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HF 1493

as introduced - 88th Legislature (2013 - 2014) Posted on 03/13/2013 02:56pm

KEY: stricken = removed, old language. underscored = added, new language.

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Introduction Pdf Posted on 03/13/2013

Current Version - as introduced

1.1A bill for an act
1.2relating to taxes; individual income, corporate franchise, occupation; requiring
1.3additions; modifying subtractions, preferences, rates, and credits; modifying
1.4calculation of incentive payments; allowing a charitable contributions credit;
1.5providing clarifying authority for political subdivision imposing and collecting
1.6local lodging taxes; making conforming changes; repealing certain deductions
1.7and credits;amending Minnesota Statutes 2012, sections 289A.08, subdivision
1.83; 290.01, subdivisions 5, 19a, 19b, 19c, 19d; 290.06, subdivision 2c, by
1.9adding a subdivision; 290.067, subdivisions 1, 2a; 290.0671, subdivision 1;
1.10290.0675, subdivision 1; 290.068, subdivisions 3, 6a; 290.0802, subdivisions
1.111, 2; 290.091, subdivision 2; 290.0921, subdivision 3; 290.0922, subdivision 1;
1.12290.095, subdivision 2; 290.17, subdivision 4; 290.191, subdivision 5; 290.21,
1.13subdivision 4; 290C.02, subdivision 6; 290C.05; 290C.07; 298.01, subdivisions
1.143, 4; 469.190, by adding a subdivision; repealing Minnesota Statutes 2012,
1.15sections 290.01, subdivision 6b; 290.06, subdivisions 22a, 27, 28; 290.0672;
1.16290.0674; 290.0679; 290.0921, subdivision 7.
1.17BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.18    Section 1. Minnesota Statutes 2012, section 289A.08, subdivision 3, is amended to read:
1.19    Subd. 3. Corporations. (a) A corporation that is subject to the state's jurisdiction to
1.20tax under section 290.014, subdivision 5, must file a return, except that a foreign operating
1.21corporation as defined in section 290.01, subdivision 6b, is not required to file a return.
1.22(b) Members of a unitary business that are required to file a combined report on one
1.23return must designate a member of the unitary business to be responsible for tax matters,
1.24including the filing of returns, the payment of taxes, additions to tax, penalties, interest,
1.25or any other payment, and for the receipt of refunds of taxes or interest paid in excess of
1.26taxes lawfully due. The designated member must be a member of the unitary business that
1.27is filing the single combined report and either:
1.28(1) a corporation that is subject to the taxes imposed by chapter 290; or
1.29(2) a corporation that is not subject to the taxes imposed by chapter 290:
2.1(i) Such corporation consents by filing the return as a designated member under this
2.2clause to remit taxes, penalties, interest, or additions to tax due from the members of the
2.3unitary business subject to tax, and receive refunds or other payments on behalf of other
2.4members of the unitary business. The member designated under this clause is a "taxpayer"
2.5for the purposes of this chapter and chapter 270C, and is liable for any liability imposed
2.6on the unitary business under this chapter and chapter 290.
2.7(ii) If the state does not otherwise have the jurisdiction to tax the member designated
2.8under this clause, consenting to be the designated member does not create the jurisdiction
2.9to impose tax on the designated member, other than as described in item (i).
2.10(iii) The member designated under this clause must apply for a business tax account
2.11identification number.
2.12(c) The commissioner shall adopt rules for the filing of one return on behalf of the
2.13members of an affiliated group of corporations that are required to file a combined report.
2.14All members of an affiliated group that are required to file a combined report must file one
2.15return on behalf of the members of the group under rules adopted by the commissioner.
2.16(d) If a corporation claims on a return that it has paid tax in excess of the amount of
2.17taxes lawfully due, that corporation must include on that return information necessary for
2.18payment of the tax in excess of the amount lawfully due by electronic means.
2.19EFFECTIVE DATE.This section is effective for taxable years beginning after
2.20December 31, 2012.

2.21    Sec. 2. Minnesota Statutes 2012, section 290.01, subdivision 5, is amended to read:
2.22    Subd. 5. Domestic corporation. The term "domestic" when applied to a corporation
2.23means a corporation:
2.24(1) created or organized in the United States, or under the laws of the United States or
2.25of any state, the District of Columbia, or any political subdivision of any of the foregoing
2.26but not including the Commonwealth of Puerto Rico, or any possession of the United States;
2.27(2) which qualifies as a DISC, as defined in section 992(a) of the Internal Revenue
2.28Code; or
2.29(3) which qualifies as a FSC, as defined in section 922 of the Internal Revenue Code;
2.30(4) which is an affiliated corporation that is eligible to be included in a federal
2.31consolidated return under sections 1501 to 1505 of the Internal Revenue Code, if the
2.32corporation's property, payroll, and sales factors in the United States average:
2.33(i) 20 percent or more; or
2.34(ii) under 20 percent, if the corporation does not meet the requirements of section
2.35861(c) of the Internal Revenue Code; or
3.1(5) a corporation that is incorporated in or does business in a country that does not
3.2impose an income tax, or that imposes an income tax at a rate lower than 90 percent of
3.3the United States income tax rate on the income tax base of the corporation in the United
3.4States, if:
3.5(i) 50 percent or more of the sales, purchases, or payments of income or expenses,
3.6exclusive of payments for intangible property, of the corporation are made directly or
3.7indirectly to one or more members of a group of corporations that are included on the
3.8combined report under section 290.17; and
3.9(ii) the corporation does not conduct significant economic activity.
3.10EFFECTIVE DATE.This section is effective for taxable years beginning after
3.11December 31, 2012.

3.12    Sec. 3. Minnesota Statutes 2012, section 290.01, subdivision 19a, is amended to read:
3.13    Subd. 19a. Additions to federal taxable income. For individuals, estates, and
3.14trusts, there shall be added to federal taxable income:
3.15    (1)(i) interest income on obligations of any state other than Minnesota or a political
3.16or governmental subdivision, municipality, or governmental agency or instrumentality
3.17of any state other than Minnesota exempt from federal income taxes under the Internal
3.18Revenue Code or any other federal statute, but excluding interest on such an obligation
3.19issued and sold before July 1, 2013, by the state of Minnesota or a political or governmental
3.20subdivision, municipality, or governmental agency or instrumentality of Minnesota; and
3.21    (ii) exempt-interest dividends as defined in section 852(b)(5) of the Internal Revenue
3.22Code, except:
3.23(A) the portion of the exempt-interest dividends exempt from state taxation under
3.24the laws of the United States; and
3.25(B) the portion of the exempt-interest dividends derived from interest income
3.26on obligations of the state of Minnesota or its political or governmental subdivisions,
3.27municipalities, governmental agencies or instrumentalities, but only if the portion of the
3.28exempt-interest dividends from such Minnesota sources paid to all shareholders represents
3.2995 percent or more of the exempt-interest dividends, including any dividends exempt
3.30under subitem (A), that are paid by the regulated investment company as defined in section
3.31851(a) of the Internal Revenue Code, or the fund of the regulated investment company as
3.32defined in section 851(g) of the Internal Revenue Code, making the payment and only to
3.33the extent the interest is paid on obligations issued and sold before July 1, 2013; and
4.1    (iii) for the purposes of items (i) and (ii), interest on obligations of an Indian tribal
4.2government described in section 7871(c) of the Internal Revenue Code shall be treated as
4.3interest income on obligations of the state in which the tribe is located;
4.4    (2) to the extent allowed as a deduction under section 63(d) of the Internal Revenue
4.5Code the amount of:
4.6    (i) income, sales and use, motor vehicle sales, or excise taxes paid or accrued within
4.7the taxable year under this chapter and the amount of;
4.8    (ii) taxes based on net income paid, sales and use, motor vehicle sales, or excise
4.9taxes paid to any other state or to any province or territory of Canada, to the extent allowed
4.10as a deduction under section 63(d) of the Internal Revenue Code,;
4.11(iii) real property taxes paid on a home other than the principal residence, as that
4.12term is used in section 121 of the Internal Revenue Code, of the taxpayer or spouse;
4.13(iv) personal property taxes paid or accrued within the taxable year other than taxes
4.14on a principal residence, as that term is used in section 121 of the Internal Revenue Code;
4.15(v) qualified residence interest, as defined in section 163(h)(3) of the Internal
4.16Revenue Code, paid on a loan that is not acquisition indebtedness, as defined in section
4.17163(h)(3)(B) of the Internal Revenue Code, with respect to the principal residence, as that
4.18term is used in section 121 of the Internal Revenue Code, of the taxpayer or spouse at
4.19the time the interest accrued; and
4.20(vi) charitable contributions, as defined in section 170(c) of the Internal Revenue
4.21Code, to the extent allowed as a deduction under section 170(a) of the Internal Revenue
4.22Code;
4.23 but the sum of the addition under items (i) to (vi) may not be more than the amount by
4.24which the itemized deductions as allowed under section 63(d) of the Internal Revenue
4.25Code exceeds the amount of the standard deduction as defined in section 63(c) of the
4.26Internal Revenue Code, disregarding the amounts allowed under sections 63(c)(1)(C) and
4.2763(c)(1)(E) of the Internal Revenue Code, minus any addition that would have been
4.28required under clause (21) (16) if the taxpayer had claimed the standard deduction. For
4.29the purpose of this paragraph, the disallowance of itemized deductions under section 68
4.30of the Internal Revenue Code of 1986, income, sales and use, motor vehicle sales, or
4.31excise taxes are the last itemized deductions disallowed For purposes of this paragraph,
4.32income, sales and use, real property, and personal property taxes, nonacquisition qualified
4.33residence interest, and charitable contributions are the last itemized deductions disallowed
4.34under clause (14);
4.35    (3) the capital gain amount of a lump-sum distribution to which the special tax under
4.36section 1122(h)(3)(B)(ii) of the Tax Reform Act of 1986, Public Law 99-514, applies;
5.1    (4) the amount of income taxes paid or accrued within the taxable year under this
5.2chapter and taxes based on net income paid to any other state or any province or territory
5.3of Canada, to the extent allowed as a deduction in determining federal adjusted gross
5.4income. For the purpose of this paragraph, income taxes do not include the taxes imposed
5.5by sections 290.0922, subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729;
5.6    (5) the amount of expense, interest, or taxes disallowed pursuant to section 290.10
5.7other than expenses or interest used in computing net interest income for the subtraction
5.8allowed under subdivision 19b, clause (1);
5.9    (6) the amount of a partner's pro rata share of net income which does not flow
5.10through to the partner because the partnership elected to pay the tax on the income under
5.11section 6242(a)(2) of the Internal Revenue Code;
5.12    (7) 80 percent of the depreciation deduction allowed under section 168(k) of the
5.13Internal Revenue Code. For purposes of this clause, if the taxpayer has an activity that
5.14in the taxable year generates a deduction for depreciation under section 168(k) and the
5.15activity generates a loss for the taxable year that the taxpayer is not allowed to claim for
5.16the taxable year, "the depreciation allowed under section 168(k)" for the taxable year is
5.17limited to excess of the depreciation claimed by the activity under section 168(k) over the
5.18amount of the loss from the activity that is not allowed in the taxable year. In succeeding
5.19taxable years when the losses not allowed in the taxable year are allowed, the depreciation
5.20under section 168(k) is allowed;
5.21    (8) 80 percent of the amount by which the deduction allowed by section 179 of the
5.22Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
5.23Revenue Code of 1986, as amended through December 31, 2003;
5.24    (9) to the extent deducted in computing federal taxable income, the amount of the
5.25deduction allowable under section 199 of the Internal Revenue Code;
5.26    (10) for taxable years beginning before January 1, 2013, the exclusion allowed under
5.27section 139A of the Internal Revenue Code for federal subsidies for prescription drug plans;
5.28(11) the amount of expenses disallowed under section 290.10, subdivision 2;
5.29    (12) for taxable years beginning before January 1, 2010, the amount deducted for
5.30qualified tuition and related expenses under section 222 of the Internal Revenue Code, to
5.31the extent deducted from gross income;
5.32    (13) for taxable years beginning before January 1, 2010, the amount deducted for
5.33certain expenses of elementary and secondary school teachers under section 62(a)(2)(D)
5.34of the Internal Revenue Code, to the extent deducted from gross income;
5.35(14) the additional standard deduction for property taxes payable that is allowable
5.36under section 63(c)(1)(C) of the Internal Revenue Code;
6.1(15) the additional standard deduction for qualified motor vehicle sales taxes
6.2allowable under section 63(c)(1)(E) of the Internal Revenue Code;
6.3(16) (11) discharge of indebtedness income resulting from reacquisition of business
6.4indebtedness and deferred under section 108(i) of the Internal Revenue Code;
6.5(17) (12) the amount of unemployment compensation exempt from tax under section
6.685(c) of the Internal Revenue Code;
6.7(18) (13) changes to federal taxable income attributable to a net operating loss that
6.8the taxpayer elected to carry back for more than two years for federal purposes but for
6.9which the losses can be carried back for only two years under section 290.095, subdivision
6.1011, paragraph (c);
6.11(19) (14) to the extent included in the computation of federal taxable income in
6.12taxable years beginning after December 31, 2010, the amount of disallowed itemized
6.13deductions, but the amount of disallowed itemized deductions plus the addition required
6.14under clause (2) may not be more than the amount by which the itemized deductions as
6.15allowed under section 63(d) of the Internal Revenue Code exceeds the amount of the
6.16standard deduction as defined in section 63(c) of the Internal Revenue Code, disregarding
6.17the amounts allowed under sections 63(c)(1)(C) and 63(c)(1)(E) of the Internal Revenue
6.18Code, and reduced by any addition that would have been required under clause (21) (16) if
6.19the taxpayer had claimed the standard deduction:
6.20(i) the amount of disallowed itemized deductions is equal to the lesser of:
6.21(A) three percent of the excess of the taxpayer's federal adjusted gross income
6.22over the applicable amount; or
6.23(B) 80 percent of the amount of the itemized deductions otherwise allowable to the
6.24taxpayer under the Internal Revenue Code for the taxable year;
6.25(ii) the term "applicable amount" means $100,000, or $50,000 in the case of a
6.26married individual filing a separate return. Each dollar amount shall be increased by
6.27an amount equal to:
6.28(A) such dollar amount, multiplied by
6.29(B) the cost-of-living adjustment determined under section 1(f)(3) of the Internal
6.30Revenue Code for the calendar year in which the taxable year begins, by substituting
6.31"calendar year 1990" for "calendar year 1992" in subparagraph (B) thereof;
6.32(iii) the term "itemized deductions" does not include:
6.33(A) the deduction for medical expenses under section 213 of the Internal Revenue
6.34Code;
6.35(B) any deduction for investment interest as defined in section 163(d) of the Internal
6.36Revenue Code; and
7.1(C) the deduction under section 165(a) of the Internal Revenue Code for casualty or
7.2theft losses described in paragraph (2) or (3) of section 165(c) of the Internal Revenue
7.3Code or for losses described in section 165(d) of the Internal Revenue Code;
7.4(20) (15) to the extent included in federal taxable income in taxable years beginning
7.5after December 31, 2010, the amount of disallowed personal exemptions for taxpayers
7.6with federal adjusted gross income over the threshold amount:
7.7(i) the disallowed personal exemption amount is equal to the dollar amount of the
7.8personal exemptions claimed by the taxpayer in the computation of federal taxable income
7.9multiplied by the applicable percentage;
7.10(ii) "applicable percentage" means two percentage points for each $2,500 (or
7.11fraction thereof) by which the taxpayer's federal adjusted gross income for the taxable
7.12year exceeds the threshold amount. In the case of a married individual filing a separate
7.13return, the preceding sentence shall be applied by substituting "$1,250" for "$2,500." In
7.14no event shall the applicable percentage exceed 100 percent;
7.15(iii) the term "threshold amount" means:
7.16(A) $150,000 in the case of a joint return or a surviving spouse;
7.17(B) $125,000 in the case of a head of a household;
7.18(C) $100,000 in the case of an individual who is not married and who is not a
7.19surviving spouse or head of a household; and
7.20(D) $75,000 in the case of a married individual filing a separate return; and
7.21(iv) the thresholds shall be increased by an amount equal to:
7.22(A) such dollar amount, multiplied by
7.23(B) the cost-of-living adjustment determined under section 1(f)(3) of the Internal
7.24Revenue Code for the calendar year in which the taxable year begins, by substituting
7.25"calendar year 1990" for "calendar year 1992" in subparagraph (B) thereof; and
7.26(21) (16) to the extent deducted in the computation of federal taxable income,
7.27for taxable years beginning after December 31, 2010, and before January 1, 2013, the
7.28difference between the standard deduction allowed under section 63(c) of the Internal
7.29Revenue Code and the standard deduction allowed for 2011 and 2012 under the Internal
7.30Revenue Code as amended through December 1, 2010.
7.31EFFECTIVE DATE.This section is effective for taxable years beginning after
7.32December 31, 2012.

7.33    Sec. 4. Minnesota Statutes 2012, section 290.01, subdivision 19b, is amended to read:
7.34    Subd. 19b. Subtractions from federal taxable income. For individuals, estates,
7.35and trusts, there shall be subtracted from federal taxable income:
8.1    (1) net interest income on obligations of any authority, commission, or
8.2instrumentality of the United States to the extent includable in taxable income for federal
8.3income tax purposes but exempt from state income tax under the laws of the United States;
8.4    (2) if included in federal taxable income, the amount of any overpayment of income
8.5tax to Minnesota or to any other state, for any previous taxable year, whether the amount
8.6is received as a refund or as a credit to another taxable year's income tax liability;
8.7    (3) the amount paid to others, less the amount used to claim the credit allowed under
8.8section 290.0674, not to exceed $1,625 for each qualifying child in grades kindergarten
8.9to 6 and $2,500 for each qualifying child in grades 7 to 12, for tuition, textbooks, and
8.10transportation of each qualifying child in attending an elementary or secondary school
8.11situated in Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, wherein a
8.12resident of this state may legally fulfill the state's compulsory attendance laws, which
8.13is not operated for profit, and which adheres to the provisions of the Civil Rights Act
8.14of 1964 and chapter 363A. For the purposes of this clause, "tuition" includes fees or
8.15tuition as defined in section 290.0674, subdivision 1, clause (1). As used in this clause,
8.16"textbooks" includes books and other instructional materials and equipment purchased
8.17or leased for use in elementary and secondary schools in teaching only those subjects
8.18legally and commonly taught in public elementary and secondary schools in this state.
8.19Equipment expenses qualifying for deduction includes expenses as defined and limited in
8.20section 290.0674, subdivision 1, clause (3). "Textbooks" does not include instructional
8.21books and materials used in the teaching of religious tenets, doctrines, or worship, the
8.22purpose of which is to instill such tenets, doctrines, or worship, nor does it include books
8.23or materials for, or transportation to, extracurricular activities including sporting events,
8.24musical or dramatic events, speech activities, driver's education, or similar programs. No
8.25deduction is permitted for any expense the taxpayer incurred in using the taxpayer's or
8.26the qualifying child's vehicle to provide such transportation for a qualifying child. For
8.27purposes of the subtraction provided by this clause, "qualifying child" has the meaning
8.28given in section 32(c)(3) of the Internal Revenue Code;
8.29    (4) income as provided under section 290.0802;
8.30    (5) (4) to the extent included in federal adjusted gross income, income realized on
8.31disposition of property exempt from tax under section 290.491;
8.32    (6) to the extent not deducted or not deductible pursuant to section 408(d)(8)(E)
8.33of the Internal Revenue Code in determining federal taxable income by an individual
8.34who does not itemize deductions for federal income tax purposes for the taxable year, an
8.35amount equal to 50 percent of the excess of charitable contributions over $500 allowable
9.1as a deduction for the taxable year under section 170(a) of the Internal Revenue Code,
9.2under the provisions of Public Law 109-1 and Public Law 111-126;
9.3    (7) for individuals who are allowed a federal foreign tax credit for taxes that do not
9.4qualify for a credit under section 290.06, subdivision 22, an amount equal to the carryover
9.5of subnational foreign taxes for the taxable year, but not to exceed the total subnational
9.6foreign taxes reported in claiming the foreign tax credit. For purposes of this clause,
9.7"federal foreign tax credit" means the credit allowed under section 27 of the Internal
9.8Revenue Code, and "carryover of subnational foreign taxes" equals the carryover allowed
9.9under section 904(c) of the Internal Revenue Code minus national level foreign taxes to
9.10the extent they exceed the federal foreign tax credit;
9.11    (8) (5) in each of the five tax years immediately following the tax year in which an
9.12addition is required under subdivision 19a, clause (7), or 19c, clause (15) (13), in the case
9.13of a shareholder of a corporation that is an S corporation, an amount equal to one-fifth of the
9.14delayed depreciation. For purposes of this clause, "delayed depreciation" means the amount
9.15of the addition made by the taxpayer under subdivision 19a, clause (7), or subdivision 19c,
9.16clause (15) (13), in the case of a shareholder of an S corporation, minus the positive value
9.17of any net operating loss under section 172 of the Internal Revenue Code generated for the
9.18tax year of the addition. The resulting delayed depreciation cannot be less than zero;
9.19    (9) (6) job opportunity building zone income as provided under section 469.316;
9.20    (10) (7) to the extent included in federal taxable income, the amount of compensation
9.21paid to members of the Minnesota National Guard or other reserve components of the
9.22United States military for active service, excluding compensation for services performed
9.23under the Active Guard Reserve (AGR) program. For purposes of this clause, "active
9.24service" means (i) state active service as defined in section 190.05, subdivision 5a, clause
9.25(1); or (ii) federally funded state active service as defined in section 190.05, subdivision
9.265b
, but "active service" excludes service performed in accordance with section 190.08,
9.27subdivision 3
;
9.28    (11) (8) to the extent included in federal taxable income, the amount of compensation
9.29paid to Minnesota residents who are members of the armed forces of the United States
9.30or United Nations for active duty performed under United States Code, title 10; or the
9.31authority of the United Nations;
9.32    (12) (9) an amount, not to exceed $10,000, equal to qualified expenses related to a
9.33qualified donor's donation, while living, of one or more of the qualified donor's organs
9.34to another person for human organ transplantation. For purposes of this clause, "organ"
9.35means all or part of an individual's liver, pancreas, kidney, intestine, lung, or bone marrow;
9.36"human organ transplantation" means the medical procedure by which transfer of a human
10.1organ is made from the body of one person to the body of another person; "qualified
10.2expenses" means unreimbursed expenses for both the individual and the qualified donor
10.3for (i) travel, (ii) lodging, and (iii) lost wages net of sick pay, except that such expenses
10.4may be subtracted under this clause only once; and "qualified donor" means the individual
10.5or the individual's dependent, as defined in section 152 of the Internal Revenue Code. An
10.6individual may claim the subtraction in this clause for each instance of organ donation for
10.7transplantation during the taxable year in which the qualified expenses occur;
10.8    (13) (10) in each of the five tax years immediately following the tax year in which an
10.9addition is required under subdivision 19a, clause (8), or 19c, clause (16) (14), in the case
10.10of a shareholder of a corporation that is an S corporation, an amount equal to one-fifth of
10.11the addition made by the taxpayer under subdivision 19a, clause (8), or 19c, clause (16)
10.12 (14), in the case of a shareholder of a corporation that is an S corporation, minus the
10.13positive value of any net operating loss under section 172 of the Internal Revenue Code
10.14generated for the tax year of the addition. If the net operating loss exceeds the addition for
10.15the tax year, a subtraction is not allowed under this clause;
10.16    (14) (11) to the extent included in the federal taxable income of a nonresident of
10.17Minnesota, compensation paid to a service member as defined in United States Code, title
10.1810, section 101(a)(5), for military service as defined in the Servicemembers Civil Relief
10.19Act, Public Law 108-189, section 101(2);
10.20    (15) to the extent included in federal taxable income, the amount of national service
10.21educational awards received from the National Service Trust under United States Code,
10.22title 42, sections 12601 to 12604, for service in an approved Americorps National Service
10.23program;
10.24(16) (12) to the extent included in federal taxable income, discharge of indebtedness
10.25income resulting from reacquisition of business indebtedness included in federal taxable
10.26income under section 108(i) of the Internal Revenue Code. This subtraction applies only
10.27to the extent that the income was included in net income in a prior year as a result of the
10.28addition under section 290.01, subdivision 19a, clause (16) (11); and
10.29(17) (13) the amount of the net operating loss allowed under section 290.095,
10.30subdivision 11
, paragraph (c).
10.31EFFECTIVE DATE.This section is effective for taxable years beginning after
10.32December 31, 2012.

10.33    Sec. 5. Minnesota Statutes 2012, section 290.01, subdivision 19c, is amended to read:
10.34    Subd. 19c. Corporations; additions to federal taxable income. For corporations,
10.35there shall be added to federal taxable income:
11.1    (1) the amount of any deduction taken for federal income tax purposes for income,
11.2excise, or franchise taxes based on net income or related minimum taxes, including but not
11.3limited to the tax imposed under section 290.0922, paid by the corporation to Minnesota,
11.4another state, a political subdivision of another state, the District of Columbia, or any
11.5foreign country or possession of the United States;
11.6    (2) interest not subject to federal tax upon obligations of: the United States, its
11.7possessions, its agencies, or its instrumentalities; the state of Minnesota or any other
11.8state, any of its political or governmental subdivisions, any of its municipalities, or any
11.9of its governmental agencies or instrumentalities; the District of Columbia; or Indian
11.10tribal governments;
11.11    (3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal
11.12Revenue Code;
11.13    (4) the amount of any net operating loss deduction taken for federal income tax
11.14purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss
11.15deduction under section 810 of the Internal Revenue Code;
11.16    (5) the amount of any special deductions taken for federal income tax purposes
11.17under sections 241 to 247 and 965 of the Internal Revenue Code;
11.18    (6) losses from the business of mining, as defined in section 290.05, subdivision 1,
11.19clause (a), that are not subject to Minnesota income tax;
11.20    (7) the amount of any capital losses deducted for federal income tax purposes under
11.21sections 1211 and 1212 of the Internal Revenue Code;
11.22    (8) the exempt foreign trade income of a foreign sales corporation under sections
11.23921(a) and 291 of the Internal Revenue Code;
11.24    (9) the amount of percentage depletion deducted under sections 611 through 614 and
11.25291 of the Internal Revenue Code;
11.26    (10) (9) for certified pollution control facilities placed in service in a taxable year
11.27beginning before December 31, 1986, and for which amortization deductions were elected
11.28under section 169 of the Internal Revenue Code of 1954, as amended through December
11.2931, 1985, the amount of the amortization deduction allowed in computing federal taxable
11.30income for those facilities;
11.31    (11) the amount of any deemed dividend from a foreign operating corporation
11.32determined pursuant to section 290.17, subdivision 4, paragraph (g). The deemed dividend
11.33shall be reduced by the amount of the addition to income required by clauses (20), (21),
11.34(22), and (23);
12.1    (12) (10) the amount of a partner's pro rata share of net income which does not flow
12.2through to the partner because the partnership elected to pay the tax on the income under
12.3section 6242(a)(2) of the Internal Revenue Code;
12.4    (13) (11) the amount of net income excluded under section 114 of the Internal
12.5Revenue Code;
12.6    (14) (12) any increase in subpart F income, as defined in section 952(a) of the
12.7Internal Revenue Code, for the taxable year when subpart F income is calculated without
12.8regard to the provisions of Division C, title III, section 303(b) of Public Law 110-343;
12.9    (15) (13) 80 percent of the depreciation deduction allowed under section
12.10168(k)(1)(A) and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if
12.11the taxpayer has an activity that in the taxable year generates a deduction for depreciation
12.12under section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable
12.13year that the taxpayer is not allowed to claim for the taxable year, "the depreciation
12.14allowed under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess
12.15of the depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A)
12.16over the amount of the loss from the activity that is not allowed in the taxable year. In
12.17succeeding taxable years when the losses not allowed in the taxable year are allowed, the
12.18depreciation under section 168(k)(1)(A) and (k)(4)(A) is allowed;
12.19    (16) (14) 80 percent of the amount by which the deduction allowed by section 179 of
12.20the Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
12.21Revenue Code of 1986, as amended through December 31, 2003;
12.22    (17) (15) to the extent deducted in computing federal taxable income, the amount of
12.23the deduction allowable under section 199 of the Internal Revenue Code;
12.24    (18) for taxable years beginning before January 1, 2013, the exclusion allowed under
12.25section 139A of the Internal Revenue Code for federal subsidies for prescription drug plans;
12.26    (19) (16) the amount of expenses disallowed under section 290.10, subdivision 2; and
12.27    (20) an amount equal to the interest and intangible expenses, losses, and costs paid,
12.28accrued, or incurred by any member of the taxpayer's unitary group to or for the benefit
12.29of a corporation that is a member of the taxpayer's unitary business group that qualifies
12.30as a foreign operating corporation. For purposes of this clause, intangible expenses and
12.31costs include:
12.32    (i) expenses, losses, and costs for, or related to, the direct or indirect acquisition,
12.33use, maintenance or management, ownership, sale, exchange, or any other disposition of
12.34intangible property;
12.35    (ii) losses incurred, directly or indirectly, from factoring transactions or discounting
12.36transactions;
13.1    (iii) royalty, patent, technical, and copyright fees;
13.2    (iv) licensing fees; and
13.3    (v) other similar expenses and costs.
13.4For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
13.5applications, trade names, trademarks, service marks, copyrights, mask works, trade
13.6secrets, and similar types of intangible assets.
13.7This clause does not apply to any item of interest or intangible expenses or costs paid,
13.8accrued, or incurred, directly or indirectly, to a foreign operating corporation with respect
13.9to such item of income to the extent that the income to the foreign operating corporation
13.10is income from sources without the United States as defined in subtitle A, chapter 1,
13.11subchapter N, part 1, of the Internal Revenue Code;
13.12    (21) except as already included in the taxpayer's taxable income pursuant to clause
13.13(20), any interest income and income generated from intangible property received or
13.14accrued by a foreign operating corporation that is a member of the taxpayer's unitary
13.15group. For purposes of this clause, income generated from intangible property includes:
13.16    (i) income related to the direct or indirect acquisition, use, maintenance or
13.17management, ownership, sale, exchange, or any other disposition of intangible property;
13.18    (ii) income from factoring transactions or discounting transactions;
13.19    (iii) royalty, patent, technical, and copyright fees;
13.20    (iv) licensing fees; and
13.21    (v) other similar income.
13.22For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
13.23applications, trade names, trademarks, service marks, copyrights, mask works, trade
13.24secrets, and similar types of intangible assets.
13.25This clause does not apply to any item of interest or intangible income received or accrued
13.26by a foreign operating corporation with respect to such item of income to the extent that
13.27the income is income from sources without the United States as defined in subtitle A,
13.28chapter 1, subchapter N, part 1, of the Internal Revenue Code;
13.29    (22) the dividends attributable to the income of a foreign operating corporation that
13.30is a member of the taxpayer's unitary group in an amount that is equal to the dividends
13.31paid deduction of a real estate investment trust under section 561(a) of the Internal
13.32Revenue Code for amounts paid or accrued by the real estate investment trust to the
13.33foreign operating corporation;
14.1    (23) the income of a foreign operating corporation that is a member of the taxpayer's
14.2unitary group in an amount that is equal to gains derived from the sale of real or personal
14.3property located in the United States;
14.4    (24) for taxable years beginning before January 1, 2010, the additional amount
14.5allowed as a deduction for donation of computer technology and equipment under section
14.6170(e)(6) of the Internal Revenue Code, to the extent deducted from taxable income; and
14.7(25) (17) discharge of indebtedness income resulting from reacquisition of business
14.8indebtedness and deferred under section 108(i) of the Internal Revenue Code.
14.9EFFECTIVE DATE.This section is effective for taxable years beginning after
14.10December 31, 2012.

14.11    Sec. 6. Minnesota Statutes 2012, section 290.01, subdivision 19d, is amended to read:
14.12    Subd. 19d. Corporations; modifications decreasing federal taxable income. For
14.13corporations, there shall be subtracted from federal taxable income after the increases
14.14provided in subdivision 19c:
14.15    (1) the amount of foreign dividend gross-up added to gross income for federal
14.16income tax purposes under section 78 of the Internal Revenue Code;
14.17    (2) the amount of salary expense not allowed for federal income tax purposes due to
14.18claiming the work opportunity credit under section 51 of the Internal Revenue Code;
14.19    (3) any dividend (not including any distribution in liquidation) paid within the
14.20taxable year by a national or state bank to the United States, or to any instrumentality of
14.21the United States exempt from federal income taxes, on the preferred stock of the bank
14.22owned by the United States or the instrumentality;
14.23    (4) amounts disallowed for intangible drilling costs due to differences between
14.24this chapter and the Internal Revenue Code in taxable years beginning before January
14.251, 1987, as follows:
14.26    (i) to the extent the disallowed costs are represented by physical property, an amount
14.27equal to the allowance for depreciation under Minnesota Statutes 1986, section 290.09,
14.28subdivision 7
, subject to the modifications contained in subdivision 19e; and
14.29    (ii) to the extent the disallowed costs are not represented by physical property, an
14.30amount equal to the allowance for cost depletion under Minnesota Statutes 1986, section
14.31290.09, subdivision 8 ;
14.32    (5) the deduction for capital losses pursuant to sections 1211 and 1212 of the
14.33Internal Revenue Code, except that:
14.34    (i) for capital losses incurred in taxable years beginning after December 31, 1986,
14.35capital loss carrybacks shall not be allowed;
15.1    (ii) for capital losses incurred in taxable years beginning after December 31, 1986,
15.2a capital loss carryover to each of the 15 taxable years succeeding the loss year shall be
15.3allowed;
15.4    (iii) for capital losses incurred in taxable years beginning before January 1, 1987, a
15.5capital loss carryback to each of the three taxable years preceding the loss year, subject to
15.6the provisions of Minnesota Statutes 1986, section 290.16, shall be allowed; and
15.7    (iv) for capital losses incurred in taxable years beginning before January 1, 1987,
15.8a capital loss carryover to each of the five taxable years succeeding the loss year to the
15.9extent such loss was not used in a prior taxable year and subject to the provisions of
15.10Minnesota Statutes 1986, section 290.16, shall be allowed;
15.11    (6) an amount for interest and expenses relating to income not taxable for federal
15.12income tax purposes, if (i) the income is taxable under this chapter and (ii) the interest and
15.13expenses were disallowed as deductions under the provisions of section 171(a)(2), 265 or
15.14291 of the Internal Revenue Code in computing federal taxable income;
15.15    (7) in the case of mines, oil and gas wells, other natural deposits, and timber for
15.16which percentage depletion was disallowed pursuant to subdivision 19c, clause (9) (8), a
15.17reasonable allowance for depletion based on actual cost. In the case of leases the deduction
15.18must be apportioned between the lessor and lessee in accordance with rules prescribed
15.19by the commissioner. In the case of property held in trust, the allowable deduction must
15.20be apportioned between the income beneficiaries and the trustee in accordance with the
15.21pertinent provisions of the trust, or if there is no provision in the instrument, on the basis
15.22of the trust's income allocable to each;
15.23    (8) for certified pollution control facilities placed in service in a taxable year
15.24beginning before December 31, 1986, and for which amortization deductions were elected
15.25under section 169 of the Internal Revenue Code of 1954, as amended through December
15.2631, 1985, an amount equal to the allowance for depreciation under Minnesota Statutes
15.271986, section 290.09, subdivision 7;
15.28    (9) amounts included in federal taxable income that are due to refunds of income,
15.29excise, or franchise taxes based on net income or related minimum taxes paid by the
15.30corporation to Minnesota, another state, a political subdivision of another state, the
15.31District of Columbia, or a foreign country or possession of the United States to the extent
15.32that the taxes were added to federal taxable income under section 290.01, subdivision 19c,
15.33clause (1), in a prior taxable year;
15.34    (10) 80 percent of royalties, fees, or other like income accrued or received from a
15.35foreign operating corporation or a foreign corporation which is part of the same unitary
15.36business as the receiving corporation, unless the income resulting from such payments or
16.1accruals is income from sources within the United States as defined in subtitle A, chapter
16.21, subchapter N, part 1, of the Internal Revenue Code;
16.3    (11) (10) income or gains from the business of mining as defined in section 290.05,
16.4subdivision 1
, clause (a), that are not subject to Minnesota franchise tax;
16.5    (12) (11) the amount of disability access expenditures in the taxable year which are not
16.6allowed to be deducted or capitalized under section 44(d)(7) of the Internal Revenue Code;
16.7    (13) (12) the amount of qualified research expenses not allowed for federal income
16.8tax purposes under section 280C(c) of the Internal Revenue Code, but only to the extent
16.9that the amount exceeds the amount of the credit allowed under section 290.068;
16.10    (14) (13) the amount of salary expenses not allowed for federal income tax purposes
16.11due to claiming the Indian employment credit under section 45A(a) of the Internal
16.12Revenue Code;
16.13    (15) (14) for a corporation whose foreign sales corporation, as defined in section
16.14922 of the Internal Revenue Code, constituted a foreign operating corporation during any
16.15taxable year ending before January 1, 1995, and a return was filed by August 15, 1996,
16.16claiming the deduction under section 290.21, subdivision 4, for income received from
16.17the foreign operating corporation, an amount equal to 1.23 multiplied by the amount of
16.18income excluded under section 114 of the Internal Revenue Code, provided the income is
16.19not income of a foreign operating company;
16.20    (16) (15) any decrease in subpart F income, as defined in section 952(a) of the
16.21Internal Revenue Code, for the taxable year when subpart F income is calculated without
16.22regard to the provisions of Division C, title III, section 303(b) of Public Law 110-343;
16.23    (17) (16) in each of the five tax years immediately following the tax year in which an
16.24addition is required under subdivision 19c, clause (15) (13), an amount equal to one-fifth
16.25of the delayed depreciation. For purposes of this clause, "delayed depreciation" means the
16.26amount of the addition made by the taxpayer under subdivision 19c, clause (15) (13). The
16.27resulting delayed depreciation cannot be less than zero;
16.28    (18) (17) in each of the five tax years immediately following the tax year in which an
16.29addition is required under subdivision 19c, clause (16) (14), an amount equal to one-fifth
16.30of the amount of the addition; and
16.31(19) (18) to the extent included in federal taxable income, discharge of indebtedness
16.32income resulting from reacquisition of business indebtedness included in federal taxable
16.33income under section 108(i) of the Internal Revenue Code. This subtraction applies only
16.34to the extent that the income was included in net income in a prior year as a result of the
16.35addition under section 290.01, subdivision 19c, clause (25) (17).
17.1EFFECTIVE DATE.This section is effective for taxable years beginning after
17.2December 31, 2012.

17.3    Sec. 7. Minnesota Statutes 2012, section 290.06, subdivision 2c, is amended to read:
17.4    Subd. 2c. Schedules of rates for individuals, estates, and trusts. (a) The income
17.5taxes imposed by this chapter upon married individuals filing joint returns and surviving
17.6spouses as defined in section 2(a) of the Internal Revenue Code must be computed by
17.7applying to their taxable net income the following schedule of rates:
17.8    (1) On the first $25,680, 5.35 percent;
17.9    (2) On all over $25,680, but not over $102,030, 7.05 percent;
17.10    (3) On all over $102,030, 7.85 percent.
17.11    Married individuals filing separate returns, estates, and trusts must compute their
17.12income tax by applying the above rates to their taxable income, except that the income
17.13brackets will be one-half of the above amounts.
17.14    (b) The income taxes imposed by this chapter upon unmarried individuals must be
17.15computed by applying to taxable net income the following schedule of rates:
17.16    (1) On the first $17,570, 5.35 percent;
17.17    (2) On all over $17,570, but not over $57,710, 7.05 percent;
17.18    (3) On all over $57,710, 7.85 percent.
17.19    (c) The income taxes imposed by this chapter upon unmarried individuals qualifying
17.20as a head of household as defined in section 2(b) of the Internal Revenue Code must be
17.21computed by applying to taxable net income the following schedule of rates:
17.22    (1) On the first $21,630, 5.35 percent;
17.23    (2) On all over $21,630, but not over $86,910, 7.05 percent;
17.24    (3) On all over $86,910, 7.85 percent.
17.25    (d) In lieu of a tax computed according to the rates set forth in this subdivision, the
17.26tax of any individual taxpayer whose taxable net income for the taxable year is less than
17.27an amount determined by the commissioner must be computed in accordance with tables
17.28prepared and issued by the commissioner of revenue based on income brackets of not
17.29more than $100. The amount of tax for each bracket shall be computed at the rates set
17.30forth in this subdivision, provided that the commissioner may disregard a fractional part of
17.31a dollar unless it amounts to 50 cents or more, in which case it may be increased to $1.
17.32    (e) An individual who is not a Minnesota resident for the entire year must compute
17.33the individual's Minnesota income tax as provided in this subdivision. After the
17.34application of the nonrefundable credits provided in this chapter, the tax liability must
17.35then be multiplied by a fraction in which:
18.1    (1) the numerator is the individual's Minnesota source federal adjusted gross income
18.2as defined in section 62 of the Internal Revenue Code and increased by the additions
18.3required under section 290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), (9), (12),
18.4(13), and (16) to (18) and (11) to (13), and reduced by the Minnesota assignable portion of
18.5the subtraction for United States government interest under section 290.01, subdivision
18.619b
, clause (1), and the subtractions under section 290.01, subdivision 19b, clauses (8),
18.7(9), (13), (14), (16), and (17) (5), (6), and (10) to (13), after applying the allocation and
18.8assignability provisions of section 290.081, clause (a), or 290.17; and
18.9    (2) the denominator is the individual's federal adjusted gross income as defined in
18.10section 62 of the Internal Revenue Code of 1986, increased by the amounts specified in
18.11section 290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), (9), (12), (13), and (16) to
18.12(18) and (11) to (13), and reduced by the amounts specified in section 290.01, subdivision
18.1319b
, clauses (1), (8), (9), (13), (14), (16), and (17) (5), (6), and (10) to (13).
18.14EFFECTIVE DATE.This section is effective for taxable years beginning after
18.15December 31, 2012.

18.16    Sec. 8. Minnesota Statutes 2012, section 290.06, is amended by adding a subdivision
18.17to read:
18.18    Subd. 36. Charitable contributions credit. (a) A taxpayer, other than a corporation,
18.19estate, or trust, is allowed a credit against the tax imposed by this chapter equal to eight
18.20percent of the amount by which eligible charitable contributions exceed the greater of:
18.21(1) two percent of the taxpayer's adjusted gross income for the taxable year; or
18.22(2) $400 ($800 for married joint).
18.23(b) For purposes of this subdivision, "eligible charitable contributions" means
18.24charitable contributions allowable as a deduction for the taxable year under section 170(a)
18.25of the Internal Revenue Code, subject to the limitations of section 170(b) of the Internal
18.26Revenue Code, and determined without regard to whether or not the taxpayer itemizes
18.27deductions.
18.28(c) For purposes of this subdivision, "adjusted gross income" has the meaning given
18.29in section 62 of the Internal Revenue Code.
18.30(d) For a nonresident or part-year resident, the credit must be allocated based on the
18.31percentage calculated under subdivision 2c, paragraph (e).
18.32EFFECTIVE DATE.This section is effective for taxable years beginning after
18.33December 31, 2012.

19.1    Sec. 9. Minnesota Statutes 2012, section 290.067, subdivision 1, is amended to read:
19.2    Subdivision 1. Amount of credit. (a) A taxpayer may take as a credit against the
19.3tax due from the taxpayer and a spouse, if any, under this chapter an amount equal to the
19.4dependent care credit for which the taxpayer is eligible pursuant to the provisions of
19.5section 21 of the Internal Revenue Code subject to the limitations provided in subdivision
19.62 except that in determining whether the child qualified as a dependent, income received
19.7as a Minnesota family investment program grant or allowance to or on behalf of the child
19.8must not be taken into account in determining whether the child received more than half
19.9of the child's support from the taxpayer, and the provisions of section 32(b)(1)(D) of
19.10the Internal Revenue Code do not apply.
19.11(b) If a child who has not attained the age of six years at the close of the taxable year
19.12is cared for at a licensed family day care home operated by the child's parent, the taxpayer
19.13is deemed to have paid employment-related expenses. If the child is 16 months old or
19.14younger at the close of the taxable year, the amount of expenses deemed to have been paid
19.15equals the maximum limit for one qualified individual under section 21(c) and (d) of the
19.16Internal Revenue Code. If the child is older than 16 months of age but has not attained the
19.17age of six years at the close of the taxable year, the amount of expenses deemed to have
19.18been paid equals the amount the licensee would charge for the care of a child of the same
19.19age for the same number of hours of care.
19.20(c) If a married couple:
19.21(1) has a child who has not attained the age of one year at the close of the taxable year;
19.22(2) files a joint tax return for the taxable year; and
19.23(3) does not participate in a dependent care assistance program as defined in section
19.24129 of the Internal Revenue Code, in lieu of the actual employment related expenses paid
19.25for that child under paragraph (a) or the deemed amount under paragraph (b), the lesser of
19.26(i) the combined earned income of the couple or (ii) the amount of the maximum limit for
19.27one qualified individual under section 21(c) and (d) of the Internal Revenue Code will
19.28be deemed to be the employment related expense paid for that child. The earned income
19.29limitation of section 21(d) of the Internal Revenue Code shall not apply to this deemed
19.30amount. These deemed amounts apply regardless of whether any employment-related
19.31expenses have been paid.
19.32(d) If the taxpayer is not required and does not file a federal individual income tax
19.33return for the tax year, no credit is allowed for any amount paid to any person unless:
19.34(1) the name, address, and taxpayer identification number of the person are included
19.35on the return claiming the credit; or
20.1(2) if the person is an organization described in section 501(c)(3) of the Internal
20.2Revenue Code and exempt from tax under section 501(a) of the Internal Revenue Code,
20.3the name and address of the person are included on the return claiming the credit.
20.4In the case of a failure to provide the information required under the preceding sentence,
20.5the preceding sentence does not apply if it is shown that the taxpayer exercised due
20.6diligence in attempting to provide the information required.
20.7In the case of a nonresident, part-year resident, or a person who has earned income
20.8not subject to tax under this chapter including earned income excluded pursuant to section
20.9290.01, subdivision 19b , clause (9), the credit determined under section 21 of the Internal
20.10Revenue Code must be allocated based on the ratio by which the earned income of the
20.11claimant and the claimant's spouse from Minnesota sources bears to the total earned
20.12income of the claimant and the claimant's spouse.
20.13For residents of Minnesota, the subtractions for military pay under section 290.01,
20.14subdivision 19b
, clauses (10) and (11) (7) and (8), are not considered "earned income not
20.15subject to tax under this chapter."
20.16For residents of Minnesota, the exclusion of combat pay under section 112 of the
20.17Internal Revenue Code is not considered "earned income not subject to tax under this
20.18chapter."
20.19EFFECTIVE DATE.This section is effective for taxable years beginning after
20.20December 31, 2012.

20.21    Sec. 10. Minnesota Statutes 2012, section 290.067, subdivision 2a, is amended to read:
20.22    Subd. 2a. Income. (a) For purposes of this section, "income" means the sum of
20.23the following:
20.24(1) federal adjusted gross income as defined in section 62 of the Internal Revenue
20.25Code; and
20.26(2) the sum of the following amounts to the extent not included in clause (1):
20.27(i) all nontaxable income;
20.28(ii) the amount of a passive activity loss that is not disallowed as a result of section
20.29469, paragraph (i) or (m) of the Internal Revenue Code and the amount of passive activity
20.30loss carryover allowed under section 469(b) of the Internal Revenue Code;
20.31(iii) an amount equal to the total of any discharge of qualified farm indebtedness
20.32of a solvent individual excluded from gross income under section 108(g) of the Internal
20.33Revenue Code;
20.34(iv) cash public assistance and relief;
21.1(v) any pension or annuity (including railroad retirement benefits, all payments
21.2received under the federal Social Security Act, supplemental security income, and veterans
21.3benefits), which was not exclusively funded by the claimant or spouse, or which was
21.4funded exclusively by the claimant or spouse and which funding payments were excluded
21.5from federal adjusted gross income in the years when the payments were made;
21.6(vi) interest received from the federal or a state government or any instrumentality
21.7or political subdivision thereof;
21.8(vii) workers' compensation;
21.9(viii) nontaxable strike benefits;
21.10(ix) the gross amounts of payments received in the nature of disability income or
21.11sick pay as a result of accident, sickness, or other disability, whether funded through
21.12insurance or otherwise;
21.13(x) a lump-sum distribution under section 402(e)(3) of the Internal Revenue Code of
21.141986, as amended through December 31, 1995;
21.15(xi) contributions made by the claimant to an individual retirement account,
21.16including a qualified voluntary employee contribution; simplified employee pension plan;
21.17self-employed retirement plan; cash or deferred arrangement plan under section 401(k)
21.18of the Internal Revenue Code; or deferred compensation plan under section 457 of the
21.19Internal Revenue Code;
21.20(xii) nontaxable scholarship or fellowship grants;
21.21(xiii) the amount of deduction allowed under section 199 of the Internal Revenue
21.22Code;
21.23(xiv) the amount of deduction allowed under section 220 or 223 of the Internal
21.24Revenue Code;
21.25(xv) the amount of tuition expenses required to be added to income under section
21.26290.01, subdivision 19a, clause (12);
21.27(xvi) the amount deducted for certain expenses of elementary and secondary school
21.28teachers under section 62(a)(2)(D) of the Internal Revenue Code; and
21.29(xvii) (xvi) unemployment compensation.
21.30In the case of an individual who files an income tax return on a fiscal year basis, the
21.31term "federal adjusted gross income" means federal adjusted gross income reflected in the
21.32fiscal year ending in the next calendar year. Federal adjusted gross income may not be
21.33reduced by the amount of a net operating loss carryback or carryforward or a capital loss
21.34carryback or carryforward allowed for the year.
21.35(b) "Income" does not include:
21.36(1) amounts excluded pursuant to the Internal Revenue Code, sections 101(a) and 102;
22.1(2) amounts of any pension or annuity that were exclusively funded by the claimant
22.2or spouse if the funding payments were not excluded from federal adjusted gross income
22.3in the years when the payments were made;
22.4(3) surplus food or other relief in kind supplied by a governmental agency;
22.5(4) relief granted under chapter 290A;
22.6(5) child support payments received under a temporary or final decree of dissolution
22.7or legal separation; and
22.8(6) restitution payments received by eligible individuals and excludable interest as
22.9defined in section 803 of the Economic Growth and Tax Relief Reconciliation Act of
22.102001, Public Law 107-16.
22.11EFFECTIVE DATE.This section is effective for taxable years beginning after
22.12December 31, 2012.

22.13    Sec. 11. Minnesota Statutes 2012, section 290.0671, subdivision 1, is amended to read:
22.14    Subdivision 1. Credit allowed. (a) An individual is allowed a credit against the tax
22.15imposed by this chapter equal to a percentage of earned income. To receive a credit, a
22.16taxpayer must be eligible for a credit under section 32 of the Internal Revenue Code.
22.17(b) For individuals with no qualifying children, the credit equals 1.9125 percent of
22.18the first $4,620 of earned income. The credit is reduced by 1.9125 percent of earned
22.19income or adjusted gross income, whichever is greater, in excess of $5,770, but in no
22.20case is the credit less than zero.
22.21(c) For individuals with one qualifying child, the credit equals 8.5 percent of the first
22.22$6,920 of earned income and 8.5 percent of earned income over $12,080 but less than
22.23$13,450. The credit is reduced by 5.73 percent of earned income or adjusted gross income,
22.24whichever is greater, in excess of $15,080, but in no case is the credit less than zero.
22.25(d) For individuals with two or more qualifying children, the credit equals ten percent
22.26of the first $9,720 of earned income and 20 percent of earned income over $14,860 but less
22.27than $16,800. The credit is reduced by 10.3 percent of earned income or adjusted gross
22.28income, whichever is greater, in excess of $17,890, but in no case is the credit less than zero.
22.29(e) For a nonresident or part-year resident, the credit must be allocated based on the
22.30percentage calculated under section 290.06, subdivision 2c, paragraph (e).
22.31(f) For a person who was a resident for the entire tax year and has earned income
22.32not subject to tax under this chapter, including income excluded under section 290.01,
22.33subdivision 19b
, clause (9), the credit must be allocated based on the ratio of federal
22.34adjusted gross income reduced by the earned income not subject to tax under this chapter
22.35over federal adjusted gross income. For purposes of this paragraph, the subtractions for
23.1military pay under section 290.01, subdivision 19b, clauses (10) and (11) (7) and (8), are
23.2not considered "earned income not subject to tax under this chapter."
23.3For the purposes of this paragraph, the exclusion of combat pay under section 112
23.4of the Internal Revenue Code is not considered "earned income not subject to tax under
23.5this chapter."
23.6(g) For tax years beginning after December 31, 2007, and before December 31,
23.72010, the $5,770 in paragraph (b), the $15,080 in paragraph (c), and the $17,890 in
23.8paragraph (d), after being adjusted for inflation under subdivision 7, are each increased by
23.9$3,000 for married taxpayers filing joint returns. For tax years beginning after December
23.1031, 2008, the commissioner shall annually adjust the $3,000 by the percentage determined
23.11pursuant to the provisions of section 1(f) of the Internal Revenue Code, except that in
23.12section 1(f)(3)(B), the word "2007" shall be substituted for the word "1992." For 2009,
23.13the commissioner shall then determine the percent change from the 12 months ending on
23.14August 31, 2007, to the 12 months ending on August 31, 2008, and in each subsequent
23.15year, from the 12 months ending on August 31, 2007, to the 12 months ending on August
23.1631 of the year preceding the taxable year. The earned income thresholds as adjusted
23.17for inflation must be rounded to the nearest $10. If the amount ends in $5, the amount
23.18is rounded up to the nearest $10. The determination of the commissioner under this
23.19subdivision is not a rule under the Administrative Procedure Act.
23.20(h) For tax years beginning after December 31, 2010, and before January 1, 2012,
23.21the $5,770 in paragraph (b), the $15,080 in paragraph (c), and the $17,890 in paragraph
23.22(d), after being adjusted for inflation under subdivision 7, are each increased by $5,000 for
23.23married taxpayers filing joint returns. For tax years beginning after December 31, 2010,
23.24and before January 1, 2012, the commissioner shall annually adjust the $5,000 by the
23.25percentage determined pursuant to the provisions of section 1(f) of the Internal Revenue
23.26Code, except that in section 1(f)(3)(B), the word "2008" shall be substituted for the word
23.27"1992." For 2011, the commissioner shall then determine the percent change from the 12
23.28months ending on August 31, 2008, to the 12 months ending on August 31, 2010. The
23.29earned income thresholds as adjusted for inflation must be rounded to the nearest $10. If the
23.30amount ends in $5, the amount is rounded up to the nearest $10. The determination of the
23.31commissioner under this subdivision is not a rule under the Administrative Procedure Act.
23.32(i) The commissioner shall construct tables showing the amount of the credit at
23.33various income levels and make them available to taxpayers. The tables shall follow
23.34the schedule contained in this subdivision, except that the commissioner may graduate
23.35the transition between income brackets.
24.1EFFECTIVE DATE.This section is effective for taxable years beginning after
24.2December 31, 2012.

24.3    Sec. 12. Minnesota Statutes 2012, section 290.0675, subdivision 1, is amended to read:
24.4    Subdivision 1. Definitions. (a) For purposes of this section the following terms
24.5have the meanings given.
24.6(b) "Earned income" means the sum of the following, to the extent included in
24.7Minnesota taxable income:
24.8(1) earned income as defined in section 32(c)(2) of the Internal Revenue Code;
24.9(2) income received from a retirement pension, profit-sharing, stock bonus, or
24.10annuity plan; and
24.11(3) Social Security benefits as defined in section 86(d)(1) of the Internal Revenue
24.12Code.
24.13(c) "Taxable income" means net income as defined in section 290.01, subdivision 19.
24.14(d) "Earned income of lesser-earning spouse" means the earned income of the spouse
24.15with the lesser amount of earned income as defined in paragraph (b) for the taxable year
24.16minus the sum of (i) the amount for one exemption under section 151(d) of the Internal
24.17Revenue Code and (ii) one-half the amount of the standard deduction under section
24.1863(c)(2)(A) and (4) of the Internal Revenue Code minus one-half of any addition required
24.19under section 290.01, subdivision 19a, clause (21) (16), and one-half of the addition that
24.20would have been required under section 290.01, subdivision 19a, clause (21) (16), if the
24.21taxpayer had claimed the standard deduction.
24.22EFFECTIVE DATE.This section is effective for taxable years beginning after
24.23December 31, 2012.

24.24    Sec. 13. Minnesota Statutes 2012, section 290.068, subdivision 3, is amended to read:
24.25    Subd. 3. Limitation; carryover. (a)(1) The credit for a taxable year beginning
24.26before January 1, 2010, and after December 31, 2012, shall not exceed the liability for
24.27tax. "Liability for tax" for purposes of this section means the tax imposed under section
24.28290.06, subdivision 1 , for the taxable year reduced by the sum of the nonrefundable
24.29credits allowed under this chapter.
24.30    (2) In the case of a corporation which is a partner in a partnership, the credit allowed
24.31for the taxable year shall not exceed the lesser of the amount determined under clause (1)
24.32for the taxable year or an amount (separately computed with respect to the corporation's
24.33interest in the trade or business or entity) equal to the amount of tax attributable to that
25.1portion of taxable income which is allocable or apportionable to the corporation's interest
25.2in the trade or business or entity.
25.3    (b) If the amount of the credit determined under this section for any taxable year
25.4exceeds the limitation under clause (a), the excess shall be a research credit carryover to
25.5each of the 15 succeeding taxable years. The entire amount of the excess unused credit for
25.6the taxable year shall be carried first to the earliest of the taxable years to which the credit
25.7may be carried and then to each successive year to which the credit may be carried. The
25.8amount of the unused credit which may be added under this clause shall not exceed the
25.9taxpayer's liability for tax less the research credit for the taxable year.
25.10EFFECTIVE DATE.This section is effective for taxable years beginning after
25.11December 31, 2012.

25.12    Sec. 14. Minnesota Statutes 2012, section 290.068, subdivision 6a, is amended to read:
25.13    Subd. 6a. Credit to be refundable. If the amount of credit allowed in this section
25.14for qualified research expenses incurred in taxable years beginning after December 31,
25.152009, and before January 1, 2013, exceeds the taxpayer's tax liability under this chapter,
25.16the commissioner shall refund the excess amount. The credit allowed for qualified research
25.17expenses incurred in taxable years beginning after December 31, 2009, and before January
25.181, 2013, must be used before any research credit earned under subdivision 3.
25.19EFFECTIVE DATE.This section is effective for taxable years beginning after
25.20December 31, 2012.

25.21    Sec. 15. Minnesota Statutes 2012, section 290.0802, subdivision 1, is amended to read:
25.22    Subdivision 1. Definitions. For purposes of this section, the following terms have
25.23the meanings given.
25.24(a) "Adjusted gross income" means federal adjusted gross income as used in section
25.2522(d) of the Internal Revenue Code for the taxable year, plus a lump-sum distribution as
25.26defined in section 402(e)(3) of the Internal Revenue Code, and less any pension, annuity,
25.27or disability benefits included in federal gross income but not subject to state taxation
25.28other than the subtraction allowed under section 290.01, subdivision 19b, clause (4) (3).
25.29(b) "Disability income" means disability income as defined in section 22(c)(2)(B)(iii)
25.30of the Internal Revenue Code.
25.31(c) "Nontaxable retirement and disability benefits" means the amount of pension,
25.32annuity, or disability benefits that would be included in the reduction under section
26.122(c)(3) of the Internal Revenue Code and pension, annuity, or disability benefits included
26.2in federal gross income but not subject to state taxation.
26.3(d) "Qualified individual" means a qualified individual as defined in section 22(b) of
26.4the Internal Revenue Code.
26.5EFFECTIVE DATE.This section is effective for taxable years beginning after
26.6December 31, 2012.

26.7    Sec. 16. Minnesota Statutes 2012, section 290.0802, subdivision 2, is amended to read:
26.8    Subd. 2. Subtraction. (a) A qualified individual is allowed a subtraction from federal
26.9taxable income of the individual's subtraction base amount. The excess of the subtraction
26.10base amount over the taxable net income computed without regard to the subtraction for
26.11the elderly or disabled under section 290.01, subdivision 19b, clause (4) (3), may be used
26.12to reduce the amount of a lump sum distribution subject to tax under section 290.032.
26.13(b)(1) The initial subtraction base amount equals
26.14(i) $12,000 for a married taxpayer filing a joint return if a spouse is a qualified
26.15individual,
26.16(ii) $9,600 for a single taxpayer, and
26.17(iii) $6,000 for a married taxpayer filing a separate federal return.
26.18(2) The qualified individual's initial subtraction base amount, then, must be reduced
26.19by the sum of nontaxable retirement and disability benefits and one-half of the amount of
26.20adjusted gross income in excess of the following thresholds:
26.21(i) $18,000 for a married taxpayer filing a joint return if both spouses are qualified
26.22individuals,
26.23(ii) $14,500 for a single taxpayer or for a married couple filing a joint return if only
26.24one spouse is a qualified individual, and
26.25(iii) $9,000 for a married taxpayer filing a separate federal return.
26.26(3) In the case of a qualified individual who is under the age of 65, the maximum
26.27amount of the subtraction base may not exceed the taxpayer's disability income.
26.28(4) The resulting amount is the subtraction base amount.
26.29EFFECTIVE DATE.This section is effective for taxable years beginning after
26.30December 31, 2012.

26.31    Sec. 17. Minnesota Statutes 2012, section 290.091, subdivision 2, is amended to read:
26.32    Subd. 2. Definitions. For purposes of the tax imposed by this section, the following
26.33terms have the meanings given:
27.1    (a) "Alternative minimum taxable income" means the sum of the following for
27.2the taxable year:
27.3    (1) the taxpayer's federal alternative minimum taxable income as defined in section
27.455(b)(2) of the Internal Revenue Code;
27.5    (2) the taxpayer's itemized deductions allowed in computing federal alternative
27.6minimum taxable income, but excluding:
27.7    (i) the charitable contribution deduction under section 170 of the Internal Revenue
27.8Code;
27.9    (ii) the medical expense deduction;
27.10    (iii) (ii) the casualty, theft, and disaster loss deduction; and
27.11    (iv) (iii) the impairment-related work expenses of a disabled person;
27.12    (3) for depletion allowances computed under section 613A(c) of the Internal
27.13Revenue Code, with respect to each property (as defined in section 614 of the Internal
27.14Revenue Code), to the extent not included in federal alternative minimum taxable income,
27.15the excess of the deduction for depletion allowable under section 611 of the Internal
27.16Revenue Code for the taxable year over the adjusted basis of the property at the end of the
27.17taxable year (determined without regard to the depletion deduction for the taxable year);
27.18    (4) to the extent not included in federal alternative minimum taxable income, the
27.19amount of the tax preference for intangible drilling cost under section 57(a)(2) of the
27.20Internal Revenue Code determined without regard to subparagraph (E);
27.21    (5) to the extent not included in federal alternative minimum taxable income, the
27.22amount of interest income as provided by section 290.01, subdivision 19a, clause (1); and
27.23    (6) the amount of addition required by section 290.01, subdivision 19a, clauses (7)
27.24to (9), (12), (13), and (16) to (18) (11) to (13);
27.25    less the sum of the amounts determined under the following:
27.26    (1) interest income as defined in section 290.01, subdivision 19b, clause (1);
27.27    (2) an overpayment of state income tax as provided by section 290.01, subdivision
27.2819b
, clause (2), to the extent included in federal alternative minimum taxable income;
27.29    (3) the amount of investment interest paid or accrued within the taxable year on
27.30indebtedness to the extent that the amount does not exceed net investment income, as
27.31defined in section 163(d)(4) of the Internal Revenue Code. Interest does not include
27.32amounts deducted in computing federal adjusted gross income;
27.33    (4) amounts subtracted from federal taxable income as provided by section 290.01,
27.34subdivision 19b
, clauses (6), (8) to (14), and (16) (5) to (12); and
27.35(5) the amount of the net operating loss allowed under section 290.095, subdivision
27.3611
, paragraph (c).
28.1    In the case of an estate or trust, alternative minimum taxable income must be
28.2computed as provided in section 59(c) of the Internal Revenue Code.
28.3    (b) "Investment interest" means investment interest as defined in section 163(d)(3)
28.4of the Internal Revenue Code.
28.5    (c) "Net minimum tax" means the minimum tax imposed by this section.
28.6    (d) "Regular tax" means the tax that would be imposed under this chapter (without
28.7regard to this section and section 290.032), reduced by the sum of the nonrefundable
28.8credits allowed under this chapter.
28.9    (e) "Tentative minimum tax" equals 6.4 percent of alternative minimum taxable
28.10income after subtracting the exemption amount determined under subdivision 3.
28.11EFFECTIVE DATE.This section is effective for taxable years beginning after
28.12December 31, 2012.

28.13    Sec. 18. Minnesota Statutes 2012, section 290.0921, subdivision 3, is amended to read:
28.14    Subd. 3. Alternative minimum taxable income. "Alternative minimum taxable
28.15income" is Minnesota net income as defined in section 290.01, subdivision 19, and
28.16includes the adjustments and tax preference items in sections 56, 57, 58, and 59(d), (e),
28.17(f), and (h) of the Internal Revenue Code. If a corporation files a separate company
28.18Minnesota tax return, the minimum tax must be computed on a separate company basis.
28.19If a corporation is part of a tax group filing a unitary return, the minimum tax must be
28.20computed on a unitary basis. The following adjustments must be made.
28.21(1) For purposes of the depreciation adjustments under section 56(a)(1) and
28.2256(g)(4)(A) of the Internal Revenue Code, the basis for depreciable property placed in
28.23service in a taxable year beginning before January 1, 1990, is the adjusted basis for federal
28.24income tax purposes, including any modification made in a taxable year under section
28.25290.01, subdivision 19e , or Minnesota Statutes 1986, section 290.09, subdivision 7,
28.26paragraph (c).
28.27For taxable years beginning after December 31, 2000, the amount of any remaining
28.28modification made under section 290.01, subdivision 19e, or Minnesota Statutes 1986,
28.29section 290.09, subdivision 7, paragraph (c), not previously deducted is a depreciation
28.30allowance in the first taxable year after December 31, 2000.
28.31(2) The portion of the depreciation deduction allowed for federal income tax
28.32purposes under section 168(k) of the Internal Revenue Code that is required as an addition
28.33under section 290.01, subdivision 19c, clause (15) (13), is disallowed in determining
28.34alternative minimum taxable income.
29.1(3) The subtraction for depreciation allowed under section 290.01, subdivision
29.219d
, clause (17) (16), is allowed as a depreciation deduction in determining alternative
29.3minimum taxable income.
29.4(4) The alternative tax net operating loss deduction under sections 56(a)(4) and 56(d)
29.5of the Internal Revenue Code does not apply.
29.6(5) The special rule for certain dividends under section 56(g)(4)(C)(ii) of the Internal
29.7Revenue Code does not apply.
29.8(6) The special rule for dividends from section 936 companies under section
29.956(g)(4)(C)(iii) does not apply.
29.10(7) The tax preference for depletion under section 57(a)(1) of the Internal Revenue
29.11Code does not apply.
29.12(8) The tax preference for intangible drilling costs under section 57(a)(2) of the
29.13Internal Revenue Code must be calculated without regard to subparagraph (E) and the
29.14subtraction under section 290.01, subdivision 19d, clause (4).
29.15(9) The tax preference for tax exempt interest under section 57(a)(5) of the Internal
29.16Revenue Code does not apply.
29.17(10) The tax preference for charitable contributions of appreciated property under
29.18section 57(a)(6) of the Internal Revenue Code does not apply.
29.19(11) For purposes of calculating the tax preference for accelerated depreciation or
29.20amortization on certain property placed in service before January 1, 1987, under section
29.2157(a)(7) of the Internal Revenue Code, the deduction allowable for the taxable year is the
29.22deduction allowed under section 290.01, subdivision 19e.
29.23For taxable years beginning after December 31, 2000, the amount of any remaining
29.24modification made under section 290.01, subdivision 19e, not previously deducted is a
29.25depreciation or amortization allowance in the first taxable year after December 31, 2004.
29.26(12) For purposes of calculating the adjustment for adjusted current earnings in
29.27section 56(g) of the Internal Revenue Code, the term "alternative minimum taxable
29.28income" as it is used in section 56(g) of the Internal Revenue Code, means alternative
29.29minimum taxable income as defined in this subdivision, determined without regard to the
29.30adjustment for adjusted current earnings in section 56(g) of the Internal Revenue Code.
29.31(13) For purposes of determining the amount of adjusted current earnings under
29.32section 56(g)(3) of the Internal Revenue Code, no adjustment shall be made under section
29.3356(g)(4) of the Internal Revenue Code with respect to (i) the amount of foreign dividend
29.34gross-up subtracted as provided in section 290.01, subdivision 19d, clause (1), or (ii) the
29.35amount of refunds of income, excise, or franchise taxes subtracted as provided in section
30.1290.01, subdivision 19d , clause (9), or (iii) the amount of royalties, fees or other like
30.2income subtracted as provided in section 290.01, subdivision 19d, clause (10).
30.3(14) Alternative minimum taxable income excludes the income from operating in a
30.4job opportunity building zone as provided under section 469.317.
30.5(15) Alternative minimum taxable income excludes the income from operating in a
30.6biotechnology and health sciences industry zone as provided under section 469.337.
30.7Items of tax preference must not be reduced below zero as a result of the
30.8modifications in this subdivision.
30.9EFFECTIVE DATE.This section is effective for taxable years beginning after
30.10December 31, 2012.

30.11    Sec. 19. Minnesota Statutes 2012, section 290.0922, subdivision 1, is amended to read:
30.12    Subdivision 1. Imposition. (a) In addition to the tax imposed by this chapter without
30.13regard to this section, the franchise tax imposed on a corporation required to file under
30.14section 289A.08, subdivision 3, other than a corporation treated as an "S" corporation
30.15under section 290.9725 for the taxable year includes a tax equal to the following amounts:
30.16
30.17
If the sum of the corporation's Minnesota
property, payrolls, and sales or receipts is:
the tax equals:
30.18
30.19
less than
$
500,000
930,000
$
0
30.20
30.21
$
500,000
930,000
to
$
999,999
1,869,999
$
100
190
30.22
30.23
$
1,000,000
1,870,000
to
$
4,999,999
9,339,999
$
300
560
30.24
30.25
$
5,000,000
9,340,000
to
$
9,999,999
18,679,999
$
1,000
1,870
30.26
30.27
$
10,000,000
18,680,000
to
$
19,999,999
37,359,999
$
2,000
3,740
30.28
30.29
$
20,000,000
37,360,000
or
more
$
5,000
9,340
30.30(b) A tax is imposed for each taxable year on a corporation required to file a return
30.31under section 289A.12, subdivision 3, that is treated as an "S" corporation under section
30.32290.9725 and on a partnership required to file a return under section 289A.12, subdivision
30.333
, other than a partnership that derives over 80 percent of its income from farming. The
30.34tax imposed under this paragraph is due on or before the due date of the return for the
30.35taxpayer due under section 289A.18, subdivision 1. The commissioner shall prescribe
30.36the return to be used for payment of this tax. The tax under this paragraph is equal to
30.37the following amounts:
31.1
31.2
31.3
31.4
If the sum of the S corporation's
or partnership's Minnesota
property, payrolls, and sales or
receipts is:
the tax equals:
31.5
31.6
less than
$
500,000
930,000
$
0
31.7
31.8
$
500,000
930,000
to
$
999,999
1,869,999
$
100
190
31.9
31.10
$
1,000,000
1,870,000
to
$
4,999,999
9,339,999
$
300
560
31.11
31.12
$
5,000,000
9,340,000
to
$
9,999,999
18,679,999
$
1,000
1,870
31.13
31.14
$
10,000,000
18,680,000
to
$
19,999,999
37,359,999
$
2,000
3,740
31.15
31.16
$
20,000,000
37,360,000
or
more
$
5,000
9,340
31.17(c) The commissioner shall adjust the dollar amounts of both the tax and the property,
31.18payrolls, and sales or receipts thresholds in paragraphs (a) and (b) by the percentage
31.19determined pursuant to the provisions of section 1(f) of the Internal Revenue Code, except
31.20that in section 1(f)(3)(B) the word "2012" must be substituted for the word "1992." For
31.212014, the commissioner shall determine the percentage change from the 12 months ending
31.22on August 31, 2012, to the 12 months ending on August 31, 2013, and in each subsequent
31.23year, from the 12 months ending on August 31, 2012, to the 12 months ending on August
31.2431 of the year preceding the taxable year. The determination of the commissioner pursuant
31.25to this subdivision is not a "rule" subject to the Administrative Procedure Act contained in
31.26chapter 14. The tax amounts as adjusted must be rounded to the nearest $10 amount and
31.27the threshold amounts must be adjusted to the nearest $10,000 amount. For tax amounts
31.28that end in $5, the amount is rounded up to the nearest $10 amount and for threshold
31.29amounts that end in $5,000, the amount is rounded up to the nearest $10,000.
31.30EFFECTIVE DATE.This section is effective for taxable years beginning after
31.31December 31, 2012.

31.32    Sec. 20. Minnesota Statutes 2012, section 290.095, subdivision 2, is amended to read:
31.33    Subd. 2. Defined and limited. (a) The term "net operating loss" as used in this
31.34section shall mean a net operating loss as defined in section 172(c) of the Internal Revenue
31.35Code, with the modifications specified in subdivision 4. The deductions provided in
31.36section 290.21 and the modification provided in section 290.01, subdivision 19d, clause
31.37(10), cannot be used in the determination of a net operating loss.
31.38(b) The term "net operating loss deduction" as used in this section means the
31.39aggregate of the net operating loss carryovers to the taxable year, computed in accordance
32.1with subdivision 3. The provisions of section 172(b) of the Internal Revenue Code relating
32.2to the carryback of net operating losses, do not apply.
32.3EFFECTIVE DATE.This section is effective for taxable years beginning after
32.4December 31, 2012.

32.5    Sec. 21. Minnesota Statutes 2012, section 290.17, subdivision 4, is amended to read:
32.6    Subd. 4. Unitary business principle. (a) If a trade or business conducted wholly
32.7within this state or partly within and partly without this state is part of a unitary business,
32.8the entire income of the unitary business is subject to apportionment pursuant to section
32.9290.191 . Notwithstanding subdivision 2, paragraph (c), none of the income of a unitary
32.10business is considered to be derived from any particular source and none may be allocated
32.11to a particular place except as provided by the applicable apportionment formula. The
32.12provisions of this subdivision do not apply to business income subject to subdivision 5,
32.13income of an insurance company, or income of an investment company determined under
32.14section 290.36.
32.15(b) The term "unitary business" means business activities or operations which
32.16result in a flow of value between them. The term may be applied within a single legal
32.17entity or between multiple entities and without regard to whether each entity is a sole
32.18proprietorship, a corporation, a partnership or a trust.
32.19(c) Unity is presumed whenever there is unity of ownership, operation, and use,
32.20evidenced by centralized management or executive force, centralized purchasing,
32.21advertising, accounting, or other controlled interaction, but the absence of these
32.22centralized activities will not necessarily evidence a nonunitary business. Unity is also
32.23presumed when business activities or operations are of mutual benefit, dependent upon or
32.24contributory to one another, either individually or as a group.
32.25(d) Where a business operation conducted in Minnesota is owned by a business
32.26entity that carries on business activity outside the state different in kind from that
32.27conducted within this state, and the other business is conducted entirely outside the state, it
32.28is presumed that the two business operations are unitary in nature, interrelated, connected,
32.29and interdependent unless it can be shown to the contrary.
32.30(e) Unity of ownership is not deemed to exist when a corporation is involved unless
32.31that corporation is a member of a group of two or more business entities and more than 50
32.32percent of the voting stock of each member of the group is directly or indirectly owned
32.33by a common owner or by common owners, either corporate or noncorporate, or by one
32.34or more of the member corporations of the group. For this purpose, the term "voting
33.1stock" shall include membership interests of mutual insurance holding companies formed
33.2under section 66A.40.
33.3(f) The net income and apportionment factors under section 290.191 or 290.20 of
33.4foreign corporations and other foreign entities which are part of a unitary business shall not
33.5be included in the net income or the apportionment factors of the unitary business, except
33.6that foreign corporations or other foreign entities that are included on a federal income tax
33.7return must be included on the combined report. Income of a foreign partnership or other
33.8foreign entity treated as a partnership included in federal taxable income, as defined in
33.9section 63 of the Internal Revenue Code, and the proportionate amount of apportionment
33.10factors, must be included in the combined report. A foreign corporation or other foreign
33.11entity which is not included on a combined report and which is required to file a return
33.12under this chapter shall file on a separate return basis. The net income and apportionment
33.13factors under section 290.191 or 290.20 of foreign operating corporations shall not be
33.14included in the net income or the apportionment factors of the unitary business except as
33.15provided in paragraph (g).
33.16(g) The adjusted net income of a foreign operating corporation shall be deemed to
33.17be paid as a dividend on the last day of its taxable year to each shareholder thereof, in
33.18proportion to each shareholder's ownership, with which such corporation is engaged in
33.19a unitary business. Such deemed dividend shall be treated as a dividend under section
33.20290.21, subdivision 4.
33.21Dividends actually paid by a foreign operating corporation to a corporate shareholder
33.22which is a member of the same unitary business as the foreign operating corporation shall
33.23be eliminated from the net income of the unitary business in preparing a combined report
33.24for the unitary business. The adjusted net income of a foreign operating corporation
33.25shall be its net income adjusted as follows:
33.26(1) any taxes paid or accrued to a foreign country, the commonwealth of Puerto
33.27Rico, or a United States possession or political subdivision of any of the foregoing shall
33.28be a deduction; and
33.29(2) the subtraction from federal taxable income for payments received from foreign
33.30corporations or foreign operating corporations under section 290.01, subdivision 19d,
33.31clause (10), shall not be allowed.
33.32If a foreign operating corporation incurs a net loss, neither income nor deduction from
33.33that corporation shall be included in determining the net income of the unitary business.
33.34(h) (g) For purposes of determining the net income of a unitary business and the
33.35factors to be used in the apportionment of net income pursuant to section 290.191 or
33.36290.20 , there must be included only the income and apportionment factors of domestic
34.1corporations or other domestic entities other than foreign operating corporations that are
34.2determined to be part of the unitary business pursuant to this subdivision, notwithstanding
34.3that foreign corporations or other foreign entities might be included in the unitary
34.4business, except that foreign corporations or other foreign entities that are included on a
34.5federal income tax return must be included on the combined report. Income of a foreign
34.6partnership or other foreign entity treated as a partnership included in federal taxable
34.7income, as defined in section 63 of the Internal Revenue Code, and the proportionate
34.8amount of apportionment factors, must be included in the combined report.
34.9(i) Deductions for expenses, interest, or taxes otherwise allowable under this chapter
34.10that are connected with or allocable against dividends, deemed dividends described
34.11in paragraph (g), or royalties, fees, or other like income described in section 290.01,
34.12subdivision 19d
, clause (10), shall not be disallowed.
34.13(j) (h) Each corporation or other entity, except a sole proprietorship, that is part of
34.14a unitary business must file combined reports as the commissioner determines. On the
34.15reports, all intercompany transactions between entities included pursuant to paragraph (h)
34.16 (g) must be eliminated and the entire net income of the unitary business determined in
34.17accordance with this subdivision is apportioned among the entities by using each entity's
34.18Minnesota factors for apportionment purposes in the numerators of the apportionment
34.19formula and the total factors for apportionment purposes of all entities included pursuant
34.20to paragraph (h) (g) in the denominators of the apportionment formula. All sales of the
34.21unitary business made within Minnesota pursuant to section 290.191 or 290.20 must be
34.22included on the separate combined report of a corporation that is a member of the unitary
34.23business and is subject to the jurisdiction of this state to impose tax under this chapter.
34.24(k) (i) If a corporation has been divested from a unitary business and is included in a
34.25combined report for a fractional part of the common accounting period of the combined
34.26report:
34.27(1) its income includable in the combined report is its income incurred for that part
34.28of the year determined by proration or separate accounting; and
34.29(2) its sales, property, and payroll included in the apportionment formula must
34.30be prorated or accounted for separately.
34.31EFFECTIVE DATE.This section is effective for taxable years beginning after
34.32December 31, 2012.

34.33    Sec. 22. Minnesota Statutes 2012, section 290.191, subdivision 5, is amended to read:
34.34    Subd. 5. Determination of sales factor. For purposes of this section, the following
34.35rules apply in determining the sales factor.
35.1    (a) The sales factor includes all sales, gross earnings, or receipts received in the
35.2ordinary course of the business, except that the following types of income are not included
35.3in the sales factor:
35.4    (1) interest;
35.5    (2) dividends;
35.6    (3) sales of capital assets as defined in section 1221 of the Internal Revenue Code;
35.7    (4) sales of property used in the trade or business, except sales of leased property of
35.8a type which is regularly sold as well as leased; and
35.9    (5) sales of debt instruments as defined in section 1275(a)(1) of the Internal Revenue
35.10Code or sales of stock; and.
35.11    (6) royalties, fees, or other like income of a type which qualify for a subtraction from
35.12federal taxable income under section 290.01, subdivision 19d, clause (10).
35.13    (b) Sales of tangible personal property are made within this state if the property is
35.14received by a purchaser at a point within this state, and the taxpayer is taxable in this state,
35.15regardless of the f.o.b. point, other conditions of the sale, or the ultimate destination
35.16of the property.
35.17    (c) Tangible personal property delivered to a common or contract carrier or foreign
35.18vessel for delivery to a purchaser in another state or nation is a sale in that state or nation,
35.19regardless of f.o.b. point or other conditions of the sale.
35.20    (d) Notwithstanding paragraphs (b) and (c), when intoxicating liquor, wine,
35.21fermented malt beverages, cigarettes, or tobacco products are sold to a purchaser who is
35.22licensed by a state or political subdivision to resell this property only within the state of
35.23ultimate destination, the sale is made in that state.
35.24    (e) Sales made by or through a corporation that is qualified as a domestic
35.25international sales corporation under section 992 of the Internal Revenue Code are not
35.26considered to have been made within this state.
35.27    (f) Sales, rents, royalties, and other income in connection with real property is
35.28attributed to the state in which the property is located.
35.29    (g) Receipts from the lease or rental of tangible personal property, including finance
35.30leases and true leases, must be attributed to this state if the property is located in this
35.31state and to other states if the property is not located in this state. Receipts from the
35.32lease or rental of moving property including, but not limited to, motor vehicles, rolling
35.33stock, aircraft, vessels, or mobile equipment are included in the numerator of the receipts
35.34factor to the extent that the property is used in this state. The extent of the use of moving
35.35property is determined as follows:
35.36    (1) A motor vehicle is used wholly in the state in which it is registered.
36.1    (2) The extent that rolling stock is used in this state is determined by multiplying
36.2the receipts from the lease or rental of the rolling stock by a fraction, the numerator of
36.3which is the miles traveled within this state by the leased or rented rolling stock and the
36.4denominator of which is the total miles traveled by the leased or rented rolling stock.
36.5    (3) The extent that an aircraft is used in this state is determined by multiplying the
36.6receipts from the lease or rental of the aircraft by a fraction, the numerator of which is
36.7the number of landings of the aircraft in this state and the denominator of which is the
36.8total number of landings of the aircraft.
36.9    (4) The extent that a vessel, mobile equipment, or other mobile property is used in
36.10the state is determined by multiplying the receipts from the lease or rental of the property
36.11by a fraction, the numerator of which is the number of days during the taxable year the
36.12property was in this state and the denominator of which is the total days in the taxable year.
36.13    (h) Royalties and other income not described in paragraph (a), clause (6), received
36.14for the use of or for the privilege of using intangible property, including patents,
36.15know-how, formulas, designs, processes, patterns, copyrights, trade names, service names,
36.16franchises, licenses, contracts, customer lists, or similar items, must be attributed to the
36.17state in which the property is used by the purchaser. If the property is used in more
36.18than one state, the royalties or other income must be apportioned to this state pro rata
36.19according to the portion of use in this state. If the portion of use in this state cannot be
36.20determined, the royalties or other income must be excluded from both the numerator
36.21and the denominator. Intangible property is used in this state if the purchaser uses the
36.22intangible property or the rights therein in the regular course of its business operations in
36.23this state, regardless of the location of the purchaser's customers.
36.24    (i) Sales of intangible property are made within the state in which the property is
36.25used by the purchaser. If the property is used in more than one state, the sales must be
36.26apportioned to this state pro rata according to the portion of use in this state. If the
36.27portion of use in this state cannot be determined, the sale must be excluded from both the
36.28numerator and the denominator of the sales factor. Intangible property is used in this
36.29state if the purchaser used the intangible property in the regular course of its business
36.30operations in this state.
36.31    (j) Receipts from the performance of services must be attributed to the state where
36.32the services are received. For the purposes of this section, receipts from the performance
36.33of services provided to a corporation, partnership, or trust may only be attributed to a state
36.34where it has a fixed place of doing business. If the state where the services are received is
36.35not readily determinable or is a state where the corporation, partnership, or trust receiving
36.36the service does not have a fixed place of doing business, the services shall be deemed
37.1to be received at the location of the office of the customer from which the services were
37.2ordered in the regular course of the customer's trade or business. If the ordering office
37.3cannot be determined, the services shall be deemed to be received at the office of the
37.4customer to which the services are billed.
37.5    (k) For the purposes of this subdivision and subdivision 6, paragraph (l), receipts
37.6from management, distribution, or administrative services performed by a corporation
37.7or trust for a fund of a corporation or trust regulated under United States Code, title 15,
37.8sections 80a-1 through 80a-64, must be attributed to the state where the shareholder of
37.9the fund resides. Under this paragraph, receipts for services attributed to shareholders are
37.10determined on the basis of the ratio of: (1) the average of the outstanding shares in the
37.11fund owned by shareholders residing within Minnesota at the beginning and end of each
37.12year; and (2) the average of the total number of outstanding shares in the fund at the
37.13beginning and end of each year. Residence of the shareholder, in the case of an individual,
37.14is determined by the mailing address furnished by the shareholder to the fund. Residence
37.15of the shareholder, when the shares are held by an insurance company as a depositor for
37.16the insurance company policyholders, is the mailing address of the policyholders. In
37.17the case of an insurance company holding the shares as a depositor for the insurance
37.18company policyholders, if the mailing address of the policyholders cannot be determined
37.19by the taxpayer, the receipts must be excluded from both the numerator and denominator.
37.20Residence of other shareholders is the mailing address of the shareholder.
37.21EFFECTIVE DATE.This section is effective for taxable years beginning after
37.22December 31, 2012.

37.23    Sec. 23. Minnesota Statutes 2012, section 290.21, subdivision 4, is amended to read:
37.24    Subd. 4. Dividends received from another corporation. (a)(1) Eighty percent
37.25of dividends received by a corporation during the taxable year from another corporation,
37.26in which the recipient owns 20 percent or more of the stock, by vote and value, not
37.27including stock described in section 1504(a)(4) of the Internal Revenue Code when the
37.28corporate stock with respect to which dividends are paid does not constitute the stock in
37.29trade of the taxpayer or would not be included in the inventory of the taxpayer, or does not
37.30constitute property held by the taxpayer primarily for sale to customers in the ordinary
37.31course of the taxpayer's trade or business, or when the trade or business of the taxpayer
37.32does not consist principally of the holding of the stocks and the collection of the income
37.33and gains therefrom; and
37.34    (2)(i) the remaining 20 percent of dividends if the dividends received are the stock in
37.35an affiliated company transferred in an overall plan of reorganization and the dividend
38.1is eliminated in consolidation under Treasury Department Regulation 1.1502-14(a), as
38.2amended through December 31, 1989;
38.3    (ii) the remaining 20 percent of dividends if the dividends are received from a
38.4corporation which is subject to tax under section 290.36 and which is a member of an
38.5affiliated group of corporations as defined by the Internal Revenue Code and the dividend
38.6is eliminated in consolidation under Treasury Department Regulation 1.1502-14(a), as
38.7amended through December 31, 1989, or is deducted under an election under section
38.8243(b) of the Internal Revenue Code; or
38.9    (iii) the remaining 20 percent of the dividends if the dividends are received from a
38.10property and casualty insurer as defined under section 60A.60, subdivision 8, which is a
38.11member of an affiliated group of corporations as defined by the Internal Revenue Code
38.12and either: (A) the dividend is eliminated in consolidation under Treasury Regulation
38.131.1502-14(a), as amended through December 31, 1989; or (B) the dividend is deducted
38.14under an election under section 243(b) of the Internal Revenue Code.
38.15    (b) Seventy percent of dividends received by a corporation during the taxable year
38.16from another corporation in which the recipient owns less than 20 percent of the stock,
38.17by vote or value, not including stock described in section 1504(a)(4) of the Internal
38.18Revenue Code when the corporate stock with respect to which dividends are paid does not
38.19constitute the stock in trade of the taxpayer, or does not constitute property held by the
38.20taxpayer primarily for sale to customers in the ordinary course of the taxpayer's trade or
38.21business, or when the trade or business of the taxpayer does not consist principally of the
38.22holding of the stocks and the collection of income and gain therefrom.
38.23    (c) The dividend deduction provided in this subdivision shall be allowed only with
38.24respect to dividends that are included in a corporation's Minnesota taxable net income
38.25for the taxable year.
38.26    The dividend deduction provided in this subdivision does not apply to a dividend
38.27from a corporation which, for the taxable year of the corporation in which the distribution
38.28is made or for the next preceding taxable year of the corporation, is a corporation exempt
38.29from tax under section 501 of the Internal Revenue Code.
38.30The dividend deduction provided in this subdivision does not apply to a dividend
38.31received from a real estate investment trust, as defined in section 856 of the Internal
38.32Revenue Code.
38.33    The dividend deduction provided in this subdivision applies to the amount of
38.34regulated investment company dividends only to the extent determined under section
38.35854(b) of the Internal Revenue Code.
39.1    The dividend deduction provided in this subdivision shall not be allowed with
39.2respect to any dividend for which a deduction is not allowed under the provisions of
39.3section 246(c) of the Internal Revenue Code.
39.4    (d) If dividends received by a corporation that does not have nexus with Minnesota
39.5under the provisions of Public Law 86-272 are included as income on the return of
39.6an affiliated corporation permitted or required to file a combined report under section
39.7290.17, subdivision 4 , or 290.34, subdivision 2, then for purposes of this subdivision the
39.8determination as to whether the trade or business of the corporation consists principally
39.9of the holding of stocks and the collection of income and gains therefrom shall be made
39.10with reference to the trade or business of the affiliated corporation having a nexus with
39.11Minnesota.
39.12    (e) The deduction provided by this subdivision does not apply if the dividends are
39.13paid by a FSC as defined in section 922 of the Internal Revenue Code.
39.14    (f) If one or more of the members of the unitary group whose income is included on
39.15the combined report received a dividend, the deduction under this subdivision for each
39.16member of the unitary business required to file a return under this chapter is the product
39.17of: (1) 100 percent of the dividends received by members of the group; (2) the percentage
39.18allowed pursuant to paragraph (a) or (b); and (3) the percentage of the taxpayer's business
39.19income apportionable to this state for the taxable year under section 290.191 or 290.20.
39.20EFFECTIVE DATE.This section is effective for taxable years beginning after
39.21December 31, 2012.

39.22    Sec. 24. Minnesota Statutes 2012, section 290C.02, subdivision 6, is amended to read:
39.23    Subd. 6. Forest land. "Forest land" means land containing a minimum of 20
39.24contiguous acres for which the owner has implemented a forest management plan that was
39.25prepared or updated within the past ten years by an approved plan writer. For purposes of
39.26this subdivision, acres are considered to be contiguous even if they are separated by a road,
39.27waterway, railroad track, or other similar intervening property. At least 50 percent of the
39.28contiguous acreage must meet the definition of forest land in section 88.01, subdivision 7.
39.29For the purposes of sections 290C.01 to 290C.11, forest land does not include the following:
39.30(i) land used for residential or agricultural purposes,;
39.31(ii) land enrolled in the reinvest in Minnesota program, a state or federal conservation
39.32reserve or easement reserve program under sections 103F.501 to 103F.531, the Minnesota
39.33agricultural property tax law under section 273.111, or land subject to agricultural land
39.34preservation controls or restrictions as defined in section 40A.02 or under the Metropolitan
39.35Agricultural Preserves Act under chapter 473H, or;
40.1(iii) land subject to a conservation easement funded under section 97A.056 or a
40.2comparable permanent easement conveyed to a governmental or nonprofit entity; or
40.3(iv) land improved with a structure, pavement, sewer, campsite, or any road, other
40.4than a township road, used for purposes not prescribed in the forest management plan.
40.5EFFECTIVE DATE.This section is effective for payments made beginning in
40.6calendar year 2014.

40.7    Sec. 25. Minnesota Statutes 2012, section 290C.05, is amended to read:
40.8290C.05 ANNUAL CERTIFICATION.
40.9    On or before July 1 of each year, beginning with the year after the original claimant
40.10has received an approved application, the commissioner shall send each claimant enrolled
40.11under the sustainable forest incentive program a certification form. For purposes of this
40.12section, the original claimant is the person that filed the first application under section
40.13290C.04 to enroll the land in the program. The claimant must sign the certification,
40.14attesting that the requirements and conditions for continued enrollment in the program are
40.15currently being met, and must return the signed certification form, along with a copy of
40.16the property tax statement for the property taxes payable on the enrolled property for the
40.17calendar year and any other information the commissioner deems necessary to determine
40.18whether the property is qualified under section 290C.02, subdivision 6, or the amount of
40.19the payment under section 290C.07, paragraph (a), clause (2), to the commissioner by
40.20August 15 of that same year. If the claimant does not return an annual certification form
40.21by the due date, the provisions in section 290C.11 apply.
40.22EFFECTIVE DATE.This section is effective for payments made beginning in
40.23calendar year 2014.

40.24    Sec. 26. Minnesota Statutes 2012, section 290C.07, is amended to read:
40.25290C.07 CALCULATION OF INCENTIVE PAYMENT.
40.26    (a) An approved claimant under the sustainable forest incentive program is eligible
40.27to receive an annual payment. The payment shall be equal to the lesser of (1) $7 per acre
40.28 or (2) one-half of the property tax payable for the calendar year for each acre enrolled in
40.29the sustainable forest incentive program.
40.30(b) The annual payment for each Social Security number or state or federal business
40.31tax identification number must not exceed $100,000.
41.1EFFECTIVE DATE.This section is effective for payments made beginning in
41.2calendar year 2014.

41.3    Sec. 27. Minnesota Statutes 2012, section 298.01, subdivision 3, is amended to read:
41.4    Subd. 3. Occupation tax; other ores. Every person engaged in the business of
41.5mining, refining, or producing ores, metals, or minerals in this state, except iron ore or
41.6taconite concentrates, shall pay an occupation tax to the state of Minnesota as provided
41.7in this subdivision. For purposes of this subdivision, mining includes the application
41.8of hydrometallurgical processes. The tax is determined in the same manner as the tax
41.9imposed by section 290.02, except that sections 290.05, subdivision 1, clause (a), 290.17,
41.10subdivision 4
, and 290.191, subdivision 2, do not apply, and the occupation tax must be
41.11computed by applying to taxable income the rate of 2.45 percent equal to one-half of
41.12the rate that applies under section 290.06, subdivision 1, for the taxable year. A person
41.13subject to occupation tax under this section shall apportion its net income on the basis of
41.14the percentage obtained by taking the sum of:
41.15(1) 75 percent of the percentage which the sales made within this state in connection
41.16with the trade or business during the tax period are of the total sales wherever made in
41.17connection with the trade or business during the tax period;
41.18(2) 12.5 percent of the percentage which the total tangible property used by the
41.19taxpayer in this state in connection with the trade or business during the tax period is of
41.20the total tangible property, wherever located, used by the taxpayer in connection with the
41.21trade or business during the tax period; and
41.22(3) 12.5 percent of the percentage which the taxpayer's total payrolls paid or incurred
41.23in this state or paid in respect to labor performed in this state in connection with the trade
41.24or business during the tax period are of the taxpayer's total payrolls paid or incurred in
41.25connection with the trade or business during the tax period.
41.26The tax is in addition to all other taxes.
41.27EFFECTIVE DATE.This section is effective the day following final enactment.

41.28    Sec. 28. Minnesota Statutes 2012, section 298.01, subdivision 4, is amended to read:
41.29    Subd. 4. Occupation tax; iron ore; taconite concentrates. A person engaged in
41.30the business of mining or producing of iron ore, taconite concentrates or direct reduced ore
41.31in this state shall pay an occupation tax to the state of Minnesota. The tax is determined
41.32in the same manner as the tax imposed by section 290.02, except that sections 290.05,
41.33subdivision 1
, clause (a), 290.17, subdivision 4, and 290.191, subdivision 2, do not apply,
41.34and the occupation tax shall be computed by applying to taxable income the rate of 2.45
42.1 percent equal to one-half of the rate that applies under section 290.06, subdivision 1, for
42.2the taxable year. A person subject to occupation tax under this section shall apportion its
42.3net income on the basis of the percentage obtained by taking the sum of:
42.4(1) 75 percent of the percentage which the sales made within this state in connection
42.5with the trade or business during the tax period are of the total sales wherever made in
42.6connection with the trade or business during the tax period;
42.7(2) 12.5 percent of the percentage which the total tangible property used by the
42.8taxpayer in this state in connection with the trade or business during the tax period is of
42.9the total tangible property, wherever located, used by the taxpayer in connection with the
42.10trade or business during the tax period; and
42.11(3) 12.5 percent of the percentage which the taxpayer's total payrolls paid or incurred
42.12in this state or paid in respect to labor performed in this state in connection with the trade
42.13or business during the tax period are of the taxpayer's total payrolls paid or incurred in
42.14connection with the trade or business during the tax period.
42.15The tax is in addition to all other taxes.
42.16EFFECTIVE DATE.This section is effective for taxable years beginning after
42.17December 31, 2012.

42.18    Sec. 29. Minnesota Statutes 2012, section 469.190, is amended by adding a subdivision
42.19to read:
42.20    Subd. 1a. Tax base; locally collected taxes. A tax imposed on the gross receipts
42.21from lodging under this section or under a special law applies to the same base as taxes
42.22collected by the commissioner of revenue under subdivision 7 and section 270C.171.
42.23EFFECTIVE DATE.This section is effective the day following final enactment.
42.24In enacting this section, the legislature confirms its original intent in enacting Minnesota
42.25Statutes, section 469.190, its predecessor provisions, and any special laws authorizing
42.26political subdivisions to impose lodging taxes, and that those taxes were and are intended
42.27to apply to the entire consideration paid to obtain access to transient lodging, including
42.28ancillary or related services, such as services provided by accommodation intermediaries
42.29as defined in Minnesota Statutes, section 297A.61, and similar services. The provisions of
42.30this section must not be interpreted to imply a narrower construction of the tax base under
42.31lodging tax provisions of Minnesota law prior to the enactment of this section.

42.32    Sec. 30. REPEALER.
43.1Minnesota Statutes 2012, sections 290.01, subdivision 6b; 290.06, subdivisions 22a,
43.227, and 28; 290.0672; 290.0674; 290.0679; and 290.0921, subdivision 7, are repealed.
43.3EFFECTIVE DATE.This section is effective for taxable years beginning after
43.4December 31, 2012.

700 State Office Building, 100 Rev. Dr. Martin Luther King Jr. Blvd., St. Paul, MN 55155 ♦ Phone: (651) 296-2868 ♦ TTY: 1-800-627-3529 ♦ Fax: (651) 296-0569