SF 2517

as introduced - 90th Legislature (2017 - 2018) Posted on 02/21/2018 09:02am

A bill for an act
relating to taxation; estate; modifying application of qualified farm property
subtraction recapture tax; amending Minnesota Statutes 2017 Supplement, section
291.03, subdivision 11.

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

Section 1.

Minnesota Statutes 2017 Supplement, section 291.03, subdivision 11, is amended
to read:

Subd. 11.

Recapture tax.

(a) If, within three years after the decedent's death and before
the death of the qualified heir, the qualified heir disposes of any interest in the qualified
property, other than by a disposition to a family member, or a family member ceases to
satisfy the requirement under subdivision 9, clause (7); or 10, clause (5), an additional estate
tax is imposed on the property. In the case of a sole proprietor, if the qualified heir replaces
qualified small business property excluded under subdivision 9 with similar property, then
the qualified heir will not be treated as having disposed of an interest in the qualified property.

(b) The amount of the additional tax equals the deleted text begin amount of the exclusion claimed by the
estate under subdivision 8, paragraph (d) deleted text end new text begin value of the disqualified property that ceases to
satisfy the requirements under subdivision 10, clause (5) new text end , multiplied by 16 percent.

(c) The additional tax under this subdivision is due on the day which is six months after
the date of the disposition or cessation in paragraph (a).

(d) The tax under this subdivision does not apply to the acquisition of title or possession
of the qualified property by a federal, state, or local government unit, or any other entity
with the power of eminent domain for a public purpose, as defined in section 117.025,
subdivision 11, within the three-year holding period.

(e) This subdivision shall not apply as a result of any of the following:

(1) a portion of qualified farm property consisting of less than one-fifth of the acreage
of the property is reclassified as class 2b property under section 273.13, subdivision 23, and
the qualified heir has not substantially altered the reclassified property during the three-year
holding period; deleted text begin or
deleted text end

(2) a portion of qualified farm property classified as 2a property at the death of the
decedent pursuant to section 273.13, subdivision 23, paragraph (a), consisting of a residence,
garage, and immediately surrounding one acre of land is reclassified as 4bb property during
the three-year holding period, and the qualified heir has not substantially altered the property deleted text begin . deleted text end new text begin ;
or
new text end

new text begin (3) a portion of qualified farm property consisting of less than one-fifth of the total
acreage is reclassified under section 273.13 during the three-year holding period, and the
qualified heir has not substantially altered the use of the reclassified property during the
three-year holding period.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin The amendment to paragraph (b) is effective for estates of
decedents dying after December 31, 2018. The amendment to paragraph (e) is effective
retroactively for estates of decedents dying after June 30, 2011.
new text end