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Minnesota Legislature

Office of the Revisor of Statutes

SF 304

as introduced - 91st Legislature (2019 - 2020) Posted on 01/22/2019 03:07pm

KEY: stricken = removed, old language.
underscored = added, new language.

Current Version - as introduced

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A bill for an act
relating to taxation; individual income; providing certain business entities the
option to file as C corporations;amending Minnesota Statutes 2018, sections
289A.08, by adding a subdivision; 290.0132, by adding a subdivision.

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

Section 1.

Minnesota Statutes 2018, section 289A.08, is amended by adding a subdivision
to read:


new text begin Subd. 7a. new text end

new text begin Election to file as a C corporation. new text end

new text begin (a) A qualifying entity may elect to file
a return as a C-option corporation and calculate its tax liability as a corporation. The election
is binding for the four taxable years following the taxable year of the election.
new text end

new text begin (b) For purposes of this subdivision:
new text end

new text begin (1) "qualifying entity" means a:
new text end

new text begin (i) partnership;
new text end

new text begin (ii) limited liability company; or
new text end

new text begin (iii) corporation organized under subchapter S of the Internal Revenue Code for federal
income tax purposes that does not have a qualified subsidiary also organized under subchapter
S of the Internal Revenue Code; and
new text end

new text begin (2) "C-option corporation" means a qualifying entity that has made the election under
paragraph (a).
new text end

new text begin (c) The election to file as a C-option corporation may only be made by persons who
hold more than 50 percent ownership interest in a qualifying entity.
new text end

new text begin (d) Tax liability must be calculated by multiplying the Minnesota taxable income of the
qualifying entity by the highest rate used to determine the tax liability for individuals under
section 290.06, subdivision 2c.
new text end

new text begin (e) The provisions of subdivision 17 apply to the election under this subdivision.
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, 2018.
new text end

Sec. 2.

Minnesota Statutes 2018, section 290.0132, is amended by adding a subdivision
to read:


new text begin Subd. 27. new text end

new text begin Income of partners, members, or shareholders. new text end

new text begin The amount of income
received from a qualifying entity, as defined under section 289A.08, subdivision 7a, for
purposes of calculating federal taxable income by a partner, member, or shareholder of a
qualifying entity that has elected to file as a C-option corporation under section 289A.08,
subdivision 7a, 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, 2018.
new text end