HF 290

as introduced - 90th Legislature (2017 - 2018) Posted on 01/17/2017 10:30am

A bill for an act
relating to taxation; income and corporate franchise; providing a tax credit for
certain energy improvements; proposing coding for new law in Minnesota Statutes,
chapter 290.

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

Section 1.

new text begin [290.0682] RENEWABLE DISTRIBUTED GENERATION SYSTEM TAX
CREDIT.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For purposes of this section, the following terms have
the meanings given them.
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new text begin (b) "Family farm business entity" means a family farm, as defined in section 500.24,
subdivision 2, or any business entity permitted to own farmland under section 500.24.
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new text begin (c) "Geothermal heat exchanger" means an earth-coupled heating or cooling device that
is trenched, bored, buried underground or looped in a body of water, or used in a way that
captures the earth's natural heat in a loop system.
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new text begin (d) "Liability for tax" means the sum of the tax imposed under sections 290.06,
subdivisions 1 and 2c; 290.091; 290.0921; and 290.0922, for the taxable year reduced by
the sum of the nonrefundable credits allowed under this chapter.
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new text begin (e) "Project cost" means the amounts expended during the taxable year for the following
items, less any commercial discounts, commercial rebates, installation-assistance credits,
or other similar reductions, comprising components of or related to qualifying systems:
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new text begin (1) equipment, components, towers, wires, conduits, anchors, and associated design;
and
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new text begin (2) labor and other direct costs properly allocable to the on-site preparation, assembly,
and original installation of the property, including piping or wiring to interconnect the
property to the dwelling unit or commercial property.
new text end

new text begin (f) "Qualifying systems" means any of the following systems, or combination of systems,
placed in service in this state by a family farm business entity or by a small business in a
rural area of this state:
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new text begin (1) geothermal heat exchangers;
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new text begin (2) small wind turbines or farm scale wind turbines;
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new text begin (3) solar thermal arrays; or
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new text begin (4) storage systems.
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new text begin (g) "Rural area" means rural or rural area as defined by Code of Federal Regulations,
title 7, section 4288.2. In addition, for areas not designated as rural by the federal under
secretary for rural development under Code of Federal Regulations, title 7, section 4288.2,
or as otherwise identified in the definition in Code of Federal Regulations, title 7, section
4288.2, a city or town may petition the commissioner of commerce for designation as a
rural area in character under the standards and procedures provided in Code of Federal
Regulations, title 7, section 4288.2.
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new text begin (h) "Small business" means a small business that meets the definition of a small business
for purposes of business loans under the size standards in the Small Business Administration's
regulations as provided by Code of Federal Regulations, title 13, part 121.
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new text begin (i) "Small wind turbine" or "farm-scale wind turbine" means a turbine or machine used
for generating electricity that:
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new text begin (1) produces a peak output of at least three kilowatts and less than 40 kilowatts to the
distribution grid;
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new text begin (2) is certified as meeting the American Wind Energy Association Standard 9.1-2009
developed by the American Wind Energy Association in partnership with the United States
Department of Energy and current as of the date when the turbine is placed in service; and
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new text begin (3) operates within the cogeneration and small power production provisions in section
216B.164.
new text end

new text begin (j) "Solar thermal array" means a flat plate, evacuated tube, transpired air collector,
recirculation air heating device, or similar device with a fixed orientation that collects the
sun's radiant energy and transfers it to a storage medium for distribution as energy to heat
or cool air or water.
new text end

new text begin (k) "Storage system" means a lead-acid battery, lithium-ion battery, fly-wheel, or other
energy storage system that:
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new text begin (1) has energy storage capacity equal to or greater than 25 kilowatt hours;
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new text begin (2) has a charge controller or other control system;
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new text begin (3) complies with the applicable Underwriters Laboratories listings and National Electric
Code provisions; and
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new text begin (4) includes software components that dispatch battery-stored energy on demand to a
public utility providing electrical service.
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new text begin Subd. 2. new text end

new text begin Credit allowed. new text end

new text begin A credit is allowed against the tax imposed by this chapter on
a family farm business entity or small business. The amount of the credit equals 30 percent
of the project cost per system for qualifying systems that are installed and placed in service
by the family farm business entity or small business during the taxable year.
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new text begin Subd. 3. new text end

new text begin Partnerships and S corporations. new text end

new text begin (a) For shareholders in S corporations, the
credit must be allocated to each shareholder in the manner provided by section 1366(a) of
the Internal Revenue Code for income.
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new text begin (b) For partners in a partnership, including members of a limited liability company, the
credit must be allocated to each partner as provided by written agreement of the partners
or members. If no allocation is provided by written agreement, the credit must be allocated
in proportion to the partner's share of the entity's net income or loss for the taxable year.
new text end

new text begin Subd. 4. new text end

new text begin Limitation; carryover credit. new text end

new text begin (a) The credit must not exceed the liability for
tax.
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new text begin (b) For a corporation that is a partner in a partnership, the credit allowed for the taxable
year must not exceed the lesser of the amount determined under paragraph (a) for the taxable
year or an amount, separately computed with respect to the corporation's interest in the trade
or business or entity, equal to the liability for tax attributable to that portion of taxable
income that is allocable or apportionable to the corporation's interest in the trade or business
or entity.
new text end

new text begin (c) If the amount of the credit determined under this section for any taxable year exceeds
the limitation under paragraph (a) or (b), the excess is a credit carryover to each of the three
succeeding taxable years. The entire amount of the excess unused credit for the taxable year
must be carried first to the earliest of the taxable years to which the credit may be carried
and then to each successive year to which the credit may be carried. The amount of the
unused credit which may be added under this paragraph must not exceed the taxpayer's
liability for tax less the credit for the taxable year.
new text end

new text begin EFFECTIVE DATE. new text end

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