HF 2559

as introduced - 91st Legislature (2019 - 2020) Posted on 03/18/2019 02:41pm

A bill for an act
relating to taxation; income; including deferred foreign income in net income;
providing a subtraction for nonresident individuals; providing an addition for
certain deducted deferred foreign income; providing that deferred foreign income
is dividend income; amending Minnesota Statutes 2018, sections 290.01,
subdivision 19; 290.0132, by adding a subdivision; 290.0133, subdivision 6, by
adding a subdivision; 290.21, by adding a subdivision.

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

Section 1.

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

Subd. 19.

Net income.

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

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

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

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

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

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

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

The Internal Revenue Code of 1986, as amended through December 16, 2016, shall be
in effect for taxable years beginning after December 31, 1996 new text begin , except that section 965 of
the Internal Revenue Code of 1986, as amended through March 24, 2018, relating to the
taxation of deferred foreign income is effective retroactively for taxable years beginning
after December 31, 2018 new text end .

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

new text begin EFFECTIVE DATE. new text end

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

Sec. 2.

Minnesota Statutes 2018, section 290.0132, is amended by adding a subdivision
to read:

new text begin Subd. 27. new text end

new text begin Deferred foreign income of nonresidents. new text end

new text begin For a nonresident individual, the
amount of deferred foreign income recognized under section 965 of the Internal Revenue
Code of 1986, as amended through March 24, 2018, is a subtraction.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 3.

Minnesota Statutes 2018, section 290.0133, subdivision 6, is amended to read:

Subd. 6.

Special deductions.

The amount of any special deductions under sections 241
to 247 deleted text begin and 965 deleted text end of the Internal Revenue Code is an addition.

new text begin EFFECTIVE DATE. new text end

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

Sec. 4.

Minnesota Statutes 2018, section 290.0133, is amended by adding a subdivision
to read:

new text begin Subd. 15. new text end

new text begin Deferred foreign income; participation exemption. new text end

new text begin (a) The amount of the
deduction under section 965(c) of the Internal Revenue Code of 1986, as amended through
March 24, 2018, is an addition.
new text end

new text begin (b) For a taxpayer making a valid election under section 965(h) of the Internal Revenue
Code of 1986, as amended through March 24, 2018, the addition under paragraph (a) must
be applied ratably to the same tax periods in which the taxpayer includes deferred foreign
income in Minnesota net income pursuant to section 290.01, subdivision 19.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 5.

Minnesota Statutes 2018, section 290.21, is amended by adding a subdivision to
read:

new text begin Subd. 9. new text end

new text begin Controlled foreign corporations. new text end

new text begin For the purposes of this chapter, the net
income of a domestic corporation that is included under sections 951 and 965 of the Internal
Revenue Code of 1986, as amended through March 24, 2018, is dividend income.
new text end

new text begin EFFECTIVE DATE. new text end

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