SF 1532

as introduced - 82nd Legislature (2001 - 2002) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to taxation; increasing the research credit 
  1.3             and extending it to individual income tax; allowing an 
  1.4             investment credit; imposing application fees; 
  1.5             providing a sales tax exemption for certain purchases; 
  1.6             appropriating money; amending Minnesota Statutes 2000, 
  1.7             section 290.068, subdivisions 1, 3, and 4; proposing 
  1.8             coding for new law in Minnesota Statutes, chapter 290. 
  1.9   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.10     Section 1.  Minnesota Statutes 2000, section 290.068, 
  1.11  subdivision 1, is amended to read: 
  1.12     Subdivision 1.  [CREDIT ALLOWED.] A corporation, other than 
  1.13  a corporation treated as an "S" corporation under section 
  1.14  290.9725, taxpayer is allowed a credit against the portion of 
  1.15  the franchise tax computed under section 290.06, subdivision 1, 
  1.16  for the taxable year equal to: 
  1.17     (a) 5 percent of the first $2,000,000 of the excess (if 
  1.18  any) of: 
  1.19     (1) the qualified research expenses for the taxable year, 
  1.20  over 
  1.21     (2) the base amount; and 
  1.22     (b) 2.5 percent on all of such excess expenses over 
  1.23  $2,000,000. 
  1.24     [EFFECTIVE DATE.] This section is effective for taxable 
  1.25  years beginning after December 31, 2000. 
  1.26     Sec. 2.  Minnesota Statutes 2000, section 290.068, 
  1.27  subdivision 3, is amended to read: 
  2.1      Subd. 3.  [LIMITATION; CARRYOVER.] (a)(1) The credit for 
  2.2   the taxable year shall may not exceed the liability for tax.  
  2.3   "Liability for tax" for purposes of this section means the tax 
  2.4   imposed under this chapter section 290.06 for the taxable year 
  2.5   reduced by the sum of the nonrefundable credits allowed under 
  2.6   this chapter. 
  2.7      (2) In the case of a corporation which is For a partner in 
  2.8   a partnership, the credit allowed for the taxable year shall may 
  2.9   not exceed the lesser of the amount determined under clause (1) 
  2.10  for the taxable year or an amount (separately computed with 
  2.11  respect to the corporation's taxpayer's interest in the trade or 
  2.12  business or entity) equal to the amount of tax attributable to 
  2.13  that portion of taxable income which is allocable or 
  2.14  apportionable to the corporation's taxpayer's interest in the 
  2.15  trade or business or entity.  
  2.16     (b) If the amount of the credit determined under this 
  2.17  section for any taxable year exceeds the limitation under clause 
  2.18  (a), the excess shall be is a research credit carryover to each 
  2.19  of the 15 succeeding taxable years.  The entire amount of the 
  2.20  excess unused credit for the taxable year shall must be carried 
  2.21  first to the earliest of the taxable years to which the credit 
  2.22  may be carried and then to each successive year to which the 
  2.23  credit may be carried.  The amount of the unused credit which 
  2.24  may be added under this clause shall may not exceed the 
  2.25  taxpayer's liability for tax less the research credit for the 
  2.26  taxable year.  
  2.27     [EFFECTIVE DATE.] This section is effective for taxable 
  2.28  years beginning after December 31, 2000. 
  2.29     Sec. 3.  Minnesota Statutes 2000, section 290.068, 
  2.30  subdivision 4, is amended to read: 
  2.31     Subd. 4.  [PARTNERSHIPS.] In the case of partnerships 
  2.32  taxpayers other than corporations the credit shall be allocated 
  2.33  in the same manner provided by section is subject to sections 
  2.34  41(f)(2) and 41(g) of the Internal Revenue Code. 
  2.35     [EFFECTIVE DATE.] This section is effective for taxable 
  2.36  years beginning after December 31, 2000. 
  3.1      Sec. 4.  [290.0681] [DEFINITIONS.] 
  3.2      Subdivision 1.  [SCOPE.] The definitions in this section 
  3.3   apply to sections 290.0681 to 290.0684. 
  3.4      Subd. 2.  [BUSINESS.] "Business" means a corporation, 
  3.5   partnership, limited liability company, association, or sole 
  3.6   proprietorship operated for profit. 
  3.7      Subd. 3.  [EQUITY SECURITY.] "Equity security" includes: 
  3.8      (1) common stock; 
  3.9      (2) preferred stock; 
  3.10     (3) an interest in a partnership; or 
  3.11     (4) subordinated debt that is convertible into, or entitles 
  3.12  the holder to receive upon its exercise, common stock, preferred 
  3.13  stock, or an interest in a partnership. 
  3.14     Subd. 4.  [PASS-THROUGH ENTITY.] "Pass-through entity" 
  3.15  means: 
  3.16     (1) a corporation that is treated as an S corporation under 
  3.17  section 290.9725; and 
  3.18     (2) a partnership, including a limited partnership, a 
  3.19  general partnership, and a joint venture. 
  3.20     Subd. 5.  [QUALIFIED BUSINESS VENTURE.] "Qualified business 
  3.21  venture" means a business that meets the requirements of section 
  3.22  290.0683. 
  3.23     Subd. 6.  [SECURITY.] "Security" means a security as 
  3.24  defined in section 2(1) of the Securities Act of 1933, United 
  3.25  States Code, title 15, section 77b(1). 
  3.26     Subd. 7.  [SUBORDINATED DEBT.] "Subordinated debt" means 
  3.27  indebtedness that is not secured and is subordinated to all 
  3.28  other indebtedness of the issuer issued or to be issued to a 
  3.29  financial institution. 
  3.30     [EFFECTIVE DATE.] This section is effective beginning for 
  3.31  investments made in calendar year 2000 and for taxable years 
  3.32  beginning after December 31, 2001. 
  3.33     Sec. 5.  [290.0682] [INVESTMENT TAX CREDIT.] 
  3.34     Subdivision 1.  [CREDIT; INDIVIDUALS.] (a) Subject to the 
  3.35  limitations in section 290.0683, an individual who purchases the 
  3.36  equity securities or subordinated debt of a qualified business 
  4.1   venture directly from that business is allowed a credit against 
  4.2   the tax under sections 290.06, subdivision 2c, and 290.091 for 
  4.3   the taxable year in an amount equal to 25 percent of the amount 
  4.4   invested.  The aggregate amount of credit allowed an individual 
  4.5   for one or more investments in a single taxable year under this 
  4.6   section, whether directly or indirectly as owner of a 
  4.7   pass-through entity, may not exceed $50,000. 
  4.8      (b) The credit may not be taken for the year in which the 
  4.9   investment is made but must be taken for the taxable year 
  4.10  beginning during the calendar year in which the application for 
  4.11  the credit becomes effective as provided in subdivision 4. 
  4.12     Subd. 2.  [PASS-THROUGH ENTITIES.] (a) This section does 
  4.13  not apply to a pass-through entity that has committed capital 
  4.14  under management in excess of $5,000,000. 
  4.15     (b) Subject to the limitations in section 290.0683, a 
  4.16  pass-through entity that purchases the equity securities or 
  4.17  subordinated debt of a qualified business venture directly from 
  4.18  the business is eligible for a tax credit equal to 25 percent of 
  4.19  the amount invested.  The aggregate amount of credit allowed a 
  4.20  pass-through entity for one or more investments in a single 
  4.21  taxable year under this section, whether directly or indirectly 
  4.22  as owner of another pass-through entity, may not exceed $750,000.
  4.23     (c) The pass-through entity is not eligible for the credit 
  4.24  for the year in which the investment by the pass-through entity 
  4.25  is made but is eligible for the credit for the taxable year 
  4.26  beginning during the calendar year in which the application for 
  4.27  the credit becomes effective as provided in subdivision 4. 
  4.28     (d) Each individual who is an owner of a pass-through 
  4.29  entity is allowed as a credit against the tax imposed by 
  4.30  sections 290.06, subdivision 2c, and 290.091, for the taxable 
  4.31  year in an amount equal to the owner's allocated share of the 
  4.32  credits for which the pass-through entity is eligible under this 
  4.33  subdivision.  The aggregate amount of credit allowed an 
  4.34  individual for one or more investments in a single taxable year 
  4.35  under sections 290.06, subdivision 2c, and 290.091, whether 
  4.36  directly or indirectly as owner of a pass-through entity, may 
  5.1   not exceed $50,000.  If an owner's share of the pass-through 
  5.2   entity's credit is limited due to the maximum allowable credit 
  5.3   under this section for a taxable year, the pass-through entity 
  5.4   and its owners may not reallocate the unused credit among the 
  5.5   other owners. 
  5.6      Subd. 3.  [NO CREDIT FOR BROKERED INVESTMENTS.] No credit 
  5.7   is allowed under this section for a purchase of equity 
  5.8   securities or subordinated debt if a broker's fee or commission 
  5.9   or other similar remuneration is paid or given directly or 
  5.10  indirectly for soliciting the purchase. 
  5.11     Subd. 4.  [APPLICATION.] To be eligible for the tax credit 
  5.12  under this section, the taxpayer must file an application for 
  5.13  the credit with the commissioner by April 15 of the year 
  5.14  following the calendar year in which the investment was made.  
  5.15  The commissioner may grant extensions of this deadline, as the 
  5.16  commissioner finds appropriate, upon the request of the 
  5.17  taxpayer, except that the application may not be filed after 
  5.18  September 15 of the year following the calendar year in which 
  5.19  the investment was made.  An application is effective for the 
  5.20  year in which it is timely filed.  The application must be on a 
  5.21  form prescribed by the commissioner and must include any 
  5.22  supporting documentation that the commissioner may require.  If 
  5.23  an investment for which a credit is applied for was paid for 
  5.24  other than in money, the taxpayer must include with the 
  5.25  application a certified appraisal of the value of the property 
  5.26  used to pay for the investment.  The application for a credit 
  5.27  for an investment made by a pass-through entity must be filed by 
  5.28  the pass-through entity. 
  5.29     Subd. 5.  [NONREFUNDABLE; CARRYOVER.] (a) The credit 
  5.30  allowed under this section may not exceed the amount of income 
  5.31  tax imposed by section 290.06, subdivision 2c, or 290.091, 
  5.32  whichever is greater. 
  5.33     (b) The amount of unused credit allowed under this section, 
  5.34  but not allowed as a result of the limit in paragraph (a), may 
  5.35  be carried forward for the five succeeding years.  The $50,000 
  5.36  limitation on the amount of credit allowed a taxpayer under 
  6.1   subdivisions 2 and 3 does not apply to unused amounts carried 
  6.2   forward under this subdivision. 
  6.3      Subd. 6.  [AGGREGATE LIMIT.] (a) The total amount of all 
  6.4   tax credits allowed to taxpayers under this section for 
  6.5   investments made in a calendar year may not exceed $........ The 
  6.6   commissioner shall calculate the total amount of tax credits 
  6.7   claimed from the applications filed under subdivision 4.  If the 
  6.8   total amount of tax credits claimed for investments made in a 
  6.9   calendar year exceeds $......., the commissioner shall allow a 
  6.10  portion of the credits claimed by allocating a total of $....... 
  6.11  in tax credits in proportion to the size of the credit claimed 
  6.12  by each taxpayer. 
  6.13     (b) If a credit claimed under this section is reduced as 
  6.14  provided in this subdivision, the commissioner shall notify the 
  6.15  taxpayer of the amount of the reduction of the credit by 
  6.16  December 31 of the year following the calendar year in which the 
  6.17  investment was made.  The commissioner's allocations based on 
  6.18  applications filed under subdivision 4 are final and may not be 
  6.19  adjusted to account for credits applied for but not claimed. 
  6.20     [EFFECTIVE DATE.] This section is effective beginning for 
  6.21  investments made in calendar year 2000 and for taxable years 
  6.22  beginning after December 31, 2001. 
  6.23     Sec. 6.  [290.0683] [REGISTRATION OF QUALIFIED BUSINESS 
  6.24  VENTURES.] 
  6.25     Subdivision 1.  [REGISTRATION REQUIRED.] To qualify as a 
  6.26  qualified business venture for purposes of sections 290.0681 to 
  6.27  290.0684, a business must be registered with the commissioner of 
  6.28  trade and economic development.  To register, the business must 
  6.29  file with the commissioner of trade and economic development an 
  6.30  application and any supporting documents the commissioner may 
  6.31  require from time to time to determine that the business meets 
  6.32  the requirements for registration as a qualified business 
  6.33  venture under subdivision 2. 
  6.34     Subd. 2.  [QUALIFYING RULES.] (a) A business meets the 
  6.35  requirements for registration as a qualified business venture if 
  6.36  all of the following are true when the business files the 
  7.1   application: 
  7.2      (1) It was organized after January 1 of the calendar year 
  7.3   in which its application is filed or during its most recent 
  7.4   fiscal year before filing the application, it had gross 
  7.5   revenues, as determined in accordance with generally accepted 
  7.6   accounting principles, of $5,000,000 or less on a consolidated 
  7.7   basis. 
  7.8      (2) It is organized to engage primarily in manufacturing, 
  7.9   processing, warehousing, wholesaling, research and development, 
  7.10  or a service-related industry. 
  7.11     (3) It does not engage as a substantial part of its 
  7.12  business in any of the following: 
  7.13     (i) providing a professional service as defined in section 
  7.14  319B.02; 
  7.15     (ii) construction or contracting; 
  7.16     (iii) purchasing, selling, or holding for investment of 
  7.17  commercial paper, notes, other indebtedness, financial 
  7.18  instruments, securities, or real property, or otherwise make 
  7.19  investments; 
  7.20     (iv) providing personal grooming or cosmetics services; or 
  7.21     (v) offering any form of entertainment, amusement, 
  7.22  recreation, or athletic or fitness activity for which an 
  7.23  admission or a membership is charged. 
  7.24     (4) It was not formed for the primary purpose of acquiring 
  7.25  all or part of the stock or assets of one or more existing 
  7.26  businesses. 
  7.27     (5) It is not a real estate related business, as provided 
  7.28  in paragraph (b). 
  7.29     (6) It does not engage as a substantial part of its 
  7.30  business in selling or leasing at retail, as provided in 
  7.31  paragraph (c). 
  7.32     (b)(1) "Real estate related business" means a business that 
  7.33  is involved in or related to the brokerage, selling, purchasing, 
  7.34  leasing, operating, or managing of hotels, motels, nursing homes 
  7.35  or other lodging facilities, golf courses, sports or social 
  7.36  clubs, restaurants, storage facilities, or commercial or 
  8.1   residential lots or buildings. 
  8.2      (2) A real estate related business does not include: 
  8.3      (i) a business that purchases or leases real estate from 
  8.4   others to provide itself with facilities to conduct a business 
  8.5   that is not itself a real estate related business; or 
  8.6      (ii) a business that is not otherwise a real estate related 
  8.7   business but that leases, subleases, or otherwise provides to 
  8.8   one or more other persons a number of square feet of space which 
  8.9   in the aggregate does not exceed 50 percent of the square feet 
  8.10  of space occupied by the business for its other activities. 
  8.11     (c) A business is selling or leasing at retail if the 
  8.12  business either: 
  8.13     (1) sells or leases any product or service of any nature 
  8.14  from a store or other location open to the public generally; or 
  8.15     (2) sells or leases products or services of any nature by 
  8.16  means other than to or through one or more other businesses. 
  8.17     Subd. 3.  [WHEN REGISTRATION IS EFFECTIVE.] The effective 
  8.18  date of registration for a qualified business venture whose 
  8.19  application is accepted for registration is 60 days before the 
  8.20  date its application is filed.  No credit is allowed under 
  8.21  section 290.0682 for an investment made before the effective 
  8.22  date of the registration or after the registration is revoked.  
  8.23  If a taxpayer's investment is placed initially in escrow 
  8.24  conditioned upon other investors' commitment of additional 
  8.25  funds, the date of the investment is the date escrowed funds are 
  8.26  transferred to the qualified business venture free of the 
  8.27  condition. 
  8.28     Subd. 4.  [RENEWAL REQUIRED.] (a) To remain qualified as a 
  8.29  qualified business venture, the business must renew its 
  8.30  registration annually by filing: 
  8.31     (1) a financial statement for the most recent fiscal year 
  8.32  showing gross revenues, as determined in accordance with 
  8.33  generally accepted accounting principles, of $5,000,000 or less 
  8.34  on a consolidated basis; and 
  8.35     (2) an application for renewal in which the business 
  8.36  certifies the facts required in the original application. 
  9.1      (b) Failure of a qualified business venture to renew its 
  9.2   registration by the applicable deadline results in revocation of 
  9.3   its registration effective as of the next day after the renewal 
  9.4   deadline, but does not forfeit tax credits previously allowed to 
  9.5   taxpayers who invested in the business except as provided in 
  9.6   section 290.0684. 
  9.7      (c) The commissioner of trade and economic development 
  9.8   shall send the qualified business venture notice of revocation 
  9.9   within 60 days after the renewal deadline.  A qualified business 
  9.10  venture may apply to have its registration reinstated by the 
  9.11  commissioner of trade and economic development by filing an 
  9.12  application for reinstatement, accompanied by the reinstatement 
  9.13  application fee and a late filing penalty of $1,000, within 30 
  9.14  days after receipt of the revocation notice from the 
  9.15  commissioner of trade and economic development.  A business that 
  9.16  seeks approval of a new application for registration after its 
  9.17  registration has been revoked must also pay a penalty of 
  9.18  $1,000.  A registration that has been reinstated is treated as 
  9.19  if it had not been revoked. 
  9.20     Subd. 5.  [NOTIFICATION OF COMMISSIONER.] If the gross 
  9.21  revenues of a qualified business venture exceed $5,000,000 in a 
  9.22  fiscal year, the business must notify the commissioner of trade 
  9.23  and economic development in writing of this fact by filing a 
  9.24  financial statement showing the revenues of the business for 
  9.25  that year. 
  9.26     Subd. 6.  [APPLICATION FORMS; FEES.] (a) Applications for 
  9.27  registration, renewal of registration, and reinstatement of 
  9.28  registration under this section must be in the form required by 
  9.29  the commissioner of trade and economic development.  The 
  9.30  commissioner of trade and economic development may require 
  9.31  applicants to furnish supporting information in addition to the 
  9.32  information required by this section.  The commissioner of trade 
  9.33  and economic development shall prepare blank forms for the 
  9.34  applications and shall furnish them on request. 
  9.35     (b) The fee for filing an application for registration 
  9.36  under this section is $100.  The fee for filing an application 
 10.1   for renewal of registration under this section is $50.  The fee 
 10.2   for filing an application for reinstatement of registration 
 10.3   under this section is $50. 
 10.4      (c) An application for renewal of registration under this 
 10.5   section must include a report of the number of jobs the business 
 10.6   created during the preceding year that are attributable to 
 10.7   investments that qualify under section 290.0682 for a tax credit 
 10.8   and the average wages paid by each job.  An application that 
 10.9   does not contain this information is incomplete and the 
 10.10  applicant's registration may not be renewed until the 
 10.11  information is provided. 
 10.12     Subd. 7.  [REVOCATION OF REGISTRATION.] If the commissioner 
 10.13  of trade and economic development finds that any of the 
 10.14  information contained in an application of a business registered 
 10.15  under this section is false, the commissioner of trade and 
 10.16  economic development shall revoke the registration of the 
 10.17  business.  The commissioner of trade and economic development 
 10.18  shall not revoke the registration of a business solely because 
 10.19  it ceases business operations for an indefinite period of time, 
 10.20  as long as the business renews its registration each year as 
 10.21  required under subdivision 4. 
 10.22     Subd. 8.  [TRANSFER OF REGISTRATION.] A registration as a 
 10.23  qualified business venture may not be sold or otherwise 
 10.24  transferred.  If a qualified business venture enters into a 
 10.25  merger, conversion, consolidation, or other similar transaction 
 10.26  with another business and the surviving company would otherwise 
 10.27  meet the criteria for being a qualified business venture, the 
 10.28  surviving company retains the registration without further 
 10.29  application to the commissioner of trade and economic 
 10.30  development.  In such a case, the qualified business venture 
 10.31  must provide the commissioner of trade and economic development 
 10.32  with written notice of the merger, conversion, consolidation, or 
 10.33  similar transaction and the name, address, and jurisdiction of 
 10.34  incorporation or organization of the surviving company. 
 10.35     Subd. 9.  [REPORT BY DEPARTMENT OF TRADE AND ECONOMIC 
 10.36  DEVELOPMENT.] The commissioner of trade and economic development 
 11.1   shall report to the legislature by October 1 of each year all of 
 11.2   the businesses that have registered as qualified business 
 11.3   ventures.  The report must include the name and address of each 
 11.4   business, the location of its headquarters and principal place 
 11.5   of business, a detailed description of the types of business in 
 11.6   which it engages, the number of jobs created by the business 
 11.7   during the period covered by the report, and the average wages 
 11.8   paid by these jobs. 
 11.9      Subd. 10.  [DEPOSIT OF FEES.] The fees imposed by this 
 11.10  section must be deposited in the general fund. 
 11.11     [EFFECTIVE DATE.] This section is effective the day 
 11.12  following final enactment. 
 11.13     Sec. 7.  [290.0684] [FORFEITURE OF CREDIT.] 
 11.14     Subdivision 1.  [PARTICIPATION IN BUSINESS.] (a) A taxpayer 
 11.15  who has received a credit under section 290.0682 for an 
 11.16  investment in a qualified business venture forfeits the credit 
 11.17  if, within three years after the investment was made, the 
 11.18  taxpayer participates in the operation of the qualified business 
 11.19  venture.  A taxpayer participates in the operation of a 
 11.20  qualified business venture if the taxpayer, the taxpayer's 
 11.21  spouse, parent, sibling, or child, or an employee of any of 
 11.22  these individuals or of a business controlled by any of these 
 11.23  individuals, provides services of any nature to the qualified 
 11.24  business venture for compensation, whether as an employee, a 
 11.25  contractor, or otherwise.  A person who provides services to a 
 11.26  qualified business venture, whether as an officer, a member of 
 11.27  the board of directors, or otherwise does not participate in its 
 11.28  operation if the person receives as compensation only reasonable 
 11.29  reimbursement of expenses incurred in providing the services, 
 11.30  participation in a stock option or stock bonus plan, or both. 
 11.31     (b) For purposes of this section, a person controls an 
 11.32  entity if the person owns, directly or indirectly, more than ten 
 11.33  percent of the voting securities of that entity.  A voting 
 11.34  security means a security, including a general partnership 
 11.35  interest, that: 
 11.36     (1) confers upon the holder the right to vote for the 
 12.1   election of members of the board of directors or similar 
 12.2   governing body of the business; or 
 12.3      (2) is convertible into, or entitles the holder to receive 
 12.4   upon its exercise, a security that confers such a right to vote. 
 12.5      Subd. 2.  [FALSE APPLICATION.] A taxpayer who has received 
 12.6   a credit under section 290.0682 for an investment in a qualified 
 12.7   business venture forfeits the credit if the registration of the 
 12.8   qualified business venture is revoked because information in the 
 12.9   registration application was false at the time the application 
 12.10  was filed with the commissioner of trade and economic 
 12.11  development. 
 12.12     Subd. 3.  [TRANSFER OR REDEMPTION OF INVESTMENT.] A 
 12.13  taxpayer who has received a credit under section 290.0682 for an 
 12.14  investment in a qualified business venture forfeits the credit 
 12.15  in the following cases: 
 12.16     (1) Within one year after the investment was made, the 
 12.17  taxpayer transfers any of the securities received in the 
 12.18  investment that qualified for the tax credit to another person 
 12.19  or entity, other than in a transfer resulting from one of the 
 12.20  following: 
 12.21     (i) the death of the taxpayer; 
 12.22     (ii) a final distribution in liquidation to the owners of a 
 12.23  taxpayer that is a corporation or other entity; or 
 12.24     (iii) a merger, conversion, consolidation, or similar 
 12.25  transaction requiring approval by the owners of the qualified 
 12.26  business venture under applicable state law, to the extent the 
 12.27  taxpayer does not receive cash or tangible property in the 
 12.28  merger, conversion, consolidation, or other similar transaction; 
 12.29  or 
 12.30     (2) Within five years after the investment was made, the 
 12.31  qualified business venture in which the investment was made 
 12.32  makes a redemption with respect to the securities received in 
 12.33  the investment.  If the taxpayer transfers fewer than all the 
 12.34  securities in a manner that would result in a forfeiture, the 
 12.35  amount of the credit that is forfeited is the product obtained 
 12.36  by multiplying the aggregate credit attributable to the 
 13.1   investment by a fraction whose numerator equals the number of 
 13.2   securities transferred and whose denominator equals the number 
 13.3   of securities received on account of the investment to which the 
 13.4   credit was attributable.  In addition, if the redemption amount 
 13.5   is less than the amount invested by the taxpayer in the 
 13.6   securities to which the redemption is attributable, the amount 
 13.7   of the credit that is forfeited is further reduced by 
 13.8   multiplying it by a fraction whose numerator equals the 
 13.9   redemption amount and whose denominator equals the aggregate 
 13.10  amount invested by the taxpayer in the securities involved in 
 13.11  the redemption.  The term "redemption amount" means all amounts 
 13.12  paid that are treated as a distribution in part or full payment 
 13.13  in exchange for securities under section 302(a) of the Internal 
 13.14  Revenue Code. 
 13.15     Subd. 4.  [EFFECT OF FORFEITURE.] A taxpayer who forfeits a 
 13.16  credit under this section is liable for all past taxes avoided 
 13.17  as a result of the credit plus interest at the rate established 
 13.18  under section 270.75 computed from the date the taxes would have 
 13.19  been due if the credit had not been allowed.  The past taxes and 
 13.20  interest are due 30 days after the date the credit is forfeited. 
 13.21  A taxpayer who fails to pay the past taxes and interest by the 
 13.22  due date is subject to the penalties provided in chapter 289A.60.
 13.23     [EFFECTIVE DATE.] This section is effective beginning for 
 13.24  investments made in calendar year 2000 and for taxable years 
 13.25  beginning after December 31, 2001. 
 13.26     Sec. 8.  Minnesota Statutes 2000, section 297A.68, is 
 13.27  amended by adding a subdivision to read: 
 13.28     Subd. 35.  [RESEARCH SUPPLIES AND EQUIPMENT.] Gross 
 13.29  receipts from the sale or use of tangible personal property and 
 13.30  taxable services are exempt if: 
 13.31     (1) the purchase was made by or to be used by a person 
 13.32  engaged in a trade or business; 
 13.33     (2) the expenditure by the person qualified as a deductible 
 13.34  expense under section 174 of the Internal Revenue Code or the 
 13.35  expenditures would have qualified as a deductible expense under 
 13.36  section 174, if the disallowance of items subject to allowance 
 14.1   under section 167 or 611 of the Internal Revenue Code were not 
 14.2   in effect; and 
 14.3      (3) the items purchased or used do not constitute an 
 14.4   improvement to real property. 
 14.5      [EFFECTIVE DATE.] This section is effective for sales made 
 14.6   after June 30, 2001. 
 14.7      Sec. 9.  [APPROPRIATION.] 
 14.8      $......... is appropriated to the commissioner of trade and 
 14.9   economic development for purposes of administering the 
 14.10  registration of qualified business ventures under Minnesota 
 14.11  Statutes, section 290.0683.  The amount of this appropriation 
 14.12  may not exceed the amount of the application fees collected 
 14.13  under Minnesota Statutes, section 290.0683.