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SF 2982

as introduced - 90th Legislature (2017 - 2018) Posted on 03/06/2018 09:04am

KEY: stricken = removed, old language.
underscored = added, new language.
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A bill for an act
relating to taxation; individual income and corporate franchise; providing for
various state subtractions and credits and nonconformity to certain federal tax
items; amending Minnesota Statutes 2016, sections 290.0132, by adding
subdivisions; 290.0134, by adding a subdivision; Minnesota Statutes 2017
Supplement, sections 289A.02, subdivision 7; 290.01, subdivisions 19, 31;
proposing coding for new law in Minnesota Statutes, chapter 290.

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

Section 1.

Minnesota Statutes 2017 Supplement, section 289A.02, subdivision 7, is
amended to read:


Subd. 7.

Internal Revenue Code.

Unless specifically defined otherwise, "Internal
Revenue Code" means the Internal Revenue Code of 1986, as amended through December
deleted text begin 16, 2016deleted text endnew text begin 23, 2017new text end.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2017.
new text end

Sec. 2.

Minnesota Statutes 2017 Supplement, section 290.01, subdivision 19, is amended
to read:


Subd. 19.

Net income.

The term "net income" means the federal taxable income, as
defined in section 63 of the Internal Revenue Code of 1986, as amended through the date
named in this subdivision, incorporating the federal effective dates of changes to the Internal
Revenue Code and any elections made by the taxpayer in accordance with the Internal
Revenue Code in determining federal taxable income for federal income tax purposes, and
with the modifications provided in sections 290.0131 to 290.0136.

In the case of a regulated investment company or a fund thereof, as defined in section
851(a) or 851(g) of the Internal Revenue Code, federal taxable income means investment
company taxable income as defined in section 852(b)(2) of the Internal Revenue Code,
except that:

(1) the exclusion of net capital gain provided in section 852(b)(2)(A) of the Internal
Revenue Code does not apply;

(2) the deduction for dividends paid under section 852(b)(2)(D) of the Internal Revenue
Code must be applied by allowing a deduction for capital gain dividends and exempt-interest
dividends as defined in sections 852(b)(3)(C) and 852(b)(5) of the Internal Revenue Code;
and

(3) the deduction for dividends paid must also be applied in the amount of any
undistributed capital gains which the regulated investment company elects to have treated
as provided in section 852(b)(3)(D) of the Internal Revenue Code.

The net income of a real estate investment trust as defined and limited by section 856(a),
(b), and (c) of the Internal Revenue Code means the real estate investment trust taxable
income as defined in section 857(b)(2) of the Internal Revenue Code.

The net income of a designated settlement fund as defined in section 468B(d) of the
Internal Revenue Code means the gross income as defined in section 468B(b) of the Internal
Revenue Code.

The Internal Revenue Code of 1986, as amended through December deleted text begin16, 2016deleted text endnew text begin 23, 2017new text end,
shall be in effect for taxable years beginning after December 31, 1996.

Except as otherwise provided, references to the Internal Revenue Code in this subdivision
and sections 290.0131 to 290.0136 mean the code in effect for purposes of determining net
income for the applicable year.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2017.
new text end

Sec. 3.

Minnesota Statutes 2017 Supplement, section 290.01, subdivision 31, is amended
to read:


Subd. 31.

Internal Revenue Code.

Unless specifically defined otherwise, "Internal
Revenue Code" means the Internal Revenue Code of 1986, as amended through December
deleted text begin 16, 2016deleted text endnew text begin 23, 2017new text end. Internal Revenue Code also includes any uncodified provision in federal
law that relates to provisions of the Internal Revenue Code that are incorporated into
Minnesota law. When used in this chapter, the reference to "subtitle A, chapter 1, subchapter
N, part 1, of the Internal Revenue Code" is to the Internal Revenue Code as amended through
March 18, 2010.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2017.
new text end

Sec. 4.

Minnesota Statutes 2016, section 290.0132, is amended by adding a subdivision
to read:


new text begin Subd. 27. new text end

new text begin Dependent exemptions. new text end

new text begin (a) The exemption calculated under paragraphs (b)
to (f) is a subtraction.
new text end

new text begin (b) For purposes of this subdivision, "exemption amount" means $........
new text end

new text begin (c) The exemption amount may be included in the subtraction under this subdivision for
the spouse of the taxpayer if a joint return is not made by the taxpayer and spouse, and if
the spouse, for the calendar year in which the taxable year of the taxpayer begins, has no
gross income and is not the dependent of another taxpayer.
new text end

new text begin (d) The exemption amount may be included under this subdivision for each individual
who is a dependent as defined in section 152 of the Internal Revenue Code of the taxpayer
for the taxable year.
new text end

new text begin (e) In the case of an individual with respect to whom the subtraction under this subdivision
is allowable to another taxpayer for a taxable year beginning in the calendar year in which
the individual's taxable year begins, the exemption amount applicable to the individual for
the individual's taxable year is zero.
new text end

new text begin (f) The subtraction under this subdivision is reduced by $....... for every $....... over $.......
of adjusted gross income, as defined in section 62(a) of the Internal Revenue Code.
new text end

new text begin (g) This subdivision expires for taxable years beginning after December 31, 2025.
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, 2017.
new text end

Sec. 5.

Minnesota Statutes 2016, section 290.0132, is amended by adding a subdivision
to read:


new text begin Subd. 28. new text end

new text begin State and local taxes. new text end

new text begin (a) The difference between the amount of state and
local taxes allowed as a deduction in a taxable year under section 164 of the Internal Revenue
Code as amended through December 16, 2016, and the applicable amount is a subtraction.
new text end

new text begin (b) For purposes of this subdivision, "applicable amount" means:
new text end

new text begin (1) $5,000 for married taxpayers filing separate and joint returns; and
new text end

new text begin (2) $10,000 for all other taxpayers.
new text end

new text begin (c) This subdivision expires for taxable years beginning after December 31, 2025.
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, 2017.
new text end

Sec. 6.

Minnesota Statutes 2016, section 290.0132, is amended by adding a subdivision
to read:


new text begin Subd. 29. new text end

new text begin Pass-through losses. new text end

new text begin (a) The difference between the amount of losses allowed
as a deduction in a taxable year under section 461 of the Internal Revenue Code as amended
through December 16, 2016, and the amount of losses allowed as a deduction in the same
taxable year under section 461 of the Internal Revenue Code is a subtraction.
new text end

new text begin (b) This subdivision expires for taxable years beginning after December 31, 2025.
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, 2017.
new text end

Sec. 7.

Minnesota Statutes 2016, section 290.0132, is amended by adding a subdivision
to read:


new text begin Subd. 30. new text end

new text begin Net operating losses. new text end

new text begin The difference between the amount of net operating
losses allowed as a deduction in a taxable year under section 172 of the Internal Revenue
Code as amended through December 16, 2016, and the amount of net operating losses
allowed as a deduction in the same taxable year under section 172 of the Internal Revenue
Code is a subtraction.
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, 2017.
new text end

Sec. 8.

Minnesota Statutes 2016, section 290.0134, is amended by adding a subdivision
to read:


new text begin Subd. 17. new text end

new text begin Net operating losses. new text end

new text begin The difference between the amount of net operating
losses allowed as a deduction in a taxable year under section 172 of the Internal Revenue
Code as amended through December 16, 2016, and the amount of net operating losses
allowed as a deduction in the same taxable year under section 172 of the Internal Revenue
Code is a subtraction.
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, 2017.
new text end

Sec. 9.

new text begin [290.0693] CHILD AND FAMILY CREDIT.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For purposes of this section, the following terms have
the meanings given them.
new text end

new text begin (b) "Dependent" has the meaning given in section 152(c) of the Internal Revenue Code.
new text end

new text begin (c) "Earned income" has the meaning given in section 32 of the Internal Revenue Code.
new text end

new text begin (d) "Modified adjusted gross income" has the meaning given in section 24(b)(1) of the
Internal Revenue Code.
new text end

new text begin (e) "Qualifying child" means a dependent of the taxpayer who has not reached age 17
at the end of the taxable year.
new text end

new text begin (f) "Social Security taxes" has the meaning given in section 24(d) of the Internal Revenue
Code.
new text end

new text begin (g) "Threshold amount" means:
new text end

new text begin (1) $....... for married taxpayers filing a joint return;
new text end

new text begin (2) $....... for head of household filers; and
new text end

new text begin (3) $....... for single filers.
new text end

new text begin Subd. 2. new text end

new text begin Credit allowed. new text end

new text begin (a) A taxpayer is allowed a credit against the tax imposed
under this chapter in the following amounts:
new text end

new text begin (1) $....... for each qualifying child of the taxpayer; and
new text end

new text begin (2) $....... for each dependent of the taxpayer other than a qualifying child.
new text end

new text begin (b) The credit under paragraph (a), clause (1), is reduced by $....... for every $....... of
modified adjusted gross income over the threshold amount.
new text end

new text begin Subd. 3. new text end

new text begin Portion of credit refundable. new text end

new text begin (a) If the credit allowed under subdivision 2,
paragraph (a), exceeds the tax liability under this chapter, the commissioner shall refund
the taxpayer an amount that equals the lesser of:
new text end

new text begin (1) 15 percent of earned income above $.......; or
new text end

new text begin (2) for taxpayers with three or more qualifying children, the excess of the taxpayer's
Social Security taxes for the taxable year over the taxpayer's earned income for the taxable
year.
new text end

new text begin Subd. 4. new text end

new text begin Appropriation. new text end

new text begin An amount sufficient to pay the refunds required in this section
is appropriated to the commissioner from the general fund.
new text end

new text begin Subd. 5. new text end

new text begin Expiration. new text end

new text begin This section expires for taxable years beginning after December
31, 2025.
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, 2017.
new text end