HF 4436

as introduced - 90th Legislature (2017 - 2018) Posted on 04/18/2018 10:44am

A bill for an act
relating to taxation; income and corporate franchise; adopting certain federal
provisions relating to the taxation of income of foreign corporations; amending
Minnesota Statutes 2016, sections 290.0132, by adding a subdivision; 290.0133,
subdivision 6, by adding a subdivision; 290.21, by adding a subdivision; Minnesota
Statutes 2017 Supplement, section 290.01, subdivisions 19, 31.

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

Section 1.

Minnesota Statutes 2017 Supplement, 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.

new text begin For corporations, resident individuals, and resident estates and trusts who make a valid
election under section 965(h) of the Internal Revenue Code, including any successor in
interest, net income for the taxable year includes the ratable amount of deferred foreign
income on which the taxpayer makes a federal tax payment in that year.
new text end

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 The amendments to the
Internal Revenue Code of 1986 made by title I, subtitle D, parts I and II, of the act to provide
for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for
fiscal year 2018, Public Law 115-97, apply and are effective at the same time as they were
effective for federal purposes.
new text end

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

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment and
the changes incorporated by federal changes are effective retroactively at the same time
they were effective for federal purposes.
new text end

Sec. 2.

Minnesota Statutes 2017 Supplement, section 290.01, subdivision 31, is amended
to read:

Subd. 31.

Internal Revenue Code.

Unless specifically defined otherwise, "Internal
Revenue Code" means the Internal Revenue Code of 1986, as amended through December
16, 2016 new text begin , and as amended by title I, subtitle D, parts I and II, of the act to provide for
reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal
year 2018, Public Law 115-97 new text end . Internal Revenue Code also includes any uncodified provision
in federal law that relates to provisions of the Internal Revenue Code that are incorporated
into Minnesota law. When used in this chapter, the reference to "subtitle A, chapter 1,
subchapter N, part 1, of the Internal Revenue Code" is to the Internal Revenue Code as
amended through March 18, 2010.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment and
the changes incorporated by federal changes are effective retroactively at the same time
they were effective for federal purposes.
new text end

Sec. 3.

Minnesota Statutes 2016, 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 In the case of a nonresident
individual the amount of deferred foreign income recognized because of section 965 of the
Internal Revenue Code 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, and before January 1, 2019.
new text end

Sec. 4.

Minnesota Statutes 2016, section 290.0133, subdivision 6, is amended to read:

Subd. 6.

Special deductions.

new text begin (a) new text end The amount of any special deductions under sections
241 to 247 and deleted text begin 965 deleted text end new text begin 250 new text end of the Internal Revenue Code is an addition.

new text begin (b) The addition under this subdivision is reduced by the amount of the deduction under
section 245A of the Internal Revenue Code that represents amounts included in federal
taxable income in a prior taxable year under section 965 of the Internal Revenue Code.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin Paragraph (a) is effective retroactively for taxable years beginning
after December 31, 2016. Paragraph (b) is effective for taxable years beginning after
December 31, 2017.
new text end

Sec. 5.

Minnesota Statutes 2016, 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. new text end

new text begin (a) The amount of the deduction provided under
section 965(c) of the Internal Revenue Code 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, 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. 6.

Minnesota Statutes 2016, 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 income
of domestic corporations that is included in net income under sections 951, 951A, or 965
of the Internal Revenue Code is dividend income.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively beginning for each taxpayer's
last taxable year beginning before January 1, 2018.
new text end