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Minnesota Legislature

Office of the Revisor of Statutes

SF 996

as introduced - 91st Legislature (2019 - 2020) Posted on 02/07/2019 03:19pm

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; income and corporate franchise tax; modifying the research
credit; amending Minnesota Statutes 2018, section 290.068, subdivisions 1, 2, by
adding a subdivision.

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

Section 1.

Minnesota Statutes 2018, section 290.068, subdivision 1, is amended to read:


Subdivision 1.

Credit allowed.

A corporation, partners in a partnership, or shareholders
in a corporation treated as an "S" corporation under section 290.9725 are allowed a credit
against the tax computed under this chapter for the taxable year equal to:

deleted text begin (a)deleted text endnew text begin (1)new text end ten percent of the first $2,000,000 of the excess (if any) of

deleted text begin (1)deleted text endnew text begin (i)new text end the qualified research expenses for the taxable year, over

deleted text begin (2)deleted text endnew text begin (ii)new text end the base amount; and

deleted text begin (b)deleted text endnew text begin (2)new text end four percent on all of such excess expenses over $2,000,000deleted text begin.deleted text endnew text begin; or
new text end

new text begin (3) for a taxpayer with a valid alternative simplified credit election in effect, six percent
on all qualified research expenses for the taxable year over the base amount.
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 290.068, subdivision 2, is amended to read:


Subd. 2.

Definitions.

For purposes of this section, the following terms have the meanings
given.

(a) "Qualified research expenses" means (i) qualified research expenses and basic research
payments as defined in section 41(b) and (e) of the Internal Revenue Code, except it does
not include expenses incurred for qualified research or basic research conducted outside
the state of Minnesota pursuant to section 41(d) and (e) of the Internal Revenue Code; and
(ii) contributions to a nonprofit corporation established and operated pursuant to the
provisions of chapter 317A for the purpose of promoting the establishment and expansion
of business in this state, provided the contributions are invested by the nonprofit corporation
for the purpose of providing funds for small, technologically innovative enterprises in
Minnesota during the early stages of their development.

(b) "Qualified research" means qualified research as defined in section 41(d) of the
Internal Revenue Code, except that the term does not include qualified research conducted
outside the state of Minnesota.

(c) "Base amount" meansnew text begin:
new text end

new text begin (1) for taxpayers not subject to clause (2), thenew text end base amount as defined in section 41(c)
of the Internal Revenue Code, except that the average annual gross receipts and aggregate
gross receipts must be calculated using Minnesota sales or receipts under section 290.191
and the definitions contained in paragraphs (a) and (b) deleted text beginshalldeleted text end applydeleted text begin.deleted text endnew text begin; or
new text end

new text begin (2) for a taxpayer with an alternative simplified credit election in place under subdivision
2a for the taxable year, 50 percent of the average qualified research expenses for the three
taxable years preceding the taxable year for which the credit is being determined.
new text end

(d) "Liability for tax" means the sum of the tax imposed under section 290.06,
subdivisions 1 and 2c
, for the taxable year reduced by the sum of the nonrefundable credits
allowed under this chapter, on all of the entities required to be included on the combined
report of the unitary business.

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. 3.

Minnesota Statutes 2018, section 290.068, is amended by adding a subdivision to
read:


new text begin Subd. 2a. new text end

new text begin Alternative simplified credit election. new text end

new text begin (a) A corporation, partnership, or other
taxpayer qualifying for a credit under this section may elect on an original return, including
all extensions, to calculate its base amount under subdivision 2, paragraph (c), clause (2),
for the taxable year. A taxpayer may revoke the election without approval of the
commissioner, but is precluded from making the election for the five taxable years
immediately following the taxable year to which the revocation applies.
new text end

new text begin (b) For a partnership, the election must be made by the partnership on the partnership
return or other form, as required by the commissioner, and applies to all of its partners.
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