SF 1714

as introduced - 86th Legislature (2009 - 2010) Posted on 02/09/2010 02:23am

A bill for an act
relating to taxation; income; corporate franchise; modifying the research tax
credit; amending Minnesota Statutes 2008, section 290.068, subdivisions 1, 2,
3, 4.

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

Section 1.

Minnesota Statutes 2008, section 290.068, subdivision 1, is amended to read:

Subdivision 1.

Credit allowed.

A deleted text begin corporation, other than a corporation treated as an
"S" corporation under section 290.9725, deleted text end new text begin taxpayer new text end is allowed a credit against deleted text begin the portion
of deleted text end the deleted text begin franchise deleted text end tax computed under section 290.06 deleted text begin , subdivision 1 deleted text end deleted text begin , deleted text end for the taxable year
equal to:

deleted text begin (a) deleted text end new text begin (1) new text end 5 percent of the first $2,000,000 of the excess deleted text begin ( deleted text end new text begin , new text end if any deleted text begin ) deleted text end new text begin , new text end of new text begin :
new text end

deleted text begin (1) deleted text end new text begin (i) new text end the qualified research expenses for the taxable year, over

deleted text begin (2) deleted text end new text begin (ii) new text end the base amount; and

deleted text begin (b) deleted text end new text begin (2) new text end 2.5 percent on all of such excess expenses over $2,000,000.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2008.
new text end

Sec. 2.

Minnesota Statutes 2008, section 290.068, subdivision 2, is amended to read:

Subd. 2.

Definitions.

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

(a) "Qualified research expenses" means (i) qualified research expenses and basic
research payments as defined in section 41(b) and (e) of the Internal Revenue Code, except
it does not include expenses incurred for qualified research or basic research conducted
outside the state of Minnesota pursuant to section 41(d) and (e) of the Internal Revenue
Code; and (ii) contributions to a nonprofit corporation established and operated pursuant
to the provisions of chapter 317A for the purpose of promoting the establishment and
expansion of business in this state, provided the contributions are invested by the nonprofit
corporation for the purpose of providing funds for small, technologically innovative
enterprises in Minnesota during the early stages of their development.

(b) "Qualified research" means qualified research as defined in section 41(d) of the
Internal Revenue Code, except that the term does not include qualified research conducted
outside the state of Minnesota.

(c) "Base amount" means base amount as defined in section 41(c) of the Internal
Revenue Code, except that the average annual gross receipts must be calculated using
Minnesota sales or receipts under section 290.191 and the definitions contained in deleted text begin clauses deleted text end
new text begin paragraphs new text end (a) and (b) shall apply.

Sec. 3.

Minnesota Statutes 2008, section 290.068, subdivision 3, is amended to read:

Subd. 3.

Limitation; carryover.

(a)(1) The credit for the taxable year shall not
exceed the liability for tax. "Liability for tax" for purposes of this section means the tax
imposed under section 290.06, subdivision 1, for the taxable year reduced by the sum of
the nonrefundable credits allowed under this chapter.

(2) deleted text begin In the case of a corporation which is deleted text end new text begin For new text end a partner in a partnership new text begin and for a
shareholder in an S corporation new text end , the credit allowed for the taxable year shall not exceed
the lesser of the amount determined under deleted text begin clause deleted text end new text begin paragraph (a) new text end (1) for the taxable year
or an amount (separately computed with respect to the deleted text begin corporation's deleted text end new text begin taxpayer's new text end interest
in the trade or business or entity) equal to the amount of tax attributable to that portion
of taxable income which is allocable or apportionable to the deleted text begin corporation's deleted text end new text begin taxpayer's new text end
interest in the trade or business or entity.

(b) If the amount of the credit determined under this section for any taxable year
exceeds the limitation under deleted text begin clause deleted text end new text begin paragraph new text end (a), the excess shall be a research credit
carryover to each of the 15 succeeding taxable years. The entire amount of the excess
unused credit for the taxable year shall be carried first to the earliest of the taxable years to
which the credit may be carried and then to each successive year to which the credit may
be carried. The amount of the unused credit which may be added under this clause shall
not exceed the taxpayer's liability for tax less the research credit for the taxable year.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2008.
new text end

Sec. 4.

Minnesota Statutes 2008, section 290.068, subdivision 4, is amended to read:

Subd. 4.

Partnerships new text begin and S corporations new text end .

In the case of partnerships new text begin and S
corporations, new text end the credit shall be allocated in the same manner provided by deleted text begin section deleted text end new text begin sections new text end
41(f)(2) new text begin and 41(g) new text end of the Internal Revenue Code.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2008.
new text end