HF 4680

as introduced - 92nd Legislature (2021 - 2022) Posted on 03/30/2022 11:38am

A bill for an act
relating to taxation; modifying individual income and corporate franchise taxes;
proposing conformity to certain federal tax provisions; making technical and
conforming changes; amending Minnesota Statutes 2020, sections 289A.02,
subdivision 7; 290.091, subdivision 2; 290.0921, subdivision 3; 290A.03,
subdivision 15; 291.005, subdivision 1; Minnesota Statutes 2021 Supplement,
sections 289A.08, subdivision 7; 290.01, subdivisions 19, 31; 290.06, subdivision
2c; repealing Minnesota Statutes 2020, sections 290.0131, subdivision 9; 290.0132,
subdivision 9; 290.0133, subdivision 11; 290.0134, subdivision 13.

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

Section 1.

Minnesota Statutes 2020, section 289A.02, subdivision 7, is amended to read:

Subd. 7.

Internal Revenue Code.

Unless specifically defined otherwise, "Internal
Revenue Code" means the Internal Revenue Code of 1986, as amended through deleted text begin December
31, 2018 deleted text end new text begin November 15, 2021 new text end .

new text begin EFFECTIVE DATE. new text end

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

Sec. 2.

Minnesota Statutes 2021 Supplement, section 289A.08, subdivision 7, is amended
to read:

Subd. 7.

Composite income tax returns for nonresident partners, shareholders, and
beneficiaries.

(a) The commissioner may allow a partnership with nonresident partners to
file a composite return and to pay the tax on behalf of nonresident partners who have no
other Minnesota source income. This composite return must include the names, addresses,
Social Security numbers, income allocation, and tax liability for the nonresident partners
electing to be covered by the composite return.

(b) The computation of a partner's tax liability must be determined by multiplying the
income allocated to that partner by the highest rate used to determine the tax liability for
individuals under section 290.06, subdivision 2c. Nonbusiness deductions, standard
deductions, or personal exemptions are not allowed.

(c) The partnership must submit a request to use this composite return filing method for
nonresident partners. The requesting partnership must file a composite return in the form
prescribed by the commissioner of revenue. The filing of a composite return is considered
a request to use the composite return filing method.

(d) The electing partner must not have any Minnesota source income other than the
income from the partnership, other electing partnerships, and other qualifying entities
electing to file and pay the pass-through entity tax under subdivision 7a. If it is determined
that the electing partner has other Minnesota source income, the inclusion of the income
and tax liability for that partner under this provision will not constitute a return to satisfy
the requirements of subdivision 1. The tax paid for the individual as part of the composite
return is allowed as a payment of the tax by the individual on the date on which the composite
return payment was made. If the electing nonresident partner has no other Minnesota source
income, filing of the composite return is a return for purposes of subdivision 1.

(e) This subdivision does not negate the requirement that an individual pay estimated
tax if the individual's liability would exceed the requirements set forth in section 289A.25.
The individual's liability to pay estimated tax is, however, satisfied when the partnership
pays composite estimated tax in the manner prescribed in section 289A.25.

(f) If an electing partner's share of the partnership's gross income from Minnesota sources
is less than the filing requirements for a nonresident under this subdivision, the tax liability
is zero. However, a statement showing the partner's share of gross income must be included
as part of the composite return.

(g) The election provided in this subdivision is only available to a partner who has no
other Minnesota source income and who is either (1) a full-year nonresident individual or
(2) a trust or estate that does not claim a deduction under either section 651 or 661 of the
Internal Revenue Code.

(h) A corporation defined in section 290.9725 and its nonresident shareholders may
make an election under this paragraph. The provisions covering the partnership apply to
the corporation and the provisions applying to the partner apply to the shareholder.

(i) Estates and trusts distributing current income only and the nonresident individual
beneficiaries of the estates or trusts may make an election under this paragraph. The
provisions covering the partnership apply to the estate or trust. The provisions applying to
the partner apply to the beneficiary.

(j) For the purposes of this subdivision, "income" means the partner's share of federal
adjusted gross income from the partnership modified by the additions provided in section
290.0131, subdivisions 8 deleted text begin to deleted text end new text begin , new text end 10, 16, deleted text begin and deleted text end 17, new text begin 19, and 20, new text end and the subtractions provided in:
(1) section 290.0132, subdivisions deleted text begin 9, deleted text end 27 deleted text begin , deleted text end and 28, to the extent the amount is assignable or
allocable to Minnesota under section 290.17; and (2) section 290.0132, subdivision 14 new text begin , 31,
and 32 new text end . deleted text begin The subtraction allowed under section 290.0132, subdivision 9, is only allowed on
the composite tax computation to the extent the electing partner would have been allowed
the subtraction.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2021.
new text end

Sec. 3.

Minnesota Statutes 2021 Supplement, section 290.01, subdivision 19, is amended
to read:

Subd. 19.

Net income.

(a) For a trust or estate taxable under section 290.03, and a
corporation taxable under section 290.02, 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.

(b) For an individual, the term "net income" means federal adjusted gross income with
the modifications provided in sections 290.0131, 290.0132, and 290.0135 to 290.0137.

(c) 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.

(d) 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.

(e) 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.

(f) The Internal Revenue Code of 1986, as amended through deleted text begin December 31, 2018 deleted text end new text begin
November 15, 2021 new text end , applies for taxable years beginning after December 31, 1996 deleted text begin , except
the sections of federal law in section 290.0111 shall also apply deleted text end .

(g) 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, except
the changes incorporated by federal changes are effective retroactively at the same time the
changes were effective for federal purposes.
new text end

Sec. 4.

Minnesota Statutes 2021 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 deleted text begin December
31, 2018, except the sections of federal law in section 290.0111 shall also apply deleted text end new text begin November
15, 2021 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.

new text begin EFFECTIVE DATE. new text end

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

Sec. 5.

Minnesota Statutes 2021 Supplement, section 290.06, subdivision 2c, is amended
to read:

Subd. 2c.

Schedules of rates for individuals, estates, and trusts.

(a) The income taxes
imposed by this chapter upon married individuals filing joint returns and surviving spouses
as defined in section 2(a) of the Internal Revenue Code must be computed by applying to
their taxable net income the following schedule of rates:

(1) On the first $38,770, 5.35 percent;

(2) On all over $38,770, but not over $154,020, 6.8 percent;

(3) On all over $154,020, but not over $269,010, 7.85 percent;

(4) On all over $269,010, 9.85 percent.

Married individuals filing separate returns, estates, and trusts must compute their income
tax by applying the above rates to their taxable income, except that the income brackets
will be one-half of the above amounts after the adjustment required in subdivision 2d.

(b) The income taxes imposed by this chapter upon unmarried individuals must be
computed by applying to taxable net income the following schedule of rates:

(1) On the first $26,520, 5.35 percent;

(2) On all over $26,520, but not over $87,110, 6.8 percent;

(3) On all over $87,110, but not over $161,720, 7.85 percent;

(4) On all over $161,720, 9.85 percent.

(c) The income taxes imposed by this chapter upon unmarried individuals qualifying as
a head of household as defined in section 2(b) of the Internal Revenue Code must be
computed by applying to taxable net income the following schedule of rates:

(1) On the first $32,650, 5.35 percent;

(2) On all over $32,650, but not over $131,190, 6.8 percent;

(3) On all over $131,190, but not over $214,980, 7.85 percent;

(4) On all over $214,980, 9.85 percent.

(d) In lieu of a tax computed according to the rates set forth in this subdivision, the tax
of any individual taxpayer whose taxable net income for the taxable year is less than an
amount determined by the commissioner must be computed in accordance with tables
prepared and issued by the commissioner of revenue based on income brackets of not more
than $100. The amount of tax for each bracket shall be computed at the rates set forth in
this subdivision, provided that the commissioner may disregard a fractional part of a dollar
unless it amounts to 50 cents or more, in which case it may be increased to $1.

(e) An individual who is not a Minnesota resident for the entire year must compute the
individual's Minnesota income tax as provided in this subdivision. After the application of
the nonrefundable credits provided in this chapter, the tax liability must then be multiplied
by a fraction in which:

(1) the numerator is the individual's Minnesota source federal adjusted gross income as
defined in section 62 of the Internal Revenue Code and increased by:

(i) the additions required under sections 290.0131, subdivisions 2, 6, 8 deleted text begin to deleted text end new text begin , new text end 10, 16, and
17, and 290.0137, paragraph (a); and reduced by

(ii) the Minnesota assignable portion of the subtraction for United States government
interest under section 290.0132, subdivision 2, the subtractions under sections deleted text begin 290.0132,
subdivisions 9, deleted text end new text begin 290.0132, subdivisions new text end 10, 14, 15, 17, 18, and 27, and 290.0137, paragraph
(c), after applying the allocation and assignability provisions of section 290.081, clause (a),
or 290.17; and

(2) the denominator is the individual's federal adjusted gross income as defined in section
62 of the Internal Revenue Code, increased by:

(i) the additions required under sections 290.0131, subdivisions 2, 6, 8 deleted text begin to deleted text end new text begin , new text end 10, 16, and
17, and 290.0137, paragraph (a); and reduced by

(ii) the subtractions under sections 290.0132, subdivisions 2, deleted text begin 9, deleted text end 10, 14, 15, 17, 18, and
27, and 290.0137, paragraph (c).

(f) If an individual who is not a Minnesota resident for the entire year is a qualifying
owner of a qualifying entity that elects to pay tax as provided in section 289A.08, subdivision
7a, paragraph (b), the individual must compute the individual's Minnesota income tax as
provided in paragraph (e), and also must include, to the extent attributed to the electing
qualifying entity:

(1) in paragraph (e), clause (1), item (i), and paragraph (e), clause (2), item (i), the
addition under section 290.0131, subdivision 5; and

(2) in paragraph (e), clause (1), item (ii), and paragraph (e), clause (2), item (ii), the
subtraction under section 290.0132, subdivision 3.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2021.
new text end

Sec. 6.

Minnesota Statutes 2020, section 290.091, subdivision 2, is amended to read:

Subd. 2.

Definitions.

For purposes of the tax imposed by this section, the following
terms have the meanings given.

(a) "Alternative minimum taxable income" means the sum of the following for the taxable
year:

(1) the taxpayer's federal alternative minimum taxable income as defined in section
55(b)(2) of the Internal Revenue Code;

(2) the taxpayer's itemized deductions allowed in computing federal alternative minimum
taxable income, but excluding:

(i) the charitable contribution deduction under section 170 of the Internal Revenue Code;

(ii) the medical expense deduction;

(iii) the casualty, theft, and disaster loss deduction; and

(iv) the impairment-related work expenses of a person with a disability;

(3) for depletion allowances computed under section 613A(c) of the Internal Revenue
Code, with respect to each property (as defined in section 614 of the Internal Revenue Code),
to the extent not included in federal alternative minimum taxable income, the excess of the
deduction for depletion allowable under section 611 of the Internal Revenue Code for the
taxable year over the adjusted basis of the property at the end of the taxable year (determined
without regard to the depletion deduction for the taxable year);

(4) to the extent not included in federal alternative minimum taxable income, the amount
of the tax preference for intangible drilling cost under section 57(a)(2) of the Internal Revenue
Code determined without regard to subparagraph (E);

(5) to the extent not included in federal alternative minimum taxable income, the amount
of interest income as provided by section 290.0131, subdivision 2;

(6) the amount of addition required by section deleted text begin 290.0131, subdivisions 9, deleted text end new text begin 290.0131,
subdivisions new text end 10 deleted text begin , deleted text end and 16;

(7) the deduction allowed under section 199A of the Internal Revenue Code, to the extent
not included in the addition required under clause (6); and

(8) to the extent not included in federal alternative minimum taxable income, the amount
of foreign-derived intangible income deducted under section 250 of the Internal Revenue
Code;

less the sum of the amounts determined under the following:

(i) interest income as defined in section 290.0132, subdivision 2;

(ii) an overpayment of state income tax as provided by section 290.0132, subdivision
3, to the extent included in federal alternative minimum taxable income;

(iii) the amount of investment interest paid or accrued within the taxable year on
indebtedness to the extent that the amount does not exceed net investment income, as defined
in section 163(d)(4) of the Internal Revenue Code. Interest does not include amounts deducted
in computing federal adjusted gross income;

(iv) amounts subtracted from federal taxable or adjusted gross income as provided by
section 290.0132, subdivisions 7, deleted text begin 9 deleted text end new text begin 10 new text end to 15, 17, 21, 24, and 26 to 29;

(v) the amount of the net operating loss allowed under section 290.095, subdivision 11,
paragraph (c); and

(vi) the amount allowable as a Minnesota itemized deduction under section 290.0122,
subdivision 7.

In the case of an estate or trust, alternative minimum taxable income must be computed
as provided in section 59(c) of the Internal Revenue Code, except alternative minimum
taxable income must be increased by the addition in section 290.0131, subdivision 16.

(b) "Investment interest" means investment interest as defined in section 163(d)(3) of
the Internal Revenue Code.

(c) "Net minimum tax" means the minimum tax imposed by this section.

(d) "Regular tax" means the tax that would be imposed under this chapter (without regard
to this section and section 290.032), reduced by the sum of the nonrefundable credits allowed
under this chapter.

(e) "Tentative minimum tax" equals 6.75 percent of alternative minimum taxable income
after subtracting the exemption amount determined under subdivision 3.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2021.
new text end

Sec. 7.

Minnesota Statutes 2020, section 290.0921, subdivision 3, is amended to read:

Subd. 3.

Alternative minimum taxable income.

new text begin (a) new text end "Alternative minimum taxable
income" is Minnesota net income as defined in section 290.01, subdivision 19, and includes
the adjustments and tax preference items in sections 56, 57, 58, and 59(d), (e), (f), and (h)
of the Internal Revenue Code. If a corporation files a separate company Minnesota tax
return, the minimum tax must be computed on a separate company basis. If a corporation
is part of a tax group filing a unitary return, the minimum tax must be computed on a unitary
basis. The following adjustments must be made deleted text begin . deleted text end new text begin :
new text end

deleted text begin (1) The portion of the depreciation deduction allowed for federal income tax purposes
under section 168(k) of the Internal Revenue Code that is required as an addition under
section 290.0133, subdivision 11, is disallowed in determining alternative minimum taxable
income.
deleted text end

deleted text begin (2) The subtraction for depreciation allowed under section 290.0134, subdivision 13, is
allowed as a depreciation deduction in determining alternative minimum taxable income.
deleted text end

deleted text begin (3) deleted text end new text begin (1) new text end The alternative tax net operating loss deduction under sections 56(a)(4) and 56(d)
of the Internal Revenue Code does not apply deleted text begin . deleted text end new text begin ;
new text end

deleted text begin (4) deleted text end new text begin (2) new text end The special rule for certain dividends under section 56(g)(4)(C)(ii) of the Internal
Revenue Code does not apply deleted text begin . deleted text end new text begin ;
new text end

deleted text begin (5) deleted text end new text begin (3) new text end The tax preference for depletion under section 57(a)(1) of the Internal Revenue
Code does not apply deleted text begin . deleted text end new text begin ;
new text end

deleted text begin (6) deleted text end new text begin (4) new text end The tax preference for tax exempt interest under section 57(a)(5) of the Internal
Revenue Code does not apply deleted text begin . deleted text end new text begin ;
new text end

deleted text begin (7) deleted text end new text begin (5) new text end The tax preference for charitable contributions of appreciated property under
section 57(a)(6) of the Internal Revenue Code does not apply deleted text begin . deleted text end new text begin ;
new text end

deleted text begin (8) deleted text end new text begin (6) new text end For purposes of calculating the adjustment for adjusted current earnings in section
56(g) of the Internal Revenue Code, the term "alternative minimum taxable income" as it
is used in section 56(g) of the Internal Revenue Code, means alternative minimum taxable
income as defined in this subdivision, determined without regard to the adjustment for
adjusted current earnings in section 56(g) of the Internal Revenue Code deleted text begin . deleted text end new text begin ;
new text end

deleted text begin (9) deleted text end new text begin (7) new text end For purposes of determining the amount of adjusted current earnings under section
56(g)(3) of the Internal Revenue Code, no adjustment shall be made under section 56(g)(4)
of the Internal Revenue Code with respect to (i) the amount of foreign dividend gross-up
subtracted as provided in section 290.0134, subdivision 2, or (ii) the amount of refunds of
income, excise, or franchise taxes subtracted as provided in section 290.0134, subdivision
8 deleted text begin . deleted text end new text begin ;
new text end

deleted text begin (10) deleted text end new text begin (8) new text end Alternative minimum taxable income excludes the income from operating in a
job opportunity building zone as provided under section 469.317 deleted text begin . deleted text end new text begin ; and
new text end

deleted text begin Items of tax preference must not be reduced below zero as a result of the modifications
in this subdivision.
deleted text end

deleted text begin (11) deleted text end new text begin (9) new text end The subtraction for disallowed section 280E expenses under section 290.0134,
subdivision 19, is allowed as a deduction in determining alternative minimum taxable
income.

new text begin (b) Items of tax preference must not be reduced below zero as a result of the modifications
in this subdivision.
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, 2021.
new text end

Sec. 8.

Minnesota Statutes 2020, section 290A.03, subdivision 15, is amended to read:

Subd. 15.

Internal Revenue Code.

"Internal Revenue Code" means the Internal Revenue
Code of 1986, as amended through deleted text begin December 31, 2018 deleted text end new text begin November 15, 2021 new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for property tax refunds based on property
taxes payable in 2022 and rent paid in 2021 and thereafter.
new text end

Sec. 9.

Minnesota Statutes 2020, section 291.005, subdivision 1, is amended to read:

Subdivision 1.

Scope.

Unless the context otherwise clearly requires, the following terms
used in this chapter shall have the following meanings:

(1) "Commissioner" means the commissioner of revenue or any person to whom the
commissioner has delegated functions under this chapter.

(2) "Federal gross estate" means the gross estate of a decedent as required to be valued
and otherwise determined for federal estate tax purposes under the Internal Revenue Code,
increased by the value of any property in which the decedent had a qualifying income interest
for life and for which an election was made under section 291.03, subdivision 1d, for
Minnesota estate tax purposes, but was not made for federal estate tax purposes.

(3) "Internal Revenue Code" means the United States Internal Revenue Code of 1986,
as amended through deleted text begin December 31, 2018 deleted text end new text begin November 15, 2021 new text end .

(4) "Minnesota gross estate" means the federal gross estate of a decedent after (a)
excluding therefrom any property included in the estate which has its situs outside Minnesota,
and (b) including any property omitted from the federal gross estate which is includable in
the estate, has its situs in Minnesota, and was not disclosed to federal taxing authorities.

(5) "Nonresident decedent" means an individual whose domicile at the time of death
was not in Minnesota.

(6) "Personal representative" means the executor, administrator or other person appointed
by the court to administer and dispose of the property of the decedent. If there is no executor,
administrator or other person appointed, qualified, and acting within this state, then any
person in actual or constructive possession of any property having a situs in this state which
is included in the federal gross estate of the decedent shall be deemed to be a personal
representative to the extent of the property and the Minnesota estate tax due with respect
to the property.

(7) "Resident decedent" means an individual whose domicile at the time of death was
in Minnesota. The provisions of section 290.01, subdivision 7, paragraphs (c) and (d), apply
to determinations of domicile under this chapter.

(8) "Situs of property" means, with respect to:

(i) real property, the state or country in which it is located;

(ii) tangible personal property, the state or country in which it was normally kept or
located at the time of the decedent's death or for a gift of tangible personal property within
three years of death, the state or country in which it was normally kept or located when the
gift was executed;

(iii) a qualified work of art, as defined in section 2503(g)(2) of the Internal Revenue
Code, owned by a nonresident decedent and that is normally kept or located in this state
because it is on loan to an organization, qualifying as exempt from taxation under section
501(c)(3) of the Internal Revenue Code, that is located in Minnesota, the situs of the art is
deemed to be outside of Minnesota, notwithstanding the provisions of item (ii); and

(iv) intangible personal property, the state or country in which the decedent was domiciled
at death or for a gift of intangible personal property within three years of death, the state or
country in which the decedent was domiciled when the gift was executed.

For a nonresident decedent with an ownership interest in a pass-through entity with
assets that include real or tangible personal property, situs of the real or tangible personal
property, including qualified works of art, is determined as if the pass-through entity does
not exist and the real or tangible personal property is personally owned by the decedent. If
the pass-through entity is owned by a person or persons in addition to the decedent, ownership
of the property is attributed to the decedent in proportion to the decedent's capital ownership
share of the pass-through entity.

(9) "Pass-through entity" includes the following:

(i) an entity electing S corporation status under section 1362 of the Internal Revenue
Code;

(ii) an entity taxed as a partnership under subchapter K of the Internal Revenue Code;

(iii) a single-member limited liability company or similar entity, regardless of whether
it is taxed as an association or is disregarded for federal income tax purposes under Code
of Federal Regulations, title 26, section 301.7701-3; or

(iv) a trust to the extent the property is includable in the decedent's federal gross estate;
but excludes

(v) an entity whose ownership interest securities are traded on an exchange regulated
by the Securities and Exchange Commission as a national securities exchange under section
6 of the Securities Exchange Act, United States Code, title 15, section 78f.

new text begin EFFECTIVE DATE. new text end

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

Sec. 10. new text begin TEMPORARY NONCONFORMITY PROVISIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For the purposes of this section, the following terms have
the meanings given.
new text end

new text begin (b) For an individual, estate, or trust:
new text end

new text begin (1) "subtraction" has the meaning given in Minnesota Statutes, section 290.0132,
subdivision 1, and the rules in that subdivision apply for this section; and
new text end

new text begin (2) "addition" has the meaning given in Minnesota Statutes, section 290.0131, subdivision
1, and the rules in that subdivision apply for this section.
new text end

new text begin (c) For a corporation other than an S corporation:
new text end

new text begin (1) "subtraction" has the meaning given in Minnesota Statutes, section 290.0134,
subdivision 1, and the rules in that subdivision apply for this section; and
new text end

new text begin (2) "addition" has the meaning given in Minnesota Statutes, section 290.0133, subdivision
1, and the rules in that subdivision apply for this section.
new text end

new text begin (d) The definitions in Minnesota Statutes, section 290.01, apply for this section.
new text end

new text begin Subd. 2. new text end

new text begin Temporary addition; tuition and related expenses. new text end

new text begin (a) For an individual,
estate, or trust, the amount deducted under section 104 of the Taxpayer Certainty and Disaster
Tax Relief Act of 2019 in Public Law 116-94 is an addition.
new text end

new text begin (b) This subdivision is effective retroactively for taxable years beginning after December
31, 2017, and before January 1, 2021.
new text end

new text begin Subd. 3. new text end

new text begin Temporary subtraction; retention credit for employers affected by disasters;
individuals, estates, and trusts. new text end

new text begin (a) For an individual, estate, or trust, the amount of the
deduction disallowed under section 203(c) of the Taxpayer Certainty and Disaster Tax
Relief Act of 2019 in Public Law 116-94 is a subtraction.
new text end

new text begin (b) This subdivision is effective retroactively for taxable years in which a taxpayer had
a deduction disallowed under section 203(c) of the Taxpayer Certainty and Disaster Tax
Relief Act of 2019 in Public Law 116-94.
new text end

new text begin Subd. 4. new text end

new text begin Temporary subtraction; retention credit for employers affected by disasters;
corporations. new text end

new text begin (a) For a corporation other than an S corporation, the amount of the deduction
disallowed under section 203(c) of the Taxpayer Certainty and Disaster Tax Relief Act of
2019 in Public Law 116-94 is a subtraction.
new text end

new text begin (b) This subdivision is effective retroactively for taxable years in which a taxpayer had
a deduction disallowed under section 203(c) of the Taxpayer Certainty and Disaster Tax
Relief Act of 2019 in Public Law 116-94.
new text end

new text begin Subd. 5. new text end

new text begin Temporary subtraction; federal credits for sick and family leave;
individuals, estates, and trusts. new text end

new text begin (a) For an individual, estate, or trust, the amount by which
gross income is increased under the following credits is a subtraction:
new text end

new text begin (1) the payroll credit for required paid sick leave under section 7001 of Public Law
116-127; and
new text end

new text begin (2) the payroll credit for required paid family leave under section 7003 of Public Law
116-127.
new text end

new text begin (b) The subtraction in paragraph (a) applies to the credits as amended and extended
under sections 9641 and 9651 of Public Law 117-2.
new text end

new text begin (c) This subdivision is effective retroactively for taxable years in which a taxpayer
claimed the credits described in paragraph (a).
new text end

new text begin Subd. 6. new text end

new text begin Temporary subtraction; federal credits for sick and family leave;
corporations. new text end

new text begin (a) For a corporation other than an S corporation, the amount by which gross
income is increased under the following credits is a subtraction:
new text end

new text begin (1) the payroll credit for required paid sick leave under section 7001 of Public Law
116-127; and
new text end

new text begin (2) the payroll credit for required paid family leave under section 7003 of Public Law
116-127.
new text end

new text begin (b) The subtraction in paragraph (a) applies to the credits as amended and extended
under sections 9641 and 9651 of Public Law 117-2.
new text end

new text begin (c) This subdivision is effective retroactively for taxable years in which a taxpayer
claimed the credits described in paragraph (a).
new text end

new text begin Subd. 7. new text end

new text begin Temporary addition; above-the-line deduction for charitable
contributions. new text end

new text begin (a) For an individual, estate, or trust, the amount deducted under section
2204 of Public Law 116-136 is an addition.
new text end

new text begin (b) This subdivision is effective retroactively for taxable years beginning after December
31, 2019, and before January 1, 2021.
new text end

new text begin Subd. 8. new text end

new text begin Temporary addition; charitable contribution limitation for individuals,
estates, and trusts. new text end

new text begin (a) For an individual, estate, or trust, the amount by which the deduction
under Minnesota Statutes, section 290.0122, subdivision 4, was increased as a result of
section 2205 of Public Law 116-136 is an addition.
new text end

new text begin (b) This subdivision is effective retroactively for taxable years beginning after December
31, 2019, and before January 1, 2021.
new text end

new text begin Subd. 9. new text end

new text begin Temporary addition; charitable contribution limitation for corporations. new text end

new text begin (a)
For a corporation other than an S corporation, the amount deducted as a result of section
2205 of Public Law 116-136 is an addition.
new text end

new text begin (b) This subdivision is effective retroactively for taxable years beginning after December
31, 2019, and before January 1, 2021.
new text end

new text begin Subd. 10. new text end

new text begin Temporary addition; exclusion from gross income for employer student
loan payments. new text end

new text begin (a) For an individual, estate, or trust, the amount excluded from gross
income under section 2206 of Public Law 116-136 is an addition.
new text end

new text begin (b) This subdivision is effective retroactively for payments made after March 27, 2020,
and before January 1, 2021.
new text end

new text begin Subd. 11. new text end

new text begin Temporary subtraction; wages used to claim employee retention credit;
individuals, estates, and trusts. new text end

new text begin (a) For an individual, estate, or trust, the amount disallowed
under section 2301(e) of Public Law 116-136 is a subtraction.
new text end

new text begin (b) The subtraction in paragraph (a) applies to the credit as amended and extended by
section 207 of the Taxpayer Certainty and Disaster Relief Act of 2020 in Public Law 116-260
and section 9651 of Public Law 117-2.
new text end

new text begin (c) This subdivision is effective retroactively for taxable years in which a taxpayer had
a deduction disallowed under section 2301(e) of Public Law 116-136.
new text end

new text begin Subd. 12. new text end

new text begin Temporary subtraction; wages used to claim employee retention credit;
corporations. new text end

new text begin (a) For a corporation other than an S corporation, the amount disallowed
under section 2301(e) of Public Law 116-136 is a subtraction.
new text end

new text begin (b) The subtraction in paragraph (a) applies to the credit as amended and extended by
section 207 of the Taxpayer Certainty and Disaster Relief Act of 2020 in Public Law 116-260
and section 9651 of Public Law 117-2.
new text end

new text begin (c) This subdivision is effective retroactively for taxable years in which a taxpayer had
a deduction disallowed under section 2301(e) of Public Law 116-136.
new text end

new text begin Subd. 13. new text end

new text begin Temporary subtraction; retention credit for employers affected by
disasters; individuals, estates, and trusts. new text end

new text begin (a) For an individual, estate, or trust, the amount
of the deduction disallowed under section 303(c) of the Taxpayer Certainty and Disaster
Tax Relief Act of 2020 in Public Law 116-260 is a subtraction.
new text end

new text begin (b) This subdivision is effective retroactively for taxable years in which a taxpayer had
a deduction disallowed under section 303(c) of the Taxpayer Certainty and Disaster Tax
Relief Act of 2020 in Public Law 116-260.
new text end

new text begin Subd. 14. new text end

new text begin Temporary subtraction; retention credit for employers affected by
disasters; corporations. new text end

new text begin (a) For a corporation other than an S corporation, the amount of
the deduction disallowed under section 303(c) of the Taxpayer Certainty and Disaster Tax
Relief Act of 2020 in Public Law 116-260 is a subtraction.
new text end

new text begin (b) This subdivision is effective retroactively for taxable years in which a taxpayer had
a deduction disallowed under section 303(c) of the Taxpayer Certainty and Disaster Tax
Relief Act of 2020 in Public Law 116-260.
new text end

new text begin Subd. 15. new text end

new text begin Continuation coverage premium assistance; individuals, estates, and
trusts. new text end

new text begin (a) For an individual, estate, or trust, the amount by which gross income is increased
under section 6432(e) of the Internal Revenue Code is a subtraction.
new text end

new text begin (b) This subdivision is effective retroactively for taxable years in which a taxpayer
received a credit under section 6432(e) of the Internal Revenue Code.
new text end

new text begin Subd. 16. new text end

new text begin Continuation coverage premium assistance; corporations. new text end

new text begin (a) For a
corporation other than an S corporation, the amount by which gross income is increased
under section 6432(e) of the Internal Revenue Code is a subtraction.
new text end

new text begin (b) This subdivision is effective retroactively for taxable years in which a taxpayer
received a credit under section 6432(e) of the Internal Revenue Code.
new text end

new text begin Subd. 17. new text end

new text begin Dependent care credit; nonconformity for tax year 2021. new text end

new text begin (a) The dependent
care credit under Minnesota Statutes, section 290.067, must be calculated disregarding the
provisions in section 9631 of Public Law 117-2.
new text end

new text begin (b) This subdivision is effective retroactively for taxable years beginning after December
31, 2020, and before January 1, 2022.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for the taxable years specified in each
subdivision.
new text end

Sec. 11. new text begin ADMINISTRATIVE DEADLINE EXTENSIONS.
new text end

new text begin The commissioner may extend the time limits under Minnesota Statutes, chapter 289A,
for assessments, examinations, statutes of limitations, refund provisions, and other sections
under that chapter that the commissioner deems necessary to administer the retroactive
changes in this act. The length of an extension under this section must not exceed the length
of time specified under those sections from the day following final enactment of this act.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 12. new text begin SPECIAL PROVISION FOR TAXPAYERS WITH REMAINING BONUS
DEPRECIATION SUBTRACTIONS.
new text end

new text begin A taxpayer who made a delayed bonus depreciation addition for a taxable year beginning
before December 31, 2022, and would have been allowed a delayed bonus depreciation
subtraction for a taxable year beginning after December 31, 2021, under the provisions of
Minnesota Statutes 2020 repealed in section 14, is allowed to complete the five-year schedule
of subtractions as provided under the provisions of Minnesota Statutes 2020.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 13. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2020, sections 290.0131, subdivision 9; 290.0132, subdivision 9;
290.0133, subdivision 11; and 290.0134, subdivision 13, new text end new text begin are repealed.
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, 2021.
new text end

APPENDIX

Repealed Minnesota Statutes: 22-07344

290.0131 INDIVIDUALS; ADDITIONS TO FEDERAL TAXABLE INCOME.

Subd. 9.

Bonus depreciation.

(a) 80 percent of the depreciation deduction allowed under section 168(k) of the Internal Revenue Code is an addition.

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

290.0132 INDIVIDUALS; SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.

Subd. 9.

Delayed bonus depreciation.

(a) In each of the five taxable years immediately following the taxable year in which an addition is required under section 290.0131, subdivision 9, or 290.0133, subdivision 11, for a shareholder of a corporation that is an S corporation, an amount equal to one-fifth of the delayed depreciation is a subtraction.

(b) For purposes of this subdivision, "delayed depreciation" means the amount of the addition made by the taxpayer under section 290.0131, subdivision 9, or 290.0133, subdivision 11, for a shareholder of an S corporation, minus the positive value of any net operating loss under section 172 of the Internal Revenue Code generated for the taxable year of the addition. The resulting delayed depreciation cannot be less than zero.

290.0133 CORPORATIONS; ADDITIONS TO FEDERAL TAXABLE INCOME.

Subd. 11.

Bonus depreciation.

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

290.0134 CORPORATIONS; SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.

Subd. 13.

Bonus depreciation.

(a) In each of the five taxable years immediately following the taxable year in which an addition is required under section 290.0133, subdivision 11, an amount equal to one-fifth of the delayed depreciation is a subtraction.

(b) For purposes of this subdivision, "delayed depreciation" means the amount of the addition made by the taxpayer under section 290.0133, subdivision 11, provided that delayed depreciation cannot be less than zero.