HF 104

as introduced - 84th Legislature, 2005 1st Special Session (2005 - 2005) Posted on 12/15/2009 12:00am

A bill for an act
relating to taxation; corporate franchise; modifying
the definition of foreign operating corporations;
amending Minnesota Statutes 2004, section 290.01,
subdivision 6b.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2004, section 290.01,
subdivision 6b, is amended to read:

Subd. 6b.

Foreign operating corporation.

new text begin (a) new text end The term
"foreign operating corporation," when applied to a corporation,
means a domestic corporation with the following characteristics:

(1) it is part of a unitary business at least one member of
which is taxable in this state;

(2) it is not a foreign sales corporation under section 922
of the Internal Revenue Code, as amended through December 31,
1999, for the taxable year; and

(3) either (i) the average of the percentages of its
property and payrolls assigned to locations deleted text begin inside deleted text end new text begin outside new text end the
United States deleted text begin and the District of Columbia, excluding the
commonwealth of Puerto Rico and possessions of the United
States deleted text end , as determined under section 290.191 or 290.20 new text begin and
paragraph (b) new text end , is deleted text begin 20 deleted text end new text begin 80 new text end percent or deleted text begin less deleted text end new text begin more new text end ; or (ii) it has
in effect a valid election under section 936 of the Internal
Revenue Code.

new text begin (b) For purposes this subdivision, property includes
intangible property. Patents, trademarks, copyrights, trade
names, good will, secret processes and formulas, trade brands,
franchises, and similar intellectual property are valued at
eight times the net annual rentals, fees, royalties, or other
payments received or accrued by the corporation for use of the
property. This property is assigned to locations outside the
United States, based on the percentage of the rentals, fees,
royalties, or other payments that are for use of the property in
those locations. Other intangible property must be assigned to
locations inside or outside of the United States under the rules
that apply under section 290.191, subdivision 11, regardless of
whether the corporation is a financial institution. Assets
described in section 290.191, subdivision 11, paragraph (l), are
assigned to the principal location of the issuer for equity
interests or of the obligor for debt interests.
new text end

new text begin (c) For purposes of this subdivision, "United States"
includes the District of Columbia and excludes the commonwealth
of Puerto Rico and possessions of the United States.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable
years beginning after December 31, 2005.
new text end