SF 1674

as introduced - 93rd Legislature (2023 - 2024) Posted on 06/13/2023 09:48am

A bill for an act
relating to taxation; individual income; extending the sunset of the beginning
farmer management and agricultural assets credits; modifying the credit rate;
allowing certain sales to family members to qualify; amending Minnesota Statutes
2022, section 41B.0391, subdivisions 2, 7.

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

Section 1.

Minnesota Statutes 2022, section 41B.0391, subdivision 2, is amended to read:

Subd. 2.

Tax credit for owners of agricultural assets.

(a) An owner of agricultural
assets may take a credit against the tax due under chapter 290 for the sale or rental of
agricultural assets to a beginning farmer in the amount allocated by the authority under
subdivision 4. An owner of agricultural assets is eligible for allocation of a credit equal to:

(1) deleted text begin five deleted text end new text begin ten new text end percent of the lesser of the sale price or the fair market value of the agricultural
asset, up to a maximum of deleted text begin $32,000 deleted text end new text begin $64,000 new text end ;

(2) ten percent of the gross rental income in each of the first, second, and third years of
a rental agreement, up to a maximum of $7,000 per year; or

(3) 15 percent of the cash equivalent of the gross rental income in each of the first,
second, and third years of a share rent agreement, up to a maximum of $10,000 per year.

(b) A qualifying rental agreement includes cash rent of agricultural assets or a share rent
agreement. The agricultural asset must be rented at prevailing community rates as determined
by the authority.

(c) The credit may be claimed only after approval and certification by the authority, and
is limited to the amount stated on the certificate issued under subdivision 4. An owner of
agricultural assets must apply to the authority for certification and allocation of a credit, in
a form and manner prescribed by the authority.

(d) An owner of agricultural assets or beginning farmer may terminate a rental agreement,
including a share rent agreement, for reasonable cause upon approval of the authority. If a
rental agreement is terminated without the fault of the owner of agricultural assets, the tax
credits shall not be retroactively disallowed. In determining reasonable cause, the authority
must look at which party was at fault in the termination of the agreement. If the authority
determines the owner of agricultural assets did not have reasonable cause, the owner of
agricultural assets must repay all credits received as a result of the rental agreement to the
commissioner of revenue. The repayment is additional income tax for the taxable year in
which the authority makes its decision or when a final adjudication under subdivision 5,
paragraph (a), is made, whichever is later.

(e) The credit is limited to the liability for tax as computed under chapter 290 for the
taxable year. If the amount of the credit determined under this section for any taxable year
exceeds this limitation, the excess is a beginning farmer incentive credit carryover according
to section 290.06, subdivision 37.

new text begin (f) Notwithstanding subdivision 1, paragraph (c), for purposes of the credit for the sale
of an agricultural asset under paragraph (a), clause (1), the family member definitional
exclusions in subdivision 1, paragraph (c), clauses (4) and (5), do not apply.
new text end

new text begin (g) For a sale to a family member to qualify for the credit under paragraph (a), clause
(1), the sales price of the agricultural asset must equal or exceed the assessed value of the
asset under chapter 273 as of the date of the sale. If there is no assessed value, the sales
price must equal or exceed 80 percent of the fair market value of the asset as of the date of
the sale.
new text end

new text begin (h) For the purposes of this section, "sale to a family member" means a sale to a beginning
farmer in which the beginning farmer or the beginning farmer's spouse is a family member
of:
new text end

new text begin (1) the owner of the agricultural asset; or
new text end

new text begin (2) a partner, member, shareholder, or trustee of the owner of the agricultural asset.
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, 2022.
new text end

Sec. 2.

Minnesota Statutes 2022, section 41B.0391, subdivision 7, is amended to read:

Subd. 7.

Sunset.

This section expires for taxable years beginning after December 31,
deleted text begin 2023 deleted text end new text begin 2031 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, 2023.
new text end