SF 4100

as introduced - 93rd Legislature (2023 - 2024) Posted on 02/23/2024 09:49am

A bill for an act
relating to taxation; income; modifying the inclusion of certain revenues from
lawful gambling for the purposes of unrelated business income tax; amending
Minnesota Statutes 2022, section 290.05, subdivision 3.

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

Section 1.

Minnesota Statutes 2022, section 290.05, subdivision 3, is amended to read:

Subd. 3.

Taxes imposed on exempt entities.

(a) An organization exempt from taxation
under subdivision 2 shall, nevertheless, be subject to tax under this chapter to the extent
provided in the following provisions of the Internal Revenue Code:

(1) section 527 (dealing with political organizations);

(2) section 528 (dealing with certain homeowners associations);

(3) sections 511 to 515 (dealing with unrelated business income);

(4) section 521 (dealing with farmers' cooperatives); and

(5) section 6033(e)(2) (dealing with lobbying expense); but notwithstanding this
subdivision, shall be considered an organization exempt from income tax for the purposes
of any law which refers to organizations exempt from income taxes.

(b) The tax shall be imposed on the taxable income of political organizations or
homeowner associations or the unrelated business taxable income, as defined in section 512
of the Internal Revenue Code, of organizations defined in section 511 of the Internal Revenue
Code, provided that the tax is not imposed on:

(1) advertising revenues from a newspaper published by an organization described in
section 501(c)(4) of the Internal Revenue Code;

(2) new text begin all new text end revenues from lawful gambling authorized under chapter 349 deleted text begin that are expended
for purposes that qualify for the deduction for charitable contributions under section 170
of the Internal Revenue Code, disregarding the limitation under section 170(b)(2) deleted text end , but only
to the extent the deleted text begin contributions deleted text end new text begin amounts new text end are not deductible in computing federal taxable
income; or

(3) amounts included in unrelated business taxable income under section 512(a)(7) of
the Internal Revenue Code.

The tax shall be at the corporate rates. The tax shall only be imposed on income and
deductions assignable to this state under sections 290.17 to 290.20. To the extent deducted
in computing federal taxable income, the deductions contained in section 290.21 shall not
be allowed in computing Minnesota taxable net income.

(c) The tax shall be imposed on organizations subject to federal tax under section
6033(e)(2) of the Internal Revenue Code, in an amount equal to the corporate tax rate
multiplied by the amount of lobbying expenses taxed under section 6033(e)(2) which are
attributable to lobbying the Minnesota state government.

(d) In calculating unrelated business taxable income under section 512 of the Internal
Revenue Code, the amount of any net operating loss deduction claimed under section 172
of the Internal Revenue Code is an addition. Taxpayers making an addition under this
paragraph may deduct a net operating loss for the taxable year in the same manner as a
corporation under section 290.095, in a form and manner prescribed by the commissioner,
and may calculate the loss without the application of the limitation provided for under
section 512(a)(6) of the Internal Revenue Code.

new text begin (e) Revenues from lawful gambling subtracted under paragraph (b), clause (2), must,
when expended, be expended for purposes that qualify for the deduction for charitable
contributions under section 170 of the Internal Revenue Code, disregarding the limitation
under section 170(b)(2).
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively for taxable years beginning
after December 31, 2018.
new text end