as introduced - 83rd Legislature (2003 - 2004) Posted on 12/15/2009 12:00am
1.1 A bill for an act 1.2 relating to taxation; income; allowing a credit for 1.3 contributions to school tuition organizations; 1.4 amending Minnesota Statutes 2002, section 290.01, 1.5 subdivisions 19a, 19c; proposing coding for new law in 1.6 Minnesota Statutes, chapter 290. 1.7 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 1.8 Section 1. Minnesota Statutes 2002, section 290.01, 1.9 subdivision 19a, is amended to read: 1.10 Subd. 19a. [ADDITIONS TO FEDERAL TAXABLE INCOME.] For 1.11 individuals, estates, and trusts, there shall be added to 1.12 federal taxable income: 1.13 (1)(i) interest income on obligations of any state other 1.14 than Minnesota or a political or governmental subdivision, 1.15 municipality, or governmental agency or instrumentality of any 1.16 state other than Minnesota exempt from federal income taxes 1.17 under the Internal Revenue Code or any other federal statute; 1.18 and 1.19 (ii) exempt-interest dividends as defined in section 1.20 852(b)(5) of the Internal Revenue Code, except the portion of 1.21 the exempt-interest dividends derived from interest income on 1.22 obligations of the state of Minnesota or its political or 1.23 governmental subdivisions, municipalities, governmental agencies 1.24 or instrumentalities, but only if the portion of the 1.25 exempt-interest dividends from such Minnesota sources paid to 1.26 all shareholders represents 95 percent or more of the 2.1 exempt-interest dividends that are paid by the regulated 2.2 investment company as defined in section 851(a) of the Internal 2.3 Revenue Code, or the fund of the regulated investment company as 2.4 defined in section 851(g) of the Internal Revenue Code, making 2.5 the payment; and 2.6 (iii) for the purposes of items (i) and (ii), interest on 2.7 obligations of an Indian tribal government described in section 2.8 7871(c) of the Internal Revenue Code shall be treated as 2.9 interest income on obligations of the state in which the tribe 2.10 is located; 2.11 (2) the amount of income taxes paid or accrued within the 2.12 taxable year under this chapter and income taxes paid to any 2.13 other state or to any province or territory of Canada, to the 2.14 extent allowed as a deduction under section 63(d) of the 2.15 Internal Revenue Code, but the addition may not be more than the 2.16 amount by which the itemized deductions as allowed under section 2.17 63(d) of the Internal Revenue Code exceeds the amount of the 2.18 standard deduction as defined in section 63(c) of the Internal 2.19 Revenue Code. For the purpose of this paragraph, the 2.20 disallowance of itemized deductions under section 68 of the 2.21 Internal Revenue Code of 1986, income tax is the last itemized 2.22 deduction disallowed; 2.23 (3) the capital gain amount of a lump sum distribution to 2.24 which the special tax under section 1122(h)(3)(B)(ii) of the Tax 2.25 Reform Act of 1986, Public Law Number 99-514, applies; 2.26 (4) the amount of income taxes paid or accrued within the 2.27 taxable year under this chapter and income taxes paid to any 2.28 other state or any province or territory of Canada, to the 2.29 extent allowed as a deduction in determining federal adjusted 2.30 gross income. For the purpose of this paragraph, income taxes 2.31 do not include the taxes imposed by sections 290.0922, 2.32 subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729; 2.33 (5) the amount of expense, interest, or taxes disallowed 2.34 pursuant to section 290.10; 2.35 (6) the amount of a partner's pro rata share of net income 2.36 which does not flow through to the partner because the 3.1 partnership elected to pay the tax on the income under section 3.2 6242(a)(2) of the Internal Revenue Code;
and3.3 (7) 80 percent of the depreciation deduction allowed under 3.4 section 168(k) of the Internal Revenue Code; and 3.5 (8) the amount deducted under section 170 of the Internal 3.6 Revenue Code that represents contributions to a school tuition 3.7 organization for which a credit is claimed under section 3.8 290.0676. 3.9 [EFFECTIVE DATE.] This section is effective for tax years 3.10 beginning after December 31, 2002. 3.11 Sec. 2. Minnesota Statutes 2002, section 290.01, 3.12 subdivision 19c, is amended to read: 3.13 Subd. 19c. [CORPORATIONS; ADDITIONS TO FEDERAL TAXABLE 3.14 INCOME.] For corporations, there shall be added to federal 3.15 taxable income: 3.16 (1) the amount of any deduction taken for federal income 3.17 tax purposes for income, excise, or franchise taxes based on net 3.18 income or related minimum taxes, including but not limited to 3.19 the tax imposed under section 290.0922, paid by the corporation 3.20 to Minnesota, another state, a political subdivision of another 3.21 state, the District of Columbia, or any foreign country or 3.22 possession of the United States; 3.23 (2) interest not subject to federal tax upon obligations 3.24 of: the United States, its possessions, its agencies, or its 3.25 instrumentalities; the state of Minnesota or any other state, 3.26 any of its political or governmental subdivisions, any of its 3.27 municipalities, or any of its governmental agencies or 3.28 instrumentalities; the District of Columbia; or Indian tribal 3.29 governments; 3.30 (3) exempt-interest dividends received as defined in 3.31 section 852(b)(5) of the Internal Revenue Code; 3.32 (4) the amount of any net operating loss deduction taken 3.33 for federal income tax purposes under section 172 or 832(c)(10) 3.34 of the Internal Revenue Code or operations loss deduction under 3.35 section 810 of the Internal Revenue Code; 3.36 (5) the amount of any special deductions taken for federal 4.1 income tax purposes under sections 241 to 247 of the Internal 4.2 Revenue Code; 4.3 (6) losses from the business of mining, as defined in 4.4 section 290.05, subdivision 1, clause (a), that are not subject 4.5 to Minnesota income tax; 4.6 (7) the amount of any capital losses deducted for federal 4.7 income tax purposes under sections 1211 and 1212 of the Internal 4.8 Revenue Code; 4.9 (8) the exempt foreign trade income of a foreign sales 4.10 corporation under sections 921(a) and 291 of the Internal 4.11 Revenue Code; 4.12 (9) the amount of percentage depletion deducted under 4.13 sections 611 through 614 and 291 of the Internal Revenue Code; 4.14 (10) for certified pollution control facilities placed in 4.15 service in a taxable year beginning before December 31, 1986, 4.16 and for which amortization deductions were elected under section 4.17 169 of the Internal Revenue Code of 1954, as amended through 4.18 December 31, 1985, the amount of the amortization deduction 4.19 allowed in computing federal taxable income for those 4.20 facilities; 4.21 (11) the amount of any deemed dividend from a foreign 4.22 operating corporation determined pursuant to section 290.17, 4.23 subdivision 4, paragraph (g); 4.24 (12) the amount of any environmental tax paid under section 4.25 59(a) of the Internal Revenue Code; 4.26 (13) the amount of a partner's pro rata share of net income 4.27 which does not flow through to the partner because the 4.28 partnership elected to pay the tax on the income under section 4.29 6242(a)(2) of the Internal Revenue Code; 4.30 (14) the amount of net income excluded under section 114 of 4.31 the Internal Revenue Code; 4.32 (15) any increase in subpart F income, as defined in 4.33 section 952(a) of the Internal Revenue Code, for the taxable 4.34 year when subpart F income is calculated without regard to the 4.35 provisions of section 614 of Public Law Number 107-147; and4.36 (16) 80 percent of the depreciation deduction allowed under 5.1 section 168(k) of the Internal Revenue Code; and 5.2 (17) the amount deducted under section 170 of the Internal 5.3 Revenue Code that represents contributions to a school tuition 5.4 organization for which a credit is claimed under section 5.5 290.0676. 5.6 [EFFECTIVE DATE.] This section is effective for tax years 5.7 beginning after December 31, 2002. 5.8 Sec. 3. [290.0676] [CREDIT FOR CONTRIBUTIONS TO SCHOOL 5.9 TUITION ORGANIZATIONS.] 5.10 Subdivision 1. [DEFINITIONS.] (a) For purposes of this 5.11 section the following terms have the meanings given. 5.12 (b) "School tuition organization" means a charitable 5.13 organization that is exempt from federal taxation under section 5.14 501(c)(3) of the Internal Revenue Code. To qualify as a school 5.15 tuition organization the charitable organization: 5.16 (1) must allocate at least 90 percent of its annual revenue 5.17 for education scholarships or tuition grants to children to 5.18 allow them to attend any qualified school of their parents' 5.19 choice; 5.20 (2) may only award scholarships or grants to students from 5.21 families with incomes less than 75 percent of median family 5.22 income; and 5.23 (3) must not restrict the availability of scholarships to 5.24 students of one school. 5.25 The maximum scholarship awarded to a student may not exceed 90 5.26 percent of the tuition at the school selected by the student's 5.27 parents. 5.28 (c) "Median family income" means median family income 5.29 adjusted by family size and county of residence, as most 5.30 recently estimated by the United States Department of Housing 5.31 and Urban Development. 5.32 (d) "Liability for tax" means the tax imposed under this 5.33 chapter for the taxable year reduced by the sum of the 5.34 nonrefundable credits allowed under this chapter. 5.35 (e) "Qualified school" means an elementary or secondary 5.36 school, wherein a resident of this state may legally fulfill the 6.1 state's compulsory attendance laws, which is not operated for 6.2 profit, and which adheres to the provisions of the Civil Rights 6.3 Act of 1964 and chapter 363. 6.4 Subd. 2. [CREDIT ALLOWED.] A taxpayer is allowed a credit 6.5 against the tax due under this chapter equal to 75 percent of 6.6 the amount contributed to a school tuition organization. The 6.7 maximum credit allowed in a taxable year is $1,000. The credit 6.8 may not be claimed for contributions designated for the use of a 6.9 specific student. 6.10 Subd. 3. [CARRYOVER ALLOWED.] (a) The credit for the 6.11 taxable year may not exceed the taxpayer's liability for tax. 6.12 If the amount of the credit determined under this section for 6.13 any taxable year exceeds the taxpayer's liability for tax, the 6.14 excess is a carryover to each of the three succeeding taxable 6.15 years. The entire amount of the excess unused credit for the 6.16 taxable year must be carried first to the earliest of the 6.17 taxable years to which the credit may be carried and then to 6.18 each successive year to which the credit may be carried. The 6.19 amount of the unused credit that may be added under this 6.20 subdivision may not exceed the taxpayer's liability for tax less 6.21 the credit under this section for the taxable year. 6.22 Subd. 4. [NONRESIDENTS AND PART-YEAR RESIDENTS.] For a 6.23 nonresident or part-year resident, the credit must be allocated 6.24 based on the percentage calculated under section 290.06, 6.25 subdivision 2c, paragraph (e). 6.26 [EFFECTIVE DATE.] This section is effective for taxable 6.27 years beginning after December 31, 2002.