SF 1918

as introduced - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

A bill for an act
relating to taxation; income; abolishing the
alternative minimum tax for individuals and
corporations; amending Minnesota Statutes 2004,
sections 289A.25, subdivision 5; 290.02; 290.06,
subdivisions 30, 31; 290.491; 298.01, subdivisions 3d,
4e; 469.316, subdivision 1; 469.317; 469.337;
repealing Minnesota Statutes 2004, sections 290.0674,
subdivision 3; 290.091; 290.0921; 298.01, subdivisions
3c, 4d.

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

Section 1.

Minnesota Statutes 2004, section 289A.25,
subdivision 5, is amended to read:

Subd. 5.

Amount of required installment.

The amount of
any installment required to be paid shall be 25 percent of the
required annual payment except as provided in clause (3). The
term "required annual payment" means the lesser of

(1) 90 percent of the tax shown on the return for the
taxable year or 90 percent of the tax for the year if no return
is filed, or

(2) the total tax liability shown on the return of the
taxpayer for the preceding taxable year, if a return showing a
liability for the taxes was filed by the taxpayer for the
preceding taxable year of 12 months. If the adjusted gross
income shown on the return of the taxpayer for the preceding
taxable year exceeds $150,000, this clause shall be applied by
substituting "110 percent of the total tax liability" for "the
total tax liability"

(i) for an individual who is not a Minnesota resident for
the entire year, the term "adjusted gross income" means the
Minnesota share of that income apportioned to Minnesota under
section 290.06, subdivision 2c, paragraph (e), or

(ii) for a trust the term "adjusted gross income" means the
income assigned to Minnesota under section 290.17; or

(3) an amount equal to the applicable percentage of the tax
for the taxable year computed by placing on an annualized basis
the taxable income deleted text begin and alternative minimum taxable income deleted text end for
the months in the taxable year ending before the month in which
the installment is required to be paid. The applicable
percentage of the tax is 22.5 percent in the case of the first
installment, 45 percent for the second installment, 67.5 percent
for the third installment, and 90 percent for the fourth
installment. For purposes of this clause, the taxable income
deleted text begin and alternative minimum taxable income deleted text end shall be placed on an
annualized basis by

(i) multiplying by 12 (or in the case of a taxable year of
less than 12 months, the number of months in the taxable year)
the taxable income deleted text begin and alternative minimum taxable income
deleted text end computed for the months in the taxable year ending before the
month in which the installment is required to be paid; and

(ii) dividing the resulting amount by the number of months
in the taxable year ending before the month in which the
installment date falls.

A reduction in an installment under clause (3) must be
recaptured by increasing the amount of the next required
installment by the amount of the reduction.

Sec. 2.

Minnesota Statutes 2004, section 290.02, is
amended to read:

290.02 FRANCHISE TAX ON CORPORATIONS MEASURED BY NET
INCOME.

An annual franchise tax on the exercise of the corporate
franchise to engage in contacts with this state that produce
gross income attributable to sources within this state is
imposed upon every corporation that so exercises its franchise
during the taxable year.

Contacts within this state do not include transportation in
interstate or foreign commerce, or both, by means of ships
navigating within or through waters that are made international
for navigation purposes by any treaty or agreement to which the
United States is a party.

The tax so imposed is measured by the corporations' taxable
income deleted text begin and alternative minimum taxable income deleted text end for the taxable
year for which the tax is imposed, and computed in the manner
and at the rates provided in this chapter.

Sec. 3.

Minnesota Statutes 2004, section 290.06,
subdivision 30, is amended to read:

Subd. 30.

Biotechnology and health science industry zone
job credit.

A taxpayer that is a qualified business, as defined
in section 469.330, subdivision 11, is allowed a credit as
determined under section 469.338 against the franchise tax
imposed under section 290.06, subdivision 1 deleted text begin , or the alternative
minimum tax imposed under section 290.0921 deleted text end .

Sec. 4.

Minnesota Statutes 2004, section 290.06,
subdivision 31, is amended to read:

Subd. 31.

Biotechnology and health science industry zone
research and development credit.

A taxpayer that is a qualified
business, as defined in section 469.330, subdivision 11, is
allowed a credit as determined under section 469.339 against the
franchise tax imposed under section 290.06, subdivision 1 deleted text begin , or
the alternative minimum tax imposed under section 290.0921 deleted text end .

Sec. 5.

Minnesota Statutes 2004, section 290.491, is
amended to read:

290.491 TAX ON GAIN; DISCHARGE IN BANKRUPTCY.

(a) Any tax due under this chapter on a gain realized on a
forced sale pursuant to foreclosure of a mortgage or other
security interest in agricultural production property, other
real property, or equipment, used in a farm business that was
owned and operated by the taxpayer shall be a dischargeable debt
in a bankruptcy proceeding under United States Code, title 11,
section 727.

(b) Income realized on a sale or exchange of agricultural
production property, other real property, or equipment, used in
a farm business that was owned and operated by the taxpayer
shall be exempt from taxation under this chapter, if the
taxpayer was insolvent at the time of the sale and the proceeds
of the sale were used solely to discharge indebtedness secured
by a mortgage, lien, or other security interest on the property
sold. For purposes of this section, "insolvent" means insolvent
as defined in section 108(d)(3) of the Internal Revenue Code.
This paragraph applies only to the extent that the gain is
includable in federal taxable income deleted text begin or in the computation of
the alternative minimum taxable income under section 290.091 for
purposes of the alternative minimum tax deleted text end . The amount of the
exemption is limited to the excess of the taxpayer's (1)
liabilities over (2) the total assets and any exclusion claimed
under section 108 of the Internal Revenue Code determined
immediately before application of this paragraph.

(c) For purposes of this section, any tax due under this
chapter specifically includes, but is not limited to, tax
imposed under sections 290.02 and 290.03 on income derived from
a sale or exchange, whether constituting gain, discharge of
indebtedness or recapture of depreciation deductions deleted text begin , or the
alternative minimum tax imposed under section 290.091 deleted text end .

Sec. 6.

Minnesota Statutes 2004, section 298.01,
subdivision 3d, is amended to read:

Subd. 3d.

Alternative minimum tax credit.

A credit is
allowed against qualified regular tax for qualified alternative
minimum tax previously paid new text begin prior to the repeal of the alternate
minimum tax new text end . The amount of the credit allowed under this
subdivision is determined under new text begin Minnesota Statutes 2004, new text end section
290.0921, subdivision 8. For purposes of calculating this
credit, the following terms have the meanings given:

(a) "Qualified alternative minimum tax" means the amount
determined under subdivision 3 and new text begin Minnesota Statutes 2004,
new text end section 290.0921, subdivision 1.

(b) "Qualified regular tax" means the tax imposed under
subdivision 3 and section 290.06, subdivision 1.

Sec. 7.

Minnesota Statutes 2004, section 298.01,
subdivision 4e, is amended to read:

Subd. 4e.

Alternative minimum tax credit.

A credit is
allowed against qualified regular tax for qualified alternative
minimum tax previously paid new text begin prior to the repeal of the
alternative minimum tax new text end . The amount of the credit allowed under
this paragraph is determined under new text begin Minnesota Statutes 2004,
new text end section 290.0921, subdivision 8. For purposes of calculating
this credit, the following terms have the meanings given:

(1) "Qualified alternative minimum tax" means the amount
determined under subdivision 4d and new text begin Minnesota Statutes 2004,
new text end section 290.0921, subdivision 1.

(2) "Qualified regular tax" means the tax imposed under
subdivision 4 and section 290.06, subdivision 1.

Sec. 8.

Minnesota Statutes 2004, section 469.316,
subdivision 1, is amended to read:

Subdivision 1.

Application.

An individual operating a
trade or business in a job opportunity building zone, and an
individual making a qualifying investment in a qualified
business operating in a job opportunity building zone qualifies
for the exemptions from taxes imposed under chapter 290, as
provided in this section. The exemptions provided under this
section apply only to the extent that the income otherwise would
be taxable under chapter 290. Subtractions under this section
from federal taxable income deleted text begin , alternative minimum taxable income,
deleted text end or any other base subject to tax are limited to the amount that
otherwise would be included in the tax base absent the exemption
under this section. This section applies only to taxable years
beginning during the duration of the job opportunity building
zone.

Sec. 9.

Minnesota Statutes 2004, section 469.317, is
amended to read:

469.317 CORPORATE FRANCHISE TAX EXEMPTION.

(a) A qualified business is exempt from taxation under
section 290.02 deleted text begin , the alternative minimum tax under section
290.0921, deleted text end and the minimum fee under section 290.0922, on the
portion of its income attributable to operations within the
zone. This exemption is determined as follows:

(1) for purposes of the tax imposed under section 290.02,
by multiplying its taxable net income by its zone percentage and
subtracting the result in determining taxable income; new text begin and
new text end

(2) deleted text begin for purposes of the alternative minimum tax under
section 290.0921, by multiplying its alternative minimum taxable
income by its zone percentage and reducing alternative minimum
taxable income by this amount; and
deleted text end

deleted text begin (3) deleted text end for purposes of the minimum fee under section 290.0922,
by excluding property and payroll in the zone from the
computations of the fee or by exempting the entity under section
290.0922, subdivision 2, clause (7).

(b) No subtraction is allowed under this section in excess
of 20 percent of the sum of the corporation's job opportunity
building zone payroll and the adjusted basis of the property at
the time that the property is first used in the job opportunity
building zone by the corporation.

(c) This section applies only to taxable years beginning
during the duration of the job opportunity building zone.

Sec. 10.

Minnesota Statutes 2004, section 469.337, is
amended to read:

469.337 CORPORATE FRANCHISE TAX EXEMPTION.

(a) A qualified business is exempt from taxation under
section 290.02 deleted text begin , the alternative minimum tax under section
290.0921, deleted text end and the minimum fee under section 290.0922, on the
portion of its income attributable to operations of a qualified
business within the biotechnology and health sciences industry
zone. This exemption is determined as follows:

(1) for purposes of the tax imposed under section 290.02,
by multiplying its taxable net income by its zone percentage and
subtracting the result in determining taxable income; new text begin and
new text end

(2) deleted text begin for purposes of the alternative minimum tax under
section 290.0921, by multiplying its alternative minimum taxable
income by its zone percentage and reducing alternative minimum
taxable income by this amount; and
deleted text end

deleted text begin (3) deleted text end for purposes of the minimum fee under section 290.0922,
by excluding property and payroll in the zone from the
computations of the fee.

(b) No subtraction is allowed under this section in excess
of 20 percent of the sum of the corporation's biotechnology and
health sciences industry zone payroll and the adjusted basis of
the property at the time that the property is first used in the
biotechnology and health sciences industry zone by the
corporation.

(c) No reduction in tax is allowed in excess of the amount
allocated under section 469.335.

Sec. 11. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2004, sections 290.0674, subdivision 3;
290.091; 290.0921; and 298.01, subdivisions 3c and 4d, are
repealed.
new text end

Sec. 12. new text begin EFFECTIVE DATE.
new text end

new text begin Sections 1 to 11 are effective for taxable years after
December 31, 2005.
new text end