SF 2603

as introduced - 88th Legislature (2013 - 2014) Posted on 03/13/2014 09:23am

A bill for an act
relating to taxation; estate and gift; conforming to the federal exemption
amount; amending Minnesota Statutes 2013 Supplement, sections 289A.10,
subdivision 1; 291.005, subdivision 1; 291.03, subdivision 1; 292.17, subdivision
2; repealing Minnesota Statutes 2013 Supplement, sections 289A.10, subdivision
1a; 289A.12, subdivision 18; 289A.18, subdivision 3a; 289A.20, subdivision
3a; 291.03, subdivisions 8, 9, 10, 11.

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

Section 1.

Minnesota Statutes 2013 Supplement, section 289A.10, subdivision 1,
is amended to read:

Subdivision 1.

Return required.

In the case of a decedent who has an interest in
property with a situs in Minnesota, the personal representative must submit a Minnesota
estate tax return to the commissioner, on a form prescribed by the commissioner, if deleted text begin :
deleted text end

deleted text begin (1) deleted text end a federal estate tax return is required to be filed deleted text begin ; or
deleted text end

deleted text begin (2) the sum of the federal gross estate and federal adjusted taxable gifts made within
three years of the date of the decedent's death exceeds $1,000,000 deleted text end .

The return must contain a computation of the Minnesota estate tax due. The return
must be signed by the personal representative.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for estates of decedents dying after
June 30, 2013.
new text end

Sec. 2.

Minnesota Statutes 2013 Supplement, section 291.005, subdivision 1, is
amended to read:

Subdivision 1.

Scope.

Unless the context otherwise clearly requires, the following
terms used in this chapter shall have the following meanings:

(1) "Commissioner" means the commissioner of revenue or any person to whom the
commissioner has delegated functions under this chapter.

(2) "Federal gross estate" means the gross estate of a decedent as required to be valued
and otherwise determined for federal estate tax purposes under the Internal Revenue Code.

(3) "Internal Revenue Code" means the United States Internal Revenue Code of
1986, as amended through January 3, 2013, but without regard to the provisions of section
2011, paragraph (f), of the Internal Revenue Code.

(4) "Minnesota adjusted taxable estate" means federal adjusted taxable estate as
defined by section 2011(b)(3) of the Internal Revenue Code, plus

(i) the amount of deduction for state death taxes allowed under section 2058 of
the Internal Revenue Code; new text begin and
new text end

(ii) the amount of taxable gifts, as defined in section 292.16, and made by the
decedent within three years of the decedent's date of death deleted text begin ; less deleted text end new text begin .
new text end

deleted text begin (iii)(A) the value of qualified small business property under section 291.03,
subdivision 9, and the value of qualified farm property under section 291.03, subdivision
10, or (B) $4,000,000, whichever is less.
deleted text end

(5) "Minnesota gross estate" means the federal gross estate of a decedent after (a)
excluding therefrom any property included therein which has its situs outside Minnesota,
and (b) including therein any property omitted from the federal gross estate which is
includable therein, has its situs in Minnesota, and was not disclosed to federal taxing
authorities.

(6) "Nonresident decedent" means an individual whose domicile at the time of
death was not in Minnesota.

(7) "Personal representative" means the executor, administrator or other person
appointed by the court to administer and dispose of the property of the decedent. If there
is no executor, administrator or other person appointed, qualified, and acting within this
state, then any person in actual or constructive possession of any property having a situs in
this state which is included in the federal gross estate of the decedent shall be deemed
to be a personal representative to the extent of the property and the Minnesota estate tax
due with respect to the property.

(8) "Resident decedent" means an individual whose domicile at the time of death
was in Minnesota.

(9) "Situs of property" means, with respect to:

(i) real property, the state or country in which it is located;

(ii) tangible personal property, the state or country in which it was normally kept
or located at the time of the decedent's death or for a gift of tangible personal property
within three years of death, the state or country in which it was normally kept or located
when the gift was executed; and

(iii) intangible personal property, the state or country in which the decedent was
domiciled at death or for a gift of intangible personal property within three years of death,
the state or country in which the decedent was domiciled when the gift was executed.

For a nonresident decedent with an ownership interest in a pass-through entity
with assets that include real or tangible personal property, situs of the real or tangible
personal property is determined as if the pass-through entity does not exist and the real
or tangible personal property is personally owned by the decedent. If the pass-through
entity is owned by a person or persons in addition to the decedent, ownership of the
property is attributed to the decedent in proportion to the decedent's capital ownership
share of the pass-through entity.

(10) "Pass-through entity" includes the following:

(i) an entity electing S corporation status under section 1362 of the Internal Revenue
Code;

(ii) an entity taxed as a partnership under subchapter K of the Internal Revenue Code;

(iii) a single-member limited liability company or similar entity, regardless of
whether it is taxed as an association or is disregarded for federal income tax purposes
under Code of Federal Regulations, title 26, section 301.7701-3; or

(iv) a trust to the extent the property is includible in the decedent's federal gross estate.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for estates of decedents dying after
June 30, 2013.
new text end

Sec. 3.

Minnesota Statutes 2013 Supplement, section 291.03, subdivision 1, is
amended to read:

Subdivision 1.

Tax amount.

(a) The tax imposed shall be an amount equal to the
proportion of the maximum credit for state death taxes computed under section 2011
of the Internal Revenue Code, but new text begin without regard to section 2011, paragraph (f), and
new text end using Minnesota adjusted taxable estate instead of federal adjusted taxable estate, as the
Minnesota gross estate bears to the value of the federal gross estate. The tax is reduced by:

(1) the gift tax paid by the decedent under section 292.17 on gifts included in the
Minnesota adjusted taxable estate and not subtracted as qualified farm or small business
property; and

(2) any credit allowed under subdivision 1c.

(b) The tax determined under this subdivision must not be greater than the sum of
the following amounts multiplied by a fraction, the numerator of which is the Minnesota
gross estate and the denominator of which is the federal gross estate:

(1) the rates and brackets under section 2001(c) of the Internal Revenue Code new text begin , as
amended through December 31, 2000, new text end multiplied by the sum of:

(i) the taxable estate, as defined under section 2051 of the Internal Revenue Code; plus

(ii) adjusted taxable gifts, as defined in section 2001(b) of the Internal Revenue
Code; less

deleted text begin (iii) the lesser of (A) the sum of the value of qualified small business property
under subdivision 9, and the value of qualified farm property under subdivision 10, or
(B) $4,000,000; less
deleted text end

(2) the amount of tax allowed under section 2001(b)(2) of the Internal Revenue
Code; and less

(3) the federal credit allowed under section 2010 of the Internal Revenue Code new text begin and
including the credit attributable to the deceased spousal unused exclusion amount new text end .

deleted text begin (c) For purposes of this subdivision, "Internal Revenue Code" means the Internal
Revenue Code of 1986, as amended through December 31, 2000.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for estates of decedents dying after
June 30, 2013.
new text end

Sec. 4.

Minnesota Statutes 2013 Supplement, section 292.17, subdivision 2, is
amended to read:

Subd. 2.

Lifetime credit.

A credit is allowed against the tax imposed under this
section equal to deleted text begin $100,000 deleted text end new text begin ten percent of the applicable exclusion amount, including
the inflation adjustment and deceased spousal unused exclusion amount, under section
2010(c) of the Internal Revenue Code new text end . This credit applies to the cumulative amount of
taxable gifts made by the donor during the donor's lifetime.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for estates of decedents dying after
June 30, 2013.
new text end

Sec. 5. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2013 Supplement, sections 289A.10, subdivision 1a; 289A.12,
subdivision 18; 289A.18, subdivision 3a; 289A.20, subdivision 3a; and 291.03,
subdivisions 8, 9, 10, and 11, new text end new text begin are repealed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for decedents dying after June 30,
2013.
new text end