a) of the Internal Revenue Code 
56.23 	and the standard deduction allowed for 2011 and 2012 under the Internal Revenue Code 
56.24 	as amended through December 1, 2010.

56.25 	EFFECTIVE DATE. This section is effective the day following final enactment.

56.26 	Sec. 4. Minnesota Statutes 2010, section 290.01, subdivision 19c, as amended by Laws 
56.27 	2011, chapter 8, section 4, is amended to read:
56.28 		Subd. 19c.Corporations; additions to federal taxable income. For corporations, 
56.29 	there shall be added to federal taxable income:
56.30 	(1) the amount of any deduction taken for federal income tax purposes for income, 
56.31 	excise, or franchise taxes based on net income or related minimum taxes, including but not 
56.32 	limited to the tax imposed under section 290.0922, paid by the corporation to Minnesota, 
56.33 	another state, a political subdivision of another state, the District of Columbia, or any 
56.34 	foreign country or possession of the United States;
57.1 	(2) interest not subject to federal tax upon obligations of: the United States, its 
57.2 	possessions, its agencies, or its instrumentalities; the state of Minnesota or any other 
57.3 	state, any of its political or governmental subdivisions, any of its municipalities, or any 
57.4 	of its governmental agencies or instrumentalities; the District of Columbia; or Indian 
57.5 	tribal governments;
57.6 	(3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal 
57.7 	Revenue Code;
57.8 	(4) the amount of any net operating loss deduction taken for federal income tax 
57.9 	purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss 
57.10 	deduction under section 810 of the Internal Revenue Code;
57.11 	(5) the amount of any special deductions taken for federal income tax purposes 
57.12 	under sections 241 to 247 and 965 of the Internal Revenue Code;
57.13 	(6) losses from the business of mining, as defined in section 290.05, subdivision 1, 
57.14 	clause (a), that are not subject to Minnesota income tax;
57.15 	(7) the amount of any capital losses deducted for federal income tax purposes under 
57.16 	sections 1211 and 1212 of the Internal Revenue Code;
57.17 	(8) the exempt foreign trade income of a foreign sales corporation under sections 
57.18 	921(a) and 291 of the Internal Revenue Code;
57.19 	(9) the amount of percentage depletion deducted under sections 611 through 614 and 
57.20 	291 of the Internal Revenue Code;
57.21 	(10) for certified pollution control facilities placed in service in a taxable year 
57.22 	beginning before December 31, 1986, and for which amortization deductions were elected 
57.23 	under section 169 of the Internal Revenue Code of 1954, as amended through December 
57.24 	31, 1985, the amount of the amortization deduction allowed in computing federal taxable 
57.25 	income for those facilities;
57.26 	(11) the amount of any deemed dividend from a foreign operating corporation 
57.27 	determined pursuant to section 290.17, subdivision 4, paragraph (g). The deemed dividend 
57.28 	shall be reduced by the amount of the addition to income required by clauses (20), (21), 
57.29 	(22), and (23);
57.30 	(12) the amount of a partner's pro rata share of net income which does not flow 
57.31 	through to the partner because the partnership elected to pay the tax on the income under 
57.32 	section 6242(a)(2) of the Internal Revenue Code;
57.33 	(13) the amount of net income excluded under section 114 of the Internal Revenue 
57.34 	Code;
57.35 	(14) any increase in subpart F income, as defined in section 952(a) of the Internal 
57.36 	Revenue Code, for the taxable year when subpart F income is calculated without regard to 
58.1 	the provisions of Division C, title III, section 303(b) of Public Law 110-343 section 750 
58.2 	of Public Law 111-312;
58.3 	(15) 80 percent of the depreciation deduction allowed under section 168(k)(1)(A) 
58.4 	and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if the taxpayer 
58.5 	has an activity that in the taxable year generates a deduction for depreciation under 
58.6 	section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable year 
58.7 	that the taxpayer is not allowed to claim for the taxable year, "the depreciation allowed 
58.8 	under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess of the 
58.9 	depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A) over the 
58.10 	amount of the loss from the activity that is not allowed in the taxable year. In succeeding 
58.11 	taxable years when the losses not allowed in the taxable year are allowed, the depreciation 
58.12 	under section 168(k)(1)(A) and (k)(4)(A) is allowed;
58.13 	(16) 80 percent of the amount by which the deduction allowed by section 179 of the 
58.14 	Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal 
58.15 	Revenue Code of 1986, as amended through December 31, 2003;
58.16 	(17) to the extent deducted in computing federal taxable income, the amount of the 
58.17 	deduction allowable under section 199 of the Internal Revenue Code;
58.18 	(18) for taxable years beginning before January 1, 2013, the exclusion allowed 
58.19 	under section 139A of the Internal Revenue Code for federal subsidies for prescription 
58.20 	drug plans;
58.21 	(19) the amount of expenses disallowed under section 290.10, subdivision 2;
58.22 	(20) an amount equal to the interest and intangible expenses, losses, and costs paid, 
58.23 	accrued, or incurred by any member of the taxpayer's unitary group to or for the benefit 
58.24 	of a corporation that is a member of the taxpayer's unitary business group that qualifies 
58.25 	as a foreign operating corporation. For purposes of this clause, intangible expenses and 
58.26 	costs include:
58.27 	(i) expenses, losses, and costs for, or related to, the direct or indirect acquisition, 
58.28 	use, maintenance or management, ownership, sale, exchange, or any other disposition of 
58.29 	intangible property;
58.30 	(ii) losses incurred, directly or indirectly, from factoring transactions or discounting 
58.31 	transactions;
58.32 	(iii) royalty, patent, technical, and copyright fees;
58.33 	(iv) licensing fees; and
58.34 	(v) other similar expenses and costs.
59.1 	For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent 
59.2 	applications, trade names, trademarks, service marks, copyrights, mask works, trade 
59.3 	secrets, and similar types of intangible assets.
59.4 	This clause does not apply to any item of interest or intangible expenses or costs paid, 
59.5 	accrued, or incurred, directly or indirectly, to a foreign operating corporation with respect 
59.6 	to such item of income to the extent that the income to the foreign operating corporation 
59.7 	is income from sources without the United States as defined in subtitle A, chapter 1, 
59.8 	subchapter N, part 1, of the Internal Revenue Code;
59.9 	(21) except as already included in the taxpayer's taxable income pursuant to clause 
59.10 	(20), any interest income and income generated from intangible property received or 
59.11 	accrued by a foreign operating corporation that is a member of the taxpayer's unitary 
59.12 	group. For purposes of this clause, income generated from intangible property includes:
59.13 	(i) income related to the direct or indirect acquisition, use, maintenance or 
59.14 	management, ownership, sale, exchange, or any other disposition of intangible property;
59.15 	(ii) income from factoring transactions or discounting transactions;
59.16 	(iii) royalty, patent, technical, and copyright fees;
59.17 	(iv) licensing fees; and
59.18 	(v) other similar income.
59.19 	For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent 
59.20 	applications, trade names, trademarks, service marks, copyrights, mask works, trade 
59.21 	secrets, and similar types of intangible assets.
59.22 	This clause does not apply to any item of interest or intangible income received or accrued 
59.23 	by a foreign operating corporation with respect to such item of income to the extent that 
59.24 	the income is income from sources without the United States as defined in subtitle A, 
59.25 	chapter 1, subchapter N, part 1, of the Internal Revenue Code;
59.26 	(22) the dividends attributable to the income of a foreign operating corporation that 
59.27 	is a member of the taxpayer's unitary group in an amount that is equal to the dividends 
59.28 	paid deduction of a real estate investment trust under section 561(a) of the Internal 
59.29 	Revenue Code for amounts paid or accrued by the real estate investment trust to the 
59.30 	foreign operating corporation;
59.31 	(23) the income of a foreign operating corporation that is a member of the taxpayer's 
59.32 	unitary group in an amount that is equal to gains derived from the sale of real or personal 
59.33 	property located in the United States;
59.34 	(24) for taxable years beginning before January 1, 2010, and after December 31, 
59.35 	2010, the additional amount allowed as a deduction for donation of computer technology 
60.1 	and equipment under section 170(e)(6) of the Internal Revenue Code, to the extent 
60.2 	deducted from taxable income; and
60.3 	(25) discharge of indebtedness income resulting from reacquisition of business 
60.4 	indebtedness and deferred under section 108(i) of the Internal Revenue Code.

60.5 	EFFECTIVE DATE. The changes to clauses (14) and (24) are effective for taxable 
60.6 	years beginning after December 31, 2009. The change to clause (18) is effective the 
60.7 	day following final enactment.

60.8 	Sec. 5. Minnesota Statutes 2010, section 290.01, subdivision 19d, is amended to read:
60.9 		Subd. 19d.Corporations; modifications decreasing federal taxable income. For 
60.10 	corporations, there shall be subtracted from federal taxable income after the increases 
60.11 	provided in subdivision 19c:
60.12 	(1) the amount of foreign dividend gross-up added to gross income for federal 
60.13 	income tax purposes under section 78 of the Internal Revenue Code;
60.14 	(2) the amount of salary expense not allowed for federal income tax purposes due to 
60.15 	claiming the work opportunity credit under section 51 of the Internal Revenue Code;
60.16 	(3) any dividend (not including any distribution in liquidation) paid within the 
60.17 	taxable year by a national or state bank to the United States, or to any instrumentality of 
60.18 	the United States exempt from federal income taxes, on the preferred stock of the bank 
60.19 	owned by the United States or the instrumentality;
60.20 	(4) amounts disallowed for intangible drilling costs due to differences between 
60.21 	this chapter and the Internal Revenue Code in taxable years beginning before January 
60.22 	1, 1987, as follows:
60.23 	(i) to the extent the disallowed costs are represented by physical property, an amount 
60.24 	equal to the allowance for depreciation under Minnesota Statutes 1986, section 290.09, 
60.25 	subdivision 7, subject to the modifications contained in subdivision 19e; and
60.26 	(ii) to the extent the disallowed costs are not represented by physical property, an 
60.27 	amount equal to the allowance for cost depletion under Minnesota Statutes 1986, section 
60.28 	290.09, subdivision 8;
60.29 	(5) the deduction for capital losses pursuant to sections 1211 and 1212 of the 
60.30 	Internal Revenue Code, except that:
60.31 	(i) for capital losses incurred in taxable years beginning after December 31, 1986, 
60.32 	capital loss carrybacks shall not be allowed;
60.33 	(ii) for capital losses incurred in taxable years beginning after December 31, 1986, 
60.34 	a capital loss carryover to each of the 15 taxable years succeeding the loss year shall be 
60.35 	allowed;
61.1 	(iii) for capital losses incurred in taxable years beginning before January 1, 1987, a 
61.2 	capital loss carryback to each of the three taxable years preceding the loss year, subject to 
61.3 	the provisions of Minnesota Statutes 1986, section 290.16, shall be allowed; and
61.4 	(iv) for capital losses incurred in taxable years beginning before January 1, 1987, 
61.5 	a capital loss carryover to each of the five taxable years succeeding the loss year to the 
61.6 	extent such loss was not used in a prior taxable year and subject to the provisions of 
61.7 	Minnesota Statutes 1986, section 290.16, shall be allowed;
61.8 	(6) an amount for interest and expenses relating to income not taxable for federal 
61.9 	income tax purposes, if (i) the income is taxable under this chapter and (ii) the interest and 
61.10 	expenses were disallowed as deductions under the provisions of section 171(a)(2), 265 or 
61.11 	291 of the Internal Revenue Code in computing federal taxable income;
61.12 	(7) in the case of mines, oil and gas wells, other natural deposits, and timber for 
61.13 	which percentage depletion was disallowed pursuant to subdivision 19c, clause (9), a 
61.14 	reasonable allowance for depletion based on actual cost. In the case of leases the deduction 
61.15 	must be apportioned between the lessor and lessee in accordance with rules prescribed 
61.16 	by the commissioner. In the case of property held in trust, the allowable deduction must 
61.17 	be apportioned between the income beneficiaries and the trustee in accordance with the 
61.18 	pertinent provisions of the trust, or if there is no provision in the instrument, on the basis 
61.19 	of the trust's income allocable to each;
61.20 	(8) for certified pollution control facilities placed in service in a taxable year 
61.21 	beginning before December 31, 1986, and for which amortization deductions were elected 
61.22 	under section 169 of the Internal Revenue Code of 1954, as amended through December 
61.23 	31, 1985, an amount equal to the allowance for depreciation under Minnesota Statutes 
61.24 	1986, section 290.09, subdivision 7;
61.25 	(9) amounts included in federal taxable income that are due to refunds of income, 
61.26 	excise, or franchise taxes based on net income or related minimum taxes paid by the 
61.27 	corporation to Minnesota, another state, a political subdivision of another state, the 
61.28 	District of Columbia, or a foreign country or possession of the United States to the extent 
61.29 	that the taxes were added to federal taxable income under section 290.01, subdivision 19c, 
61.30 	clause (1), in a prior taxable year;
61.31 	(10) 80 percent of royalties, fees, or other like income accrued or received from a 
61.32 	foreign operating corporation or a foreign corporation which is part of the same unitary 
61.33 	business as the receiving corporation, unless the income resulting from such payments or 
61.34 	accruals is income from sources within the United States as defined in subtitle A, chapter 
61.35 	1, subchapter N, part 1, of the Internal Revenue Code;
62.1 	(11) income or gains from the business of mining as defined in section 290.05, 
62.2 	subdivision 1, clause (a), that are not subject to Minnesota franchise tax;
62.3 	(12) the amount of disability access expenditures in the taxable year which are not 
62.4 	allowed to be deducted or capitalized under section 44(d)(7) of the Internal Revenue Code;
62.5 	(13) the amount of qualified research expenses not allowed for federal income tax 
62.6 	purposes under section 280C(c) of the Internal Revenue Code, but only to the extent that 
62.7 	the amount exceeds the amount of the credit allowed under section 290.068;
62.8 	(14) the amount of salary expenses not allowed for federal income tax purposes due 
62.9 	to claiming the Indian employment credit under section 45A(a) of the Internal Revenue 
62.10 	Code;
62.11 	(15) for a corporation whose foreign sales corporation, as defined in section 922 
62.12 	of the Internal Revenue Code, constituted a foreign operating corporation during any 
62.13 	taxable year ending before January 1, 1995, and a return was filed by August 15, 1996, 
62.14 	claiming the deduction under section 290.21, subdivision 4, for income received from 
62.15 	the foreign operating corporation, an amount equal to 1.23 multiplied by the amount of 
62.16 	income excluded under section 114 of the Internal Revenue Code, provided the income is 
62.17 	not income of a foreign operating company;
62.18 	(16) any decrease in subpart F income, as defined in section 952(a) of the Internal 
62.19 	Revenue Code, for the taxable year when subpart F income is calculated without regard to 
62.20 	the provisions of Division C, title III, section 303(b) of Public Law 110-343 section 750 
62.21 	of Public Law 111-312;
62.22 	(17) in each of the five tax years immediately following the tax year in which an 
62.23 	addition is required under subdivision 19c, clause (15), an amount equal to one-fifth of 
62.24 	the delayed depreciation. For purposes of this clause, "delayed depreciation" means the 
62.25 	amount of the addition made by the taxpayer under subdivision 19c, clause (15). The 
62.26 	resulting delayed depreciation cannot be less than zero;
62.27 	(18) in each of the five tax years immediately following the tax year in which an 
62.28 	addition is required under subdivision 19c, clause (16), an amount equal to one-fifth of 
62.29 	the amount of the addition; and
62.30 	(19) to the extent included in federal taxable income, discharge of indebtedness 
62.31 	income resulting from reacquisition of business indebtedness included in federal taxable 
62.32 	income under section 108(i) of the Internal Revenue Code. This subtraction applies only 
62.33 	to the extent that the income was included in net income in a prior year as a result of the 
62.34 	addition under section 290.01, subdivision 19c, clause (25).

62.35 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
62.36 	December 31, 2009.

63.1 	Sec. 6. Minnesota Statutes 2010, section 290.01, subdivision 31, as amended by Laws 
63.2 	2011, chapter 8, section 5, is amended to read:
63.3 		Subd. 31.Internal Revenue Code. Unless specifically defined otherwise, for 
63.4 	taxable years beginning before January 1, 2010, and after December 31, 2010, "Internal 
63.5 	Revenue Code" means the Internal Revenue Code of 1986, as amended through March 18, 
63.6 	2010; and for taxable years beginning after December 31, 2009, and before January 1, 
63.7 	2011, "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended 
63.8 	through December 31, 2010. Internal Revenue Code also includes any uncodified 
63.9 	provision in federal law that relates to provisions of the Internal Revenue Code that are 
63.10 	incorporated into Minnesota law. When used in this chapter, the reference to "subtitle A, 
63.11 	chapter 1, subchapter N, part 1, of the Internal Revenue Code" is to the Internal Revenue 
63.12 	Code as amended through March 18, 2010.

63.13 	EFFECTIVE DATE. This section is effective the day following final enactment 
63.14 	except that the changes incorporated by federal changes are effective at the same time as 
63.15 	the changes were effective for federal purposes.

63.16 	Sec. 7. Minnesota Statutes 2010, section 290.0671, subdivision 1, is amended to read:
63.17 		Subdivision 1.Credit allowed. (a) An individual is allowed a credit against the tax 
63.18 	imposed by this chapter equal to a percentage of earned income. To receive a credit, a 
63.19 	taxpayer must be eligible for a credit under section 32 of the Internal Revenue Code.
63.20 	(b) For individuals with no qualifying children, the credit equals 1.9125 percent of 
63.21 	the first $4,620 of earned income. The credit is reduced by 1.9125 percent of earned 
63.22 	income or adjusted gross income, whichever is greater, in excess of $5,770, but in no 
63.23 	case is the credit less than zero.
63.24 	(c) For individuals with one qualifying child, the credit equals 8.5 percent of the first 
63.25 	$6,920 of earned income and 8.5 percent of earned income over $12,080 but less than 
63.26 	$13,450. The credit is reduced by 5.73 percent of earned income or adjusted gross income, 
63.27 	whichever is greater, in excess of $15,080, but in no case is the credit less than zero.
63.28 	(d) For individuals with two or more qualifying children, the credit equals ten 
63.29 	percent of the first $9,720 of earned income and 20 percent of earned income over 
63.30 	$14,860 but less than $16,800. The credit is reduced by 10.3 percent of earned income 
63.31 	or adjusted gross income, whichever is greater, in excess of $17,890, but in no case is 
63.32 	the credit less than zero.
63.33 	(e) For a nonresident or part-year resident, the credit must be allocated based on the 
63.34 	percentage calculated under section 290.06, subdivision 2c, paragraph (e).
64.1 	(f) For a person who was a resident for the entire tax year and has earned income 
64.2 	not subject to tax under this chapter, including income excluded under section 290.01, 
64.3 	subdivision 19b, clause (9) or (15), the credit must be allocated based on the ratio of 
64.4 	federal adjusted gross income reduced by the earned income not subject to tax under 
64.5 	this chapter over federal adjusted gross income. For purposes of this paragraph, the 
64.6 	subtractions for military pay under section 290.01, subdivision 19b, clauses (10) and (11), 
64.7 	are not considered "earned income not subject to tax under this chapter."
64.8 	For the purposes of this paragraph, the exclusion of combat pay under section 112 
64.9 	of the Internal Revenue Code is not considered "earned income not subject to tax under 
64.10 	this chapter."
64.11 	(g) For tax years beginning after December 31, 2007, and before December 31, 
64.12 	2010, the $5,770 in paragraph (b), the $15,080 in paragraph (c), and the $17,890 in 
64.13 	paragraph (d), after being adjusted for inflation under subdivision 7, are each increased by 
64.14 	$3,000 for married taxpayers filing joint returns. For tax years beginning after December 
64.15 	31, 2008, the commissioner shall annually adjust the $3,000 by the percentage determined 
64.16 	pursuant to the provisions of section 1(f) of the Internal Revenue Code, except that in 
64.17 	section 1(f)(3)(B), the word "2007" shall be substituted for the word "1992." For 2009, 
64.18 	the commissioner shall then determine the percent change from the 12 months ending on 
64.19 	August 31, 2007, to the 12 months ending on August 31, 2008, and in each subsequent 
64.20 	year, from the 12 months ending on August 31, 2007, to the 12 months ending on August 
64.21 	31 of the year preceding the taxable year. The earned income thresholds as adjusted 
64.22 	for inflation must be rounded to the nearest $10. If the amount ends in $5, the amount 
64.23 	is rounded up to the nearest $10. The determination of the commissioner under this 
64.24 	subdivision is not a rule under the Administrative Procedure Act.
64.25 	(h) For tax years beginning after December 31, 2010, and before January 1, 2013, 
64.26 	the $5,770 in paragraph (b), the $15,800 in paragraph (c), and the $17,890 in paragraph 
64.27 	(d), after being adjusted for inflation under subdivision 7, are each increased by $5,000 
64.28 	for married taxpayers filing joint returns. For tax years beginning after December 31, 
64.29 	2010, the commissioner shall annually adjust the $5,000 by the percentage determined 
64.30 	pursuant to the provisions of section 1(f) of the Internal Revenue Code, except that in 
64.31 	section 1(f)(3)(B), the word "2008" shall be substituted for the word "1992." For 2011, 
64.32 	the commissioner shall then determine the percent change from the 12 months ending on 
64.33 	August 31, 2008, to the 12 months ending on August 31, 2010, and in each subsequent 
64.34 	year, from the 12 months ending on August 31, 2008, to the 12 months ending on August 
64.35 	31 of the year preceding the taxable year. The earned income thresholds as adjusted 
64.36 	for inflation must be rounded to the nearest $10. If the amount ends in $5, the amount 
65.1 	is rounded up to the nearest $10. The determination of the commissioner under this 
65.2 	subdivision is not a rule under the Administrative Procedure Act.
65.3 	(h) (i) The commissioner shall construct tables showing the amount of the credit 
65.4 	at various income levels and make them available to taxpayers. The tables shall follow 
65.5 	the schedule contained in this subdivision, except that the commissioner may graduate 
65.6 	the transition between income brackets.

65.7 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
65.8 	December 31, 2010.

65.9 	Sec. 8. Minnesota Statutes 2010, section 290.0675, subdivision 1, is amended to read:
65.10 		Subdivision 1.Definitions. (a) For purposes of this section the following terms 
65.11 	have the meanings given.
65.12 	(b) "Earned income" means the sum of the following, to the extent included in 
65.13 	Minnesota taxable income:
65.14 	(1) earned income as defined in section 32(c)(2) of the Internal Revenue Code;
65.15 	(2) income received from a retirement pension, profit-sharing, stock bonus, or 
65.16 	annuity plan; and
65.17 	(3) Social Security benefits as defined in section 86(d)(1) of the Internal Revenue 
65.18 	Code.
65.19 	(c) "Taxable income" means net income as defined in section 290.01, subdivision 19.
65.20 	(d) "Earned income of lesser-earning spouse" means the earned income of the 
65.21 	spouse with the lesser amount of earned income as defined in paragraph (b) for the taxable 
65.22 	year minus the sum of (i) the amount for one exemption under section 151(d) of the 
65.23 	Internal Revenue Code and (ii) one-half the amount of the standard deduction under 
65.24 	section 63(c)(2)(A) and (4) of the Internal Revenue Code minus one-half of any addition 
65.25 	required under section 290.01, subdivision 19a, clause (20), and one-half of the addition 
65.26 	that would have been required under section 290.01, subdivision 19a, clause (20), if the 
65.27 	taxpayer had claimed the standard deduction.

65.28 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
65.29 	December 31, 2010.

65.30 	Sec. 9. Minnesota Statutes 2010, section 290A.03, subdivision 15, as amended by 
65.31 	Laws 2011, chapter 8, section 6, is amended to read:
65.32 		Subd. 15.Internal Revenue Code. For taxable years beginning before January 1, 
65.33 	2010, and after December 31, 2010, "Internal Revenue Code" means the Internal Revenue 
66.1 	Code of 1986, as amended through March 18, 2010; and for taxable years beginning after 
66.2 	December 31, 2009, and before January 1, 2011, "Internal Revenue Code" means the 
66.3 	Internal Revenue Code of 1986, as amended through December 31, 2010.

66.4 	EFFECTIVE DATE. This section is effective for property tax refunds based on 
66.5 	property taxes payable after December 31, 2010, and rent paid after December 31, 2009.

66.6 	Sec. 10. Minnesota Statutes 2010, section 291.005, subdivision 1, is amended to read:
66.7 		Subdivision 1.Scope. Unless the context otherwise clearly requires, the following 
66.8 	terms used in this chapter shall have the following meanings:
66.9 	(1) "Commissioner" means the commissioner of revenue or any person to whom the 
66.10 	commissioner has delegated functions under this chapter.
66.11 	(2) "Federal gross estate" means the gross estate of a decedent as required to be 
66.12 	valued and otherwise determined for federal estate tax purposes under the Internal 
66.13 	Revenue Code.
66.14 	(3) "Internal Revenue Code" means the United States Internal Revenue Code of 
66.15 	1986, as amended through March 18 December 31, 2010, but without regard to the 
66.16 	provisions of sections 501 and 901 of Public Law 107-16, as amended by Public Law 
66.17 	111-312, and section 301(c) of Public Law 111-312.
66.18 	(4) "Minnesota adjusted taxable estate" means federal adjusted taxable estate as 
66.19 	defined by section 2011(b)(3) of the Internal Revenue Code, increased by the amount of 
66.20 	deduction for state death taxes allowed under section 2058 of the Internal Revenue Code.
66.21 	(5) "Minnesota gross estate" means the federal gross estate of a decedent after (a) 
66.22 	excluding therefrom any property included therein which has its situs outside Minnesota, 
66.23 	and (b) including therein any property omitted from the federal gross estate which is 
66.24 	includable therein, has its situs in Minnesota, and was not disclosed to federal taxing 
66.25 	authorities.
66.26 	(6) "Nonresident decedent" means an individual whose domicile at the time of 
66.27 	death was not in Minnesota.
66.28 	(7) "Personal representative" means the executor, administrator or other person 
66.29 	appointed by the court to administer and dispose of the property of the decedent. If there 
66.30 	is no executor, administrator or other person appointed, qualified, and acting within this 
66.31 	state, then any person in actual or constructive possession of any property having a situs in 
66.32 	this state which is included in the federal gross estate of the decedent shall be deemed 
66.33 	to be a personal representative to the extent of the property and the Minnesota estate tax 
66.34 	due with respect to the property.
67.1 	(8) "Resident decedent" means an individual whose domicile at the time of death 
67.2 	was in Minnesota.
67.3 	(9) "Situs of property" means, with respect to real property, the state or country in 
67.4 	which it is located; with respect to tangible personal property, the state or country in which 
67.5 	it was normally kept or located at the time of the decedent's death; and with respect to 
67.6 	intangible personal property, the state or country in which the decedent was domiciled 
67.7 	at death.

67.8 	EFFECTIVE DATE. This section is effective the day following final enactment.

67.9 	ARTICLE 3
67.10 	PROPERTY TAXES

67.11 	Section 1. Minnesota Statutes 2010, section 275.025, is amended to read:
67.12 	275.025 STATE GENERAL TAX.
67.13 		Subdivision 1.Levy amount. The state general levy is levied against 
67.14 	commercial-industrial property and seasonal residential recreational property, as defined in 
67.15 	this section. The state general levy base amount is $592,000,000 $810,826,000 for taxes 
67.16 	payable in 2002 2012. For taxes payable in subsequent years, the levy base amount is 
67.17 	increased each year by multiplying the levy base amount for the prior year by the sum 
67.18 	of one plus the rate of increase, if any, in the implicit price deflator for government 
67.19 	consumption expenditures and gross investment for state and local governments prepared 
67.20 	by the Bureau of Economic Analysts of the United States Department of Commerce for 
67.21 	the 12-month period ending March 31 of the year prior to the year the taxes are payable. 
67.22 	The tax under this section is not treated as a local tax rate under section 469.177 and is not 
67.23 	the levy of a governmental unit under chapters 276A and 473F.
67.24 	The commissioner shall may increase or decrease the preliminary or final rate for a 
67.25 	year as necessary to account for errors and tax base changes that affected a preliminary 
67.26 	or final rate for either or both of the two preceding two years. Adjustments are allowed 
67.27 	only to the extent that the necessary information is available to the commissioner at the 
67.28 	time the rates for a year must be certified, and for the following reasons:
67.29 	(1) an erroneous report of taxable value by a local official;
67.30 	(2) an erroneous calculation by the commissioner; and
67.31 	(3) an increase or decrease in taxable value for commercial-industrial or seasonal 
67.32 	residential recreational property reported on the abstracts of tax lists submitted under 
67.33 	section 275.29 that was not reported on the abstracts of assessment submitted under 
67.34 	section 270C.89 for the same year.
68.1 	The commissioner may, but need not, shall make the allowed adjustments if the total 
68.2 	difference in the tax levied for the year affected by the error or change would be less 
68.3 	than have been $100,000 or more.
68.4 		Subd. 2.Commercial-industrial tax capacity. For the purposes of this section, 
68.5 	"commercial-industrial tax capacity" means the net tax capacity of all taxable property 
68.6 	classified as class 3 or class 5(1) under section 273.13, except for electric generation 
68.7 	attached machinery under class 3 and property described in section 473.625. County 
68.8 	commercial-industrial tax capacity amounts are not adjusted for the captured net tax 
68.9 	capacity of a tax increment financing district under section 469.177, subdivision 2, the 
68.10 	net tax capacity of transmission lines deducted from a local government's total net tax 
68.11 	capacity under section 273.425, or fiscal disparities contribution and distribution net 
68.12 	tax capacities under chapter 276A or 473F. 
68.13 		Subd. 3.Seasonal residential recreational tax capacity. For the purposes of this 
68.14 	section, "seasonal residential recreational tax capacity" means the net tax capacity of tier 
68.15 	III of class 1c under section 273.13, subdivision 22, and all class 4c(1) and 4c(3)(ii) 
68.16 	property under section 273.13, subdivision 25, except that the first $76,000 of market 
68.17 	value of each noncommercial class 4c(1) property has a tax capacity for this purpose 
68.18 	equal to 40 percent of its net tax capacity under section 273.13 and the net tax capacity 
68.19 	of the excess of market value over $1,000,000 of each single unit noncommercial class 
68.20 	4c(1) property is excluded.
68.21 		Subd. 4.Apportionment and levy of state general tax. Ninety-five 95.1 percent of 
68.22 	the state general tax must be levied by applying a uniform rate to all commercial-industrial 
68.23 	tax capacity and five 4.9 percent of the state general tax must be levied by applying a 
68.24 	uniform rate to all seasonal residential recreational tax capacity. On or before October 1 
68.25 	each year, the commissioner of revenue shall certify the preliminary state general levy 
68.26 	rates to each county auditor that must be used to prepare the notices of proposed property 
68.27 	taxes for taxes payable in the following year. By January 1 of each year, the commissioner 
68.28 	shall certify the final state general levy rate to each county auditor that shall be used 
68.29 	in spreading taxes.

68.30 	EFFECTIVE DATE. This section is effective for taxes payable in 2012 and 
68.31 	thereafter.

68.32 	Sec. 2. [275.026] STATE GENERAL RESIDENTIAL LEVY.
68.33 		Subdivision 1.Levy amount. The state general residential levy is levied against (1) 
68.34 	residential homestead tax capacity, (2) agricultural homestead tax capacity, (3) residential 
68.35 	nonhomestead tax capacity, and (4) seasonal residential recreational tax capacity, as 
69.1 	defined in this section. The state general residential levy amount is $44,330,000 for taxes 
69.2 	payable in 2012. For taxes payable in subsequent years, the amount of the levy for each 
69.3 	year is computed by multiplying the general residential levy amount for the prior year by 
69.4 	the sum of one plus the rate of increase, if any, in the implicit price deflator for government 
69.5 	consumption expenditures and gross investment for state and local governments prepared 
69.6 	by the Bureau of Economic Analysts of the United States Department of Commerce for 
69.7 	the 12-month period ending March 31 of the year prior to the year the taxes are payable. 
69.8 	The tax under this section is not treated as a local tax rate under section 469.177 and is 
69.9 	not the levy of a governmental unit under chapters 276A and 473F. None of the tax bases 
69.10 	defined in this section are adjusted for the captured net tax capacity of a tax increment 
69.11 	financing district under section 469.177, subdivision 2.
69.12 	The commissioner may increase or decrease the preliminary or final rate for a year 
69.13 	as necessary to account for errors and tax base changes that affected a preliminary or final 
69.14 	rate for either or both of the preceding two years. Adjustments are allowed only to the 
69.15 	extent that the necessary information is available to the commissioner at the time the rates 
69.16 	for a year must be certified, and for the following reasons:
69.17 	(1) an erroneous report of taxable value by a local official;
69.18 	(2) an erroneous calculation by the commissioner; and
69.19 	(3) an increase or decrease in taxable value for the residential classes subject to tax 
69.20 	under this section that was reported on the abstracts of tax lists submitted under section 
69.21 	275.29, but not reported on the abstracts of assessment submitted under section 270C.89 
69.22 	for the same year.
69.23 	The commissioner shall make the allowed adjustments if the total difference in the tax 
69.24 	levied for the year affected by the error or change would have been $100,000 or more.
69.25 		Subd. 2.Residential homestead tax capacity. For the purposes of this section, 
69.26 	"residential homestead tax capacity" means the market value in excess of $1,000,000 
69.27 	for each tract of single unit property classified as class 1a or 1b under section 273.13, 
69.28 	subdivision 22, times one percent.
69.29 		Subd. 3.Agricultural homestead tax capacity. For the purposes of this section, 
69.30 	"agricultural homestead tax capacity" means the market value in excess of $1,000,000 of 
69.31 	the house, garage, and surrounding one acre of land for each tract of single unit property 
69.32 	classified as agricultural homestead property under section 273.13, subdivision 23, times 
69.33 	one percent.
69.34 		Subd. 4.Residential nonhomestead tax capacity. For the purposes of this section, 
69.35 	"residential nonhomestead tax capacity" means one percent times the market value in 
69.36 	excess of $1,000,000 for (1) each tract of taxable property classified as class 4bb under 
70.1 	section 273.13, subdivision 25; and (2) each tract of single-unit property classified as class 
70.2 	4(b)(1) under section 273.13, subdivision 25.
70.3 		Subd. 5.Seasonal residential recreational tax capacity. For the purposes of 
70.4 	this section, "seasonal residential recreational tax capacity" means the market value in 
70.5 	excess of $1,000,000 for each tract of single unit property classified as seasonal residential 
70.6 	recreational property not used for commercial purposes under section 273.13, subdivision 
70.7 	25, times one percent.
70.8 		Subd. 6.Apportionment and levy of state general tax. (a) The state general 
70.9 	residential levy must be levied by applying a uniform rate to all the residential homestead 
70.10 	tax capacity, agricultural homestead tax capacity, residential nonhomestead tax capacity, 
70.11 	and seasonal residential recreational tax capacity as defined in this section.
70.12 	(b) On or before October 1 each year, the commissioner of revenue shall determine 
70.13 	and certify the preliminary rate for the state general residential levy to each county auditor 
70.14 	that must be used to prepare the notices of proposed property taxes for taxes payable in the 
70.15 	following year. By January 1 of each year, the commissioner shall determine and certify 
70.16 	the final rate for the state general residential levy to each county auditor that shall be 
70.17 	used in spreading taxes.

70.18 	EFFECTIVE DATE. This section is effective for taxes payable in 2012 and 
70.19 	thereafter.

70.20 	Sec. 3. Minnesota Statutes 2010, section 276.112, is amended to read:
70.21 	276.112 STATE PROPERTY TAXES; COUNTY TREASURER.
70.22 	On the estimated payment and settlement dates provided in this chapter for 
70.23 	the settlement of taxes levied by school districts, the county treasurer must make 
70.24 	full settlement with the county auditor for all receipts of state property taxes levied 
70.25 	under section sections275.025 and 275.026, and must transmit those receipts to the 
70.26 	commissioner of revenue by electronic means on the dates and according to the provisions 
70.27 	applicable to distributions to school districts.

70.28 	EFFECTIVE DATE. This section is effective for taxes payable in 2012 and 
70.29 	thereafter.

70.30 	Sec. 4. Minnesota Statutes 2010, section 290A.04, subdivision 2h, is amended to read:
70.31 		Subd. 2h.Additional refund. (a) If the gross property taxes payable on a 
70.32 	homestead increase more than 12 percent over the property taxes payable in the prior 
70.33 	year on the same property that is owned and occupied by the same owner on January 
71.1 	2 of both years, and the amount of that increase is $100 or more, a claimant who is a 
71.2 	homeowner shall be allowed an additional refund equal to 60 percent of the amount of 
71.3 	the increase over the greater of 12 percent of the prior year's property taxes payable or 
71.4 	$100. This subdivision shall not apply to any increase in the gross property taxes payable 
71.5 	attributable to improvements made to the homestead after the assessment date for the prior 
71.6 	year's taxes. This subdivision shall not apply to any increase in the gross property taxes 
71.7 	payable attributable to (1) the termination of valuation exclusions under section 273.11, 
71.8 	subdivision 16; and (2) for taxes payable in 2012 only, the tax under section 275.026.
71.9 	The maximum refund allowed under this subdivision is $1,000.
71.10 	(b) For purposes of this subdivision "gross property taxes payable" means property 
71.11 	taxes payable determined without regard to the refund allowed under this subdivision.
71.12 	(c) In addition to the other proofs required by this chapter, each claimant under 
71.13 	this subdivision shall file with the property tax refund return a copy of the property tax 
71.14 	statement for taxes payable in the preceding year or other documents required by the 
71.15 	commissioner.
71.16 	(d) Upon request, the appropriate county official shall make available the names and 
71.17 	addresses of the property taxpayers who may be eligible for the additional property tax 
71.18 	refund under this section. The information shall be provided on a magnetic computer 
71.19 	disk. The county may recover its costs by charging the person requesting the information 
71.20 	the reasonable cost for preparing the data. The information may not be used for any 
71.21 	purpose other than for notifying the homeowner of potential eligibility and assisting the 
71.22 	homeowner, without charge, in preparing a refund claim.

71.23 	EFFECTIVE DATE. This section is effective for refunds based on property taxes 
71.24 	payable in 2012 and thereafter.

71.25 	ARTICLE 4
71.26 	SALES AND USE TAX

71.27 	Section 1. Minnesota Statutes 2010, section 297A.61, subdivision 3, is amended to 
71.28 	read:
71.29 		Subd. 3.Sale and purchase. (a) "Sale" and "purchase" include, but are not limited 
71.30 	to, each of the transactions listed in this subdivision.
71.31 	(b) Sale and purchase include:
71.32 	(1) any transfer of title or possession, or both, of tangible personal property, whether 
71.33 	absolutely or conditionally, for a consideration in money or by exchange or barter; and
72.1 	(2) the leasing of or the granting of a license to use or consume, for a consideration 
72.2 	in money or by exchange or barter, tangible personal property, other than a manufactured 
72.3 	home used for residential purposes for a continuous period of 30 days or more.
72.4 	(c) Sale and purchase include the production, fabrication, printing, or processing of 
72.5 	tangible personal property for a consideration for consumers who furnish either directly or 
72.6 	indirectly the materials used in the production, fabrication, printing, or processing.
72.7 	(d) Sale and purchase include the preparing for a consideration of food. 
72.8 	Notwithstanding section 297A.67, subdivision 2, taxable food includes, but is not limited 
72.9 	to, the following:
72.10 	(1) prepared food sold by the retailer;
72.11 	(2) soft drinks;
72.12 	(3) candy;
72.13 	(4) dietary supplements; and
72.14 	(5) all food sold through vending machines.
72.15 	(e) A sale and a purchase includes the furnishing for a consideration of electricity, 
72.16 	gas, water, or steam for use or consumption within this state.
72.17 	(f) A sale and a purchase includes the transfer for a consideration of prewritten 
72.18 	computer software whether delivered electronically, by load and leave, or otherwise. A 
72.19 	sale and purchase also includes the right to access and use prewritten computer software 
72.20 	for a consideration, where possession of the software is maintained by the seller or third 
72.21 	party, regardless of whether the consideration is paid on a per use, per user, per license, 
72.22 	subscription, or some other basis.
72.23 	(g) A sale and a purchase includes the furnishing for a consideration of the following 
72.24 	services:
72.25 	(1) the privilege of admission to places of amusement, amusement events, 
72.26 	exhibitions, selling events, recreational areas, or athletic events, including the rental of 
72.27 	box seats and suites, and the making available of amusement devices, tanning facilities, 
72.28 	reducing salons, steam baths, Turkish baths, health clubs, and spas or athletic facilities. 
72.29 	"Exhibitions" includes, but is not limited to, trade shows, boat shows, home shows, garden 
72.30 	shows, and other similar events. "Selling events" includes, but is not limited to, flea 
72.31 	markets, estate sales, auctions, and other similar events;
72.32 	(2) lodging and related services by a hotel, rooming house, resort, campground, 
72.33 	motel, or trailer camp, including furnishing the guest of the facility with access to 
72.34 	telecommunication services, and the granting of any similar license to use real property in 
72.35 	a specific facility, other than the renting or leasing of it for a continuous period of 30 days 
72.36 	or more under an enforceable written agreement that may not be terminated without prior 
73.1 	notice and including accommodations intermediary service provided in connection with 
73.2 	other services provided under this clause;
73.3 	(3) nonresidential parking services, whether on a contractual, hourly, or other 
73.4 	periodic basis, except for parking at a meter;
73.5 	(4) the granting of membership in a club, association, or other organization if:
73.6 	(i) the club, association, or other organization makes available for the use of its 
73.7 	members sports and athletic facilities, without regard to whether a separate charge is 
73.8 	assessed for use of the facilities; and
73.9 	(ii) use of the sports and athletic facility is not made available to the general public 
73.10 	on the same basis as it is made available to members.
73.11 	Granting of membership means both onetime initiation fees and periodic membership 
73.12 	dues. Sports and athletic facilities include golf courses; tennis, racquetball, handball, and 
73.13 	squash courts; basketball and volleyball facilities; running tracks; exercise equipment; 
73.14 	swimming pools; and other similar athletic or sports facilities;
73.15 	(5) delivery of aggregate materials by a third party, excluding delivery of aggregate 
73.16 	material used in road construction, and delivery of concrete block by a third party if 
73.17 	the delivery would be subject to the sales tax if provided by the seller of the concrete 
73.18 	block; and
73.19 	(6) services as provided in this clause:
73.20 	(i) laundry and dry cleaning services including cleaning, pressing, repairing, altering, 
73.21 	and storing clothes, linen services and supply, cleaning and blocking hats, and carpet, 
73.22 	drapery, upholstery, and industrial cleaning. Laundry and dry cleaning services do not 
73.23 	include services provided by coin operated facilities operated by the customer;
73.24 	(ii) motor vehicle washing, waxing, and cleaning services, including services 
73.25 	provided by coin operated facilities operated by the customer, and rustproofing, 
73.26 	undercoating, and towing of motor vehicles;
73.27 	(iii) building and residential cleaning, maintenance, and disinfecting services and 
73.28 	pest control and exterminating services;
73.29 	(iv) detective, security, burglar, fire alarm, and armored car services; but not 
73.30 	including services performed within the jurisdiction they serve by off-duty licensed peace 
73.31 	officers as defined in section 626.84, subdivision 1, or services provided by a nonprofit 
73.32 	organization for monitoring and electronic surveillance of persons placed on in-home 
73.33 	detention pursuant to court order or under the direction of the Minnesota Department 
73.34 	of Corrections;
73.35 	(v) pet grooming services;
74.1 	(vi) lawn care, fertilizing, mowing, spraying and sprigging services; garden planting 
74.2 	and maintenance; tree, bush, and shrub pruning, bracing, spraying, and surgery; indoor 
74.3 	plant care; tree, bush, shrub, and stump removal, except when performed as part of a land 
74.4 	clearing contract as defined in section 297A.68, subdivision 40; and tree trimming for 
74.5 	public utility lines. Services performed under a construction contract for the installation of 
74.6 	shrubbery, plants, sod, trees, bushes, and similar items are not taxable;
74.7 	(vii) massages, except when provided by a licensed health care facility or 
74.8 	professional or upon written referral from a licensed health care facility or professional for 
74.9 	treatment of illness, injury, or disease; and
74.10 	(viii) the furnishing of lodging, board, and care services for animals in kennels and 
74.11 	other similar arrangements, but excluding veterinary and horse boarding services.
74.12 	In applying the provisions of this chapter, the terms "tangible personal property" and 
74.13 	"retail sale" include taxable services listed in clause (6), items (i) to (vi) and (viii), and 
74.14 	the provision of these taxable services, unless specifically provided otherwise. Services 
74.15 	performed by an employee for an employer are not taxable. Services performed by a 
74.16 	partnership or association for another partnership or association are not taxable if one 
74.17 	of the entities owns or controls more than 80 percent of the voting power of the equity 
74.18 	interest in the other entity. Services performed between members of an affiliated group 
74.19 	of corporations are not taxable. 
74.20 	For purposes of the preceding sentence, "affiliated group of corporations" means 
74.21 	those entities that would be classified as members of an affiliated group as defined under 
74.22 	United States Code, title 26, section 1504, disregarding the exclusions in section 1504(b).
74.23 	For purposes of clause (5), "road construction" means construction of (1) public 
74.24 	roads, (2) cartways, and (3) private roads in townships located outside of the seven-county 
74.25 	metropolitan area up to the point of the emergency response location sign.
74.26 	(h) A sale and a purchase includes the furnishing for a consideration of tangible 
74.27 	personal property or taxable services by the United States or any of its agencies or 
74.28 	instrumentalities, or the state of Minnesota, its agencies, instrumentalities, or political 
74.29 	subdivisions.
74.30 	(i) A sale and a purchase includes the furnishing for a consideration of 
74.31 	telecommunications services, ancillary services associated with telecommunication 
74.32 	services, cable television services, and direct satellite services, and ring tones. 
74.33 	Telecommunication services include, but are not limited to, the following services, 
74.34 	as defined in section 297A.669: air-to-ground radiotelephone service, mobile 
74.35 	telecommunication service, postpaid calling service, prepaid calling service, prepaid 
75.1 	wireless calling service, and private communication services. The services in this 
75.2 	paragraph are taxed to the extent allowed under federal law.
75.3 	(j) A sale and a purchase includes the furnishing for a consideration of installation if 
75.4 	the installation charges would be subject to the sales tax if the installation were provided 
75.5 	by the seller of the item being installed.
75.6 	(k) A sale and a purchase includes the rental of a vehicle by a motor vehicle dealer 
75.7 	to a customer when (1) the vehicle is rented by the customer for a consideration, or (2) 
75.8 	the motor vehicle dealer is reimbursed pursuant to a service contract as defined in section 
75.9 	59B.02, subdivision 11.

75.10 	EFFECTIVE DATE. This section is effective for sales and purchases made after 
75.11 	June 30, 2011, except the changes made to paragraph (g), clause (2), are effective the 
75.12 	day following final enactment.

75.13 	Sec. 2. Minnesota Statutes 2010, section 297A.61, subdivision 25, is amended to read:
75.14 		Subd. 25.Cable television service. "Cable television service" means the 
75.15 	transmission of video, audio, or other programming service to purchasers, and the 
75.16 	subscriber interaction, if any, required for the selection or use of the programming service, 
75.17 	regardless of whether the programming is transmitted over facilities owned or operated by 
75.18 	the cable service provider or over facilities owned or operated by one or more dealers of 
75.19 	communications services. The term includes point-to-multipoint distribution services by 
75.20 	which programming is transmitted or broadcast by microwave or other equipment directly 
75.21 	to the subscriber's premises. The term includes basic, extended, premium, pay-per-view, 
75.22 	digital, and music services.

75.23 	EFFECTIVE DATE. This section is effective for sales and purchases made after 
75.24 	June 30, 2011.

75.25 	Sec. 3. Minnesota Statutes 2010, section 297A.61, subdivision 27, is amended to read:
75.26 		Subd. 27.Direct satellite service. "Direct satellite service" means the transmission 
75.27 	of video, audio, or other programming services transmitted or broadcast by satellite 
75.28 	directly to the subscriber's premises subscriber without the use of ground receiving 
75.29 	or distribution equipment, except at the subscriber's premises subscriber location or in 
75.30 	the uplink process to the satellite. The term also includes any subscriber interaction, 
75.31 	if any, required for the selection or use of the programming service as well as any 
75.32 	point-to-multipoint distribution services transmitted or broadcast by satellite or other 
76.1 	equipment directly to the subscriber. The term includes any and all service packages and 
76.2 	formats as well as pay-per-view, digital video recorder, and digital music services.

76.3 	EFFECTIVE DATE. This section is effective for sales and purchases made after 
76.4 	June 30, 2011.

76.5 	Sec. 4. Minnesota Statutes 2010, section 297A.61, is amended by adding a subdivision 
76.6 	to read:
76.7 		Subd. 47.Accommodations intermediary. "Accommodations intermediary" 
76.8 	means any person or entity, other than an accommodations provider, that facilitates the sale 
76.9 	of lodging as defined in subdivision 3, paragraph (g), clause (2), and that charges a room 
76.10 	charge to a customer. The term "facilitates the sale" includes brokering, coordinating, or in 
76.11 	any way arranging for the purchase of or the right to use accommodations by a customer.

76.12 	EFFECTIVE DATE. This section is effective the day following final enactment.

76.13 	Sec. 5. Minnesota Statutes 2010, section 297A.61, is amended by adding a subdivision 
76.14 	to read:
76.15 		Subd. 48.Accommodations provider. "Accommodations provider" means any 
76.16 	person or entity that furnishes lodging as defined in subdivision 3, paragraph (g), clause 
76.17 	(2), to the general public for compensation. The term "furnishes" includes the sale of use 
76.18 	or possession, or the sale of the right to use or possess.

76.19 	EFFECTIVE DATE. This section is effective the day following final enactment.

76.20 	Sec. 6. Minnesota Statutes 2010, section 297A.64, subdivision 1, is amended to read:
76.21 		Subdivision 1.Tax imposed. A tax is imposed on the lease or rental in this state 
76.22 	for not more than 28 days of a passenger automobile as defined in section 168.002, 
76.23 	subdivision 24, a van as defined in section 168.002, subdivision 40, or a pickup truck as 
76.24 	defined in section 168.002, subdivision 26. The rate of tax is 6.2 7.2 percent of the sales 
76.25 	price. The tax applies whether or not the vehicle is licensed in the state.

76.26 	EFFECTIVE DATE. This section is effective for leases or rentals entered into 
76.27 	after June 30, 2011.

76.28 	Sec. 7. Minnesota Statutes 2010, section 297A.66, is amended by adding a subdivision 
76.29 	to read:
77.1 		Subd. 4a.Solicitor. (a) A retailer is presumed to have a solicitor in this state if it 
77.2 	enters into an agreement with a resident under which the resident, for a commission or 
77.3 	other consideration, directly or indirectly refers potential customers, whether by a link on 
77.4 	an Internet Web site, or otherwise, to the seller. This paragraph only applies if the total 
77.5 	gross receipts from sales to customers located in this state who were referred to the retailer 
77.6 	by all residents with this type of agreement with the retailer are at least $10,000 in the 
77.7 	12-month period ending on the last day of the most recent calendar quarter before the 
77.8 	calendar quarter in which the sale is made.
77.9 	(b) The presumption under paragraph (a) may be rebutted by proof that the resident 
77.10 	with whom the retailer has an agreement did not engage in any solicitation in this state 
77.11 	on behalf of the retailer that would satisfy the nexus requirements of the United States 
77.12 	Constitution during the 12-month period in question. Nothing in this section shall be 
77.13 	construed to narrow the scope of the terms affiliate, agent, salesperson, canvasser, or other 
77.14 	representative for purposes of subdivision 1, paragraph (a).
77.15 	(c) For purposes of this paragraph, "resident" includes an individual who is a resident 
77.16 	of this state, as defined in section 290.01, or a business that owns tangible personal property 
77.17 	located in this state or has one or more employees providing services for it in this state.

77.18 	EFFECTIVE DATE. This section is effective for sales and purchases made after 
77.19 	June 30, 2011.

77.20 	Sec. 8. Minnesota Statutes 2010, section 297A.66, is amended by adding a subdivision 
77.21 	to read:
77.22 		Subd. 6.Lodging services. An accommodations intermediary shall collect sales 
77.23 	tax and remit it to the commissioner under section 297A.77 for services provided in 
77.24 	connection with or for lodging located in this state.

77.25 	EFFECTIVE DATE. This section is effective the day following final enactment.

77.26 	Sec. 9. Minnesota Statutes 2010, section 297A.668, is amended by adding a 
77.27 	subdivision to read:
77.28 		Subd. 9.Florist sales. (a) Notwithstanding other subdivisions of this section, the 
77.29 	retail sale of "florist sales" is sourced as follows:
77.30 	(1) When a Minnesota retailer takes a florist sales order directly from a customer, 
77.31 	whether or not the customer is physically present in Minnesota when placing the order, 
77.32 	and delivers the items to the customer or a third person, either within this state or outside 
78.1 	this state, and regardless of the delivery method, the florist sale is sourced according to 
78.2 	subdivision 2.
78.3 	(2) When one retailer transmits a florist sales order to another retailer of florist sales 
78.4 	through a floral network service or floral delivery association, whether by telephone, 
78.5 	telegraph, Internet, or other means of communication, the florist sale is sourced to the 
78.6 	location of the retailer which originally takes the order from the customer and accepts 
78.7 	payment.
78.8 	(b) For purposes of this subdivision, florist sales means sales at retail of flowers, 
78.9 	wreaths, floral bouquets, potted plants, hospital baskets, funeral designs, seeds, nursery 
78.10 	seedling stock, trees, shrubs, plants, sod, soil, bulbs, sand, rock, and all other floral 
78.11 	or nursery products.

78.12 	EFFECTIVE DATE. This section is effective for sales and purchases made after 
78.13 	June 30, 2011.

78.14 	Sec. 10. Minnesota Statutes 2010, section 297A.70, subdivision 6, is amended to read:
78.15 		Subd. 6.Ambulances. The lease of a motor vehicle for use as an ambulance by 
78.16 	an ambulance service licensed under section 144E.10 that is equipped and specifically 
78.17 	intended for emergency response or for providing ambulance services is exempt.

78.18 	EFFECTIVE DATE. This section is effective for sales and purchases made after 
78.19 	June 30, 2011.

78.20 	Sec. 11. Minnesota Statutes 2010, section 297A.94, is amended to read:
78.21 	297A.94 DEPOSIT OF REVENUES.
78.22 	(a) Except as provided in this section, the commissioner shall deposit the revenues, 
78.23 	including interest and penalties, derived from the taxes imposed by this chapter in the state 
78.24 	treasury and credit them to the general fund.
78.25 	(b) The commissioner shall deposit taxes in the Minnesota agricultural and economic 
78.26 	account in the special revenue fund if:
78.27 	(1) the taxes are derived from sales and use of property and services purchased for 
78.28 	the construction and operation of an agricultural resource project; and
78.29 	(2) the purchase was made on or after the date on which a conditional commitment 
78.30 	was made for a loan guaranty for the project under section 41A.04, subdivision 3.
78.31 	The commissioner of management and budget shall certify to the commissioner the date 
78.32 	on which the project received the conditional commitment. The amount deposited in 
78.33 	the loan guaranty account must be reduced by any refunds and by the costs incurred by 
79.1 	the Department of Revenue to administer and enforce the assessment and collection of 
79.2 	the taxes.
79.3 	(c) The commissioner shall deposit the revenues, including interest and penalties, 
79.4 	derived from the taxes imposed on sales and purchases included in section 297A.61, 
79.5 	subdivision 3, paragraph (g), clauses (1) and (4), in the state treasury, and credit them 
79.6 	as follows:
79.7 	(1) first to the general obligation special tax bond debt service account in each fiscal 
79.8 	year the amount required by section 16A.661, subdivision 3, paragraph (b); and
79.9 	(2) after the requirements of clause (1) have been met, the balance to the general 
79.10 	fund.
79.11 	(d) The commissioner shall deposit the revenues, including interest and penalties, 
79.12 	collected under section 297A.64, subdivision 5, in the state treasury and credit them to the 
79.13 	general fund. By July 15 of each year the commissioner shall transfer to the highway user 
79.14 	tax distribution fund an amount equal to the excess fees collected under section 297A.64, 
79.15 	subdivision 5, for the previous calendar year.
79.16 	(e) For fiscal year 2001, 97 percent; for fiscal years 2002 and 2003, 87 percent; and 
79.17 	for fiscal year 2004 and thereafter, 72.43 percent of the revenues, including interest and 
79.18 	penalties, transmitted to the commissioner under section 297A.65, must be deposited by 
79.19 	the commissioner in the state treasury as follows:
79.20 	(1) 50 percent of the receipts must be deposited in the heritage enhancement account 
79.21 	in the game and fish fund, and may be spent only on activities that improve, enhance, or 
79.22 	protect fish and wildlife resources, including conservation, restoration, and enhancement 
79.23 	of land, water, and other natural resources of the state;
79.24 	(2) 22.5 percent of the receipts must be deposited in the natural resources fund, and 
79.25 	may be spent only for state parks and trails;
79.26 	(3) 22.5 percent of the receipts must be deposited in the natural resources fund, and 
79.27 	may be spent only on metropolitan park and trail grants;
79.28 	(4) three percent of the receipts must be deposited in the natural resources fund, and 
79.29 	may be spent only on local trail grants; and
79.30 	(5) two percent of the receipts must be deposited in the natural resources fund, 
79.31 	and may be spent only for the Minnesota Zoological Garden, the Como Park Zoo and 
79.32 	Conservatory, and the Duluth Zoo.
79.33 	(f) The revenue dedicated under paragraph (e) may not be used as a substitute 
79.34 	for traditional sources of funding for the purposes specified, but the dedicated revenue 
79.35 	shall supplement traditional sources of funding for those purposes. Land acquired with 
79.36 	money deposited in the game and fish fund under paragraph (e) must be open to public 
80.1 	hunting and fishing during the open season, except that in aquatic management areas or 
80.2 	on lands where angling easements have been acquired, fishing may be prohibited during 
80.3 	certain times of the year and hunting may be prohibited. At least 87 percent of the money 
80.4 	deposited in the game and fish fund for improvement, enhancement, or protection of fish 
80.5 	and wildlife resources under paragraph (e) must be allocated for field operations.
80.6 	(g) The revenues deposited under paragraphs (a) to (f) do not include the revenues, 
80.7 	including interest and penalties, generated by the sales tax imposed under section 
80.8 	297A.62, subdivision 1a, which must be deposited as provided under the Minnesota 
80.9 	Constitution, article XI, section 15.
80.10 	(h) The commissioner shall deposit 13.89 percent of the revenues collected under 
80.11 	section 297A.64, subdivision 1, in the state treasury and credit them to a special revenue 
80.12 	fund dedicated to Explore Minnesota Tourism for promotional and marketing purposes 
80.13 	under chapter 116U.

80.14 	EFFECTIVE DATE. This section is effective for leases or rentals entered into 
80.15 	after June 30, 2011.

80.16 	Sec. 12. Minnesota Statutes 2010, section 297B.03, is amended to read:
80.17 	297B.03 EXEMPTIONS.
80.18 	There is specifically exempted from the provisions of this chapter and from 
80.19 	computation of the amount of tax imposed by it the following:
80.20 	(1) purchase or use, including use under a lease purchase agreement or installment 
80.21 	sales contract made pursuant to section 465.71, of any motor vehicle by the United States 
80.22 	and its agencies and instrumentalities and by any person described in and subject to the 
80.23 	conditions provided in section 297A.67, subdivision 11;
80.24 	(2) purchase or use of any motor vehicle by any person who was a resident of 
80.25 	another state or country at the time of the purchase and who subsequently becomes a 
80.26 	resident of Minnesota, provided the purchase occurred more than 60 days prior to the date 
80.27 	such person began residing in the state of Minnesota and the motor vehicle was registered 
80.28 	in the person's name in the other state or country;
80.29 	(3) purchase or use of any motor vehicle by any person making a valid election to be 
80.30 	taxed under the provisions of section 297A.90;
80.31 	(4) purchase or use of any motor vehicle previously registered in the state of 
80.32 	Minnesota when such transfer constitutes a transfer within the meaning of section 118, 
80.33 	331, 332, 336, 337, 338, 351, 355, 368, 721, 731, 1031, 1033, or 1563(a) of the Internal 
80.34 	Revenue Code;
81.1 	(5) purchase or use of any vehicle owned by a resident of another state and leased 
81.2 	to a Minnesota-based private or for-hire carrier for regular use in the transportation of 
81.3 	persons or property in interstate commerce provided the vehicle is titled in the state of 
81.4 	the owner or secured party, and that state does not impose a sales tax or sales tax on 
81.5 	motor vehicles used in interstate commerce;
81.6 	(6) purchase or use of a motor vehicle by a private nonprofit or public educational 
81.7 	institution for use as an instructional aid in automotive training programs operated by the 
81.8 	institution. "Automotive training programs" includes motor vehicle body and mechanical 
81.9 	repair courses but does not include driver education programs;
81.10 	(7) purchase of a motor vehicle for use as an ambulance by an ambulance service 
81.11 	licensed under section 144E.10 when that vehicle is equipped and specifically intended for 
81.12 	emergency response or for providing ambulance services;
81.13 	(8) purchase of a motor vehicle by or for a public library, as defined in section 
81.14 	134.001, subdivision 2, as a bookmobile or library delivery vehicle;
81.15 	(9) purchase of a ready-mixed concrete truck;
81.16 	(10) purchase or use of a motor vehicle by a town for use exclusively for road 
81.17 	maintenance, including snowplows and dump trucks, but not including automobiles, 
81.18 	vans, or pickup trucks;
81.19 	(11) purchase or use of a motor vehicle by a corporation, society, association, 
81.20 	foundation, or institution organized and operated exclusively for charitable, religious, 
81.21 	or educational purposes, except a public school, university, or library, but only if the 
81.22 	vehicle is:
81.23 	(i) a truck, as defined in section 168.002, a bus, as defined in section 168.002, or a 
81.24 	passenger automobile, as defined in section 168.002, if the automobile is designed and 
81.25 	used for carrying more than nine persons including the driver; and
81.26 	(ii) intended to be used primarily to transport tangible personal property or 
81.27 	individuals, other than employees, to whom the organization provides service in 
81.28 	performing its charitable, religious, or educational purpose;
81.29 	(12) purchase of a motor vehicle for use by a transit provider exclusively to provide 
81.30 	transit service is exempt if the transit provider is either (i) receiving financial assistance or 
81.31 	reimbursement under section 174.24 or 473.384, or (ii) operating under section 174.29, 
81.32 	473.388, or 473.405;
81.33 	(13) purchase or use of a motor vehicle by a qualified business, as defined in section 
81.34 	469.310, located in a job opportunity building zone, if the motor vehicle is principally 
81.35 	garaged in the job opportunity building zone and is primarily used as part of or in direct 
81.36 	support of the person's operations carried on in the job opportunity building zone. The 
82.1 	exemption under this clause applies to sales, if the purchase was made and delivery 
82.2 	received during the duration of the job opportunity building zone. The exemption under 
82.3 	this clause also applies to any local sales and use tax; and
82.4 	(14) purchase of a leased vehicle by the lessee who was a participant in a 
82.5 	lease-to-own program from a charitable organization that is:
82.6 	(i) described in section 501(c)(3) of the Internal Revenue Code; and
82.7 	(ii) licensed as a motor vehicle lessor under section 168.27, subdivision 4.

82.8 	EFFECTIVE DATE. This section is effective the day following final enactment.

82.9 	Sec. 13. REVISOR'S INSTRUCTION.
 82.10 	In Minnesota Rules, part 8130.9700, the revisor of statutes shall remove the last 
82.11 	sentence in subpart 3, item B, that reads "Use of equipment on a time-sharing basis, 
82.12 	where access to the equipment is only by means of remote access facilities, is not taxable 
82.13 	leasing of such equipment."

82.14 	EFFECTIVE DATE. This section is effective for sales and purchases made after 
82.15 	June 30, 2011.

82.16 	Sec. 14.  REPEALER.
 82.17 	Minnesota Rules, part 8130.0500, subpart 2, is repealed.

82.18 	EFFECTIVE DATE. This section is effective for sales and purchases made after 
82.19 	June 30, 2011.

82.20 	ARTICLE 5
82.21 	SPECIAL TAXES

82.22 	Section 1. Minnesota Statutes 2010, section 297I.01, is amended by adding a 
82.23 	subdivision to read:
82.24 		Subd. 2a.Affiliated group. "Affiliated group" means a group that includes the 
82.25 	insured and any entity, or group of entities, that controls, is controlled by, or is under 
82.26 	common control with the insured. An entity has control over another entity when: (1) the 
82.27 	entity directly or indirectly or acting through one or more other persons owns, controls, 
82.28 	or has the power to vote 25 percent or more of any class of voting securities of the other 
82.29 	entity; or (2) the entity controls in any manner the election of a majority of the directors or 
82.30 	trustees of the other entity.

83.1 	EFFECTIVE DATE. This section is effective for nonadmitted insurance policies 
83.2 	that go into effect after July 20, 2011.

83.3 	Sec. 2. Minnesota Statutes 2010, section 297I.01, subdivision 9, is amended to read:
83.4 		Subd. 9.Gross premiums. "Gross premiums" means total premiums paid by 
83.5 	policyholders and applicants of policies, whether received in the form of money or other 
83.6 	valuable consideration, on property, persons, lives, interests and other risks located, 
83.7 	resident, or to be performed in this state, but excluding consideration and premiums for 
83.8 	reinsurance assumed from other insurance companies.
83.9 	 (a) "Gross premiums" includes the total consideration paid to bail bond agents 
83.10 	for bail bonds.
83.11 	(b) For title insurance companies, "gross premiums" means the charge for title 
83.12 	insurance made by a title insurance company or its agents according to the company's rate 
83.13 	filing approved by the commissioner of commerce without a deduction for commissions 
83.14 	paid to or retained by the agent. Gross premiums of a title insurance company does not 
83.15 	include any other charge or fee for abstracting, searching, or examining the title, or 
83.16 	escrow, closing, or other related services.
83.17 	 (c) "Gross premiums" includes any workers' compensation special compensation 
83.18 	fund premium surcharge pursuant to section 176.129.
83.19 	(d) "Gross premiums" for surplus linesnonadmitted insurance includes all 
83.20 	related charges, commissions, and fees received by the licensee any payment made as 
83.21 	consideration for an insurance contract for such insurance, including premium deposits, 
83.22 	assessments, fees, and any other compensation given in consideration for a contract 
83.23 	of insurance. Gross premiums does not include the stamping fee, as provided under 
83.24 	section 60A.2085, subdivision 7, nor the operating assessment, as provided under section 
83.25 	60A.208, subdivision 8.

83.26 	EFFECTIVE DATE. This section is effective for nonadmitted insurance policies 
83.27 	that go into effect after July 20, 2011.

83.28 	Sec. 3. Minnesota Statutes 2010, section 297I.01, is amended by adding a subdivision 
83.29 	to read:
83.30 		Subd. 10a.Home state. "Home state" means the state in which an insured maintains 
83.31 	its principal place of business, or in the case of an individual, the individual's principal 
83.32 	residence; or if 100 percent of the insured risk is located out of the state, the state to 
83.33 	which the greatest percentage of the insured's taxable premium for that insurance contract 
83.34 	is allocated. If more than one insured from an affiliated group are named insureds on a 
84.1 	single nonadmitted insurance contract, the term home state means the home state of the 
84.2 	member of the affiliated group that has the largest percentage of premium attributed to 
84.3 	it under that insurance contract.

84.4 	EFFECTIVE DATE. This section is effective for nonadmitted insurance policies 
84.5 	that go into effect after July 20, 2011.

84.6 	Sec. 4. Minnesota Statutes 2010, section 297I.01, is amended by adding a subdivision 
84.7 	to read:
84.8 		Subd. 10b.Independently procured insurance. "Independently procured 
84.9 	insurance" means insurance procured directly by an insured from a nonadmitted insurer.

84.10 	EFFECTIVE DATE. This section is effective for nonadmitted insurance policies 
84.11 	that go into effect after July 20, 2011.

84.12 	Sec. 5. Minnesota Statutes 2010, section 297I.01, is amended by adding a subdivision 
84.13 	to read:
84.14 		Subd. 10c.Nonadmitted insurance. "Nonadmitted insurance" means any property 
84.15 	and casualty insurance permitted to be placed directly or through a surplus lines broker 
84.16 	with a nonadmitted insurer.

84.17 	EFFECTIVE DATE. This section is effective for nonadmitted insurance policies 
84.18 	that go into effect after July 20, 2011.

84.19 	Sec. 6. Minnesota Statutes 2010, section 297I.01, is amended by adding a subdivision 
84.20 	to read:
84.21 		Subd. 10d.Nonadmitted insurance premium tax. "Nonadmitted insurance 
84.22 	premium tax" means, with respect to surplus lines or independently procured insurance 
84.23 	coverage, any tax, fee, assessment, or other charge imposed directly or indirectly by a 
84.24 	government entity.

84.25 	EFFECTIVE DATE. This section is effective for nonadmitted insurance policies 
84.26 	that go into effect after July 20, 2011.

84.27 	Sec. 7. Minnesota Statutes 2010, section 297I.01, is amended by adding a subdivision 
84.28 	to read:
84.29 		Subd. 10e.Nonadmitted insurer. "Nonadmitted insurer" means an insurer not 
84.30 	licensed to engage in the business of insurance in Minnesota, but does not include a risk 
85.1 	retention group as the term is defined in section 2(a)(4) of the Liability Risk Retention Act 
85.2 	of 1986, United States Code, title 15, section 3901(a)(4).

85.3 	EFFECTIVE DATE. This section is effective for nonadmitted insurance policies 
85.4 	that go into effect after July 20, 2011.

85.5 	Sec. 8. Minnesota Statutes 2010, section 297I.01, is amended by adding a subdivision 
85.6 	to read:
85.7 		Subd. 15a.Surplus lines broker. "Surplus lines broker" means an individual, 
85.8 	firm, or corporation which is licensed in a state to sell, solicit, or negotiate insurance on 
85.9 	properties, risks, or exposures located or to be performed in a state with nonadmitted 
85.10 	insurers.

85.11 	EFFECTIVE DATE. This section is effective for nonadmitted insurance policies 
85.12 	that go into effect after July 20, 2011.

85.13 	Sec. 9. Minnesota Statutes 2010, section 297I.01, subdivision 16, is amended to read:
85.14 		Subd. 16.Taxpayer. "Taxpayer" means any insurance company, association, 
85.15 	surplus lines licensee broker, automobile risk self-insurer, or insured or any other person 
85.16 	or entity required to pay any amount due under this chapter.

85.17 	EFFECTIVE DATE. This section is effective for nonadmitted insurance policies 
85.18 	that go into effect after July 20, 2011.

85.19 	Sec. 10. Minnesota Statutes 2010, section 297I.05, subdivision 7, is amended to read:
85.20 		Subd. 7.Surplus lines Nonadmitted insurance premium tax. (a) A tax is imposed 
85.21 	on surplus lines licensees brokers. The rate of tax is equal to three percent of the gross 
85.22 	premiums less return premiums paid by an insured whose home state is Minnesota.
85.23 	(b) If surplus lines insurance placed by a surplus lines licensee and taxed under this 
85.24 	subdivision covers a subject of insurance residing, located, or to be performed outside this 
85.25 	state, a proper pro rata portion of the entire premium payable for all of that insurance must 
85.26 	be allocated according to the subjects of insurance residing, located, or to be performed 
85.27 	in this state. A tax is imposed on persons, firms, or corporations that procure insurance 
85.28 	directly from a nonadmitted insurer. The rate of tax is equal to two percent of the gross 
85.29 	premiums less return premiums paid by an insured whose home state is Minnesota.
85.30 	(c) No state other than the home state of an insured may require any premium tax 
85.31 	payment for nonadmitted insurance. When Minnesota is the home state of the insured, 
86.1 	as provided under section 297I.01, 100 percent of the gross premiums are taxable in 
86.2 	Minnesota with no allocation of the tax to other states.

86.3 	EFFECTIVE DATE. This section is effective for nonadmitted insurance policies 
86.4 	that go into effect after July 20, 2011.

86.5 	Sec. 11. Minnesota Statutes 2010, section 297I.05, subdivision 12, is amended to read:
86.6 		Subd. 12.Other entities. (a) A tax is imposed equal to two percent of:
86.7 	(1) gross premiums less return premiums written for risks resident or located in 
86.8 	Minnesota by a risk retention group;
86.9 	(2) gross premiums less return premiums received by an attorney in fact acting 
86.10 	in accordance with chapter 71A;
86.11 	(3) gross premiums less return premiums received pursuant to assigned risk policies 
86.12 	and contracts of coverage under chapter 79;
86.13 	(4) the direct funded premium received by the reinsurance association under section 
86.14 	79.34 from self-insurers approved under section 176.181 and political subdivisions that 
86.15 	self-insure; and
86.16 	(5) gross premiums less return premiums paid to an insurer other than a licensed 
86.17 	insurance company or a surplus lines licensee broker for coverage of risks resident or 
86.18 	located in Minnesota by a purchasing group or any members of the purchasing group to a 
86.19 	broker or agent for the purchasing group.
86.20 	(b) A tax is imposed on a joint self-insurance plan operating under chapter 60F. The 
86.21 	rate of tax is equal to two percent of the total amount of claims paid during the fund year, 
86.22 	with no deduction for claims wholly or partially reimbursed through stop-loss insurance.
86.23 	(c) A tax is imposed on a joint self-insurance plan operating under chapter 62H. 
86.24 	The rate of tax is equal to two percent of the total amount of claims paid during the 
86.25 	fund's fiscal year, with no deduction for claims wholly or partially reimbursed through 
86.26 	stop-loss insurance.
86.27 	(d) A tax is imposed equal to the tax imposed under section 297I.05, subdivision 5, 
86.28 	on the gross premiums less return premiums on all coverages received by an accountable 
86.29 	provider network or agents of an accountable provider network in Minnesota, in cash or 
86.30 	otherwise, during the year.

86.31 	EFFECTIVE DATE. This section is effective for nonadmitted insurance policies 
86.32 	that go into effect after July 20, 2011.

86.33 	Sec. 12. Minnesota Statutes 2010, section 297I.30, subdivision 1, is amended to read:
87.1 		Subdivision 1.General rule. On or before March 1, every taxpayer subject to 
87.2 	taxation under section 297I.05, subdivisions 1 to 5, 9, 10 7, paragraph (b), 12, paragraphs 
87.3 	(a), clauses (1) to (4), (b), (c), and (d), and 14, shall file an annual return for the preceding 
87.4 	calendar year in the form prescribed by the commissioner.

87.5 	EFFECTIVE DATE. This section is effective for nonadmitted insurance policies 
87.6 	that go into effect after July 20, 2011.

87.7 	Sec. 13. Minnesota Statutes 2010, section 297I.30, subdivision 2, is amended to read:
87.8 		Subd. 2.Surplus lines licensees brokers and purchasing groups. On or before 
87.9 	February 15 and August 15 of each year, every surplus lines licensee broker subject to 
87.10 	taxation under section 297I.05, subdivision 7, paragraph (a), and every purchasing group 
87.11 	or member of a purchasing group subject to tax under section 297I.05, subdivision 12, 
87.12 	paragraph (a), clause (5), shall file a return with the commissioner for the preceding 
87.13 	six-month period ending December 31, or June 30, in the form prescribed by the 
87.14 	commissioner.

87.15 	EFFECTIVE DATE. This section is effective for nonadmitted insurance policies 
87.16 	that go into effect after July 20, 2011.

87.17 	Sec. 14.  REPEALER.
 87.18 	(a) Minnesota Statutes 2010, section 297F.14, subdivision 4, is repealed.
87.19 	(b) Minnesota Statutes 2010, section 297I.05, subdivisions 9 and 10, are repealed.

87.20 	EFFECTIVE DATE. Paragraph (a) is effective for claims filed after June 30, 2011. 
87.21 	Paragraph (b) is effective for nonadmitted insurance policies that go into effect after 
87.22 	July 20, 2011.