HF 518

as introduced - 91st Legislature (2019 - 2020) Posted on 02/07/2019 04:22pm

A bill for an act
relating to taxation; income; providing conformity to federal changes for section
168 bonus depreciation; eliminating the addition for 168 bonus depreciation;
amending Minnesota Statutes 2018, sections 290.01, subdivision 19; 290.0131,
subdivision 9; 290.0133, subdivision 11.

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

Section 1.

Minnesota Statutes 2018, section 290.01, subdivision 19, is amended to read:

Subd. 19.

Net income.

The term "net income" means the federal taxable income, as
defined in section 63 of the Internal Revenue Code of 1986, as amended through the date
named in this subdivision, incorporating the federal effective dates of changes to the Internal
Revenue Code and any elections made by the taxpayer in accordance with the Internal
Revenue Code in determining federal taxable income for federal income tax purposes, and
with the modifications provided in sections 290.0131 to 290.0136.

In the case of a regulated investment company or a fund thereof, as defined in section
851(a) or 851(g) of the Internal Revenue Code, federal taxable income means investment
company taxable income as defined in section 852(b)(2) of the Internal Revenue Code,
except that:

(1) the exclusion of net capital gain provided in section 852(b)(2)(A) of the Internal
Revenue Code does not apply;

(2) the deduction for dividends paid under section 852(b)(2)(D) of the Internal Revenue
Code must be applied by allowing a deduction for capital gain dividends and exempt-interest
dividends as defined in sections 852(b)(3)(C) and 852(b)(5) of the Internal Revenue Code;
and

(3) the deduction for dividends paid must also be applied in the amount of any
undistributed capital gains which the regulated investment company elects to have treated
as provided in section 852(b)(3)(D) of the Internal Revenue Code.

The net income of a real estate investment trust as defined and limited by section 856(a),
(b), and (c) of the Internal Revenue Code means the real estate investment trust taxable
income as defined in section 857(b)(2) of the Internal Revenue Code.

The net income of a designated settlement fund as defined in section 468B(d) of the
Internal Revenue Code means the gross income as defined in section 468B(b) of the Internal
Revenue Code.

The Internal Revenue Code of 1986, as amended through December 16, 2016, shall be
in effect for taxable years beginning after December 31, 1996 new text begin , except the provisions of
section 13201 of Public Law 115-97, relating to section 168 bonus depreciation, are effective
retroactively at the same time they became effective for federal purposes new text end .

Except as otherwise provided, references to the Internal Revenue Code in this subdivision
and sections 290.0131 to 290.0136 mean the code in effect for purposes of determining net
income for the applicable year.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 2.

Minnesota Statutes 2018, section 290.0131, subdivision 9, is amended to read:

Subd. 9.

Bonus depreciation.

(a) new text begin Effective for property placed in service before
September 27, 2017, new text end 80 percent of the depreciation deduction allowed under section 168(k)
of the Internal Revenue Code is an addition.

(b) For the purposes of this subdivision, if the taxpayer has an activity that in the taxable
year generates a deduction for depreciation under section 168(k) of the Internal Revenue
Code and the activity generates a loss for the taxable year that the taxpayer is not allowed
to claim for the taxable year, "the depreciation deduction allowed under section 168(k)" for
the taxable year is limited to excess of the depreciation claimed by the activity under section
168(k) over the amount of the loss from the activity that is not allowed in the taxable year.
In succeeding taxable years when the losses not allowed in the taxable year are allowed,
the depreciation under section 168(k) is allowed.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for taxable years beginning
after December 31, 2016.
new text end

Sec. 3.

Minnesota Statutes 2018, section 290.0133, subdivision 11, is amended to read:

Subd. 11.

Bonus depreciation.

new text begin Effective for property placed in service before September
27, 2017, new text end 80 percent of the depreciation deduction allowed under section 168(k)(1)(A) and
(k)(4)(A) of the Internal Revenue Code is an addition. For purposes of this subdivision, if
the taxpayer has an activity that in the taxable year generates a deduction for depreciation
under section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable
year that the taxpayer is not allowed to claim for the taxable year, "the depreciation allowed
under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess of the
depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A) over the
amount of the loss from the activity that is not allowed in the taxable year. In succeeding
taxable years when the losses not allowed in the taxable year are allowed, the depreciation
under section 168(k)(1)(A) and (k)(4)(A) is allowed.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for taxable years beginning
after December 31, 2016.
new text end