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SF 3431

as introduced - 91st Legislature (2019 - 2020) Posted on 02/20/2020 03:35pm

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; allowing carryover of unused section 179
expensing and bonus depreciation subtractions; amending Minnesota Statutes
2018, section 290.0132, subdivisions 9, 14, by adding a subdivision; Minnesota
Statutes 2019 Supplement, section 290.091, subdivision 2; 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 2018, section 290.0132, subdivision 9, is amended to read:


Subd. 9.

deleted text beginDelayeddeleted text end Bonus depreciation.

deleted text begin (a) In each of the five taxable years immediately
following the taxable year in which an addition is required under section 290.0131,
subdivision 9
, or 290.0133, subdivision 11, for a shareholder of a corporation that is an S
corporation, an amount equal to one-fifth of the delayed depreciation is a subtraction.
deleted text end

deleted text begin (b) For purposes of this subdivision, "delayed depreciation" means the amount of the
addition made by the taxpayer under section 290.0131, subdivision 9, or 290.0133,
subdivision 11
, for a shareholder of an S corporation, minus the positive value of any net
operating loss under section 172 of the Internal Revenue Code generated for the taxable
year of the addition. The resulting delayed depreciation cannot be less than zero.
deleted text end new text begin The current
year bonus depreciation allowance under section 290.0803, subdivision 2, 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, 2019.
new text end

Sec. 2.

Minnesota Statutes 2018, section 290.0132, subdivision 14, is amended to read:


Subd. 14.

Section 179 expensing.

deleted text begin In each of the five taxable years immediately following
the taxable year in which an addition is required under section 290.0131, subdivision 10,
or 290.0133, subdivision 12, for a shareholder of a corporation that is an S corporation, an
amount equal to one-fifth of the addition made by the taxpayer under section 290.0131,
subdivision 10
, or 290.0133, subdivision 12, for a shareholder of a corporation that is an S
corporation, minus the positive value of any net operating loss under section 172 of the
Internal Revenue Code generated for the taxable year of the addition, is a subtraction. If the
net operating loss exceeds the addition for the taxable year, a subtraction is not allowed
under this subdivision.
deleted text end new text begin The current year section 179 allowance under section 290.0803,
subdivision 1, 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, 2019.
new text end

Sec. 3.

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


new text begin Subd. 30. new text end

new text begin Carryover bonus depreciation and section 179 expensing allowance. new text end

new text begin The
carryover bonus depreciation and section 179 allowance under section 290.0803, subdivision
3, 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, 2019.
new text end

Sec. 4.

new text begin [290.0803] SECTION 179 EXPENSING AND SECTION 168 BONUS
DEPRECIATION SUBTRACTION.
new text end

new text begin Subdivision 1. new text end

new text begin Current year section 179 expensing allowance. new text end

new text begin (a) In each of the five
taxable years immediately following the taxable year in which an addition is required under
section 290.0131, subdivision 10, or its predecessor provisions, the current year allowance
equals one-fifth of the addition made by the taxpayer under section 290.0131, subdivision
10.
new text end

new text begin (b) For a shareholder of an S corporation, the current year allowance is reduced by the
positive value of any net operating loss under section 172 of the Internal Revenue Code
generated for the taxable year of the addition and, if the net operating loss exceeds the
addition for the taxable year, the current year allowance is zero.
new text end

new text begin (c) A taxpayer is allowed a current year section 179 allowance subtraction from federal
taxable income under section 290.0132, subdivision 14, as determined under this subdivision.
new text end

new text begin Subd. 2. new text end

new text begin Current year bonus depreciation allowance. new text end

new text begin (a) In each of the five taxable
years immediately following the taxable year in which an addition is required under section
290.0131, subdivision 9, or its predecessor provisions, the current year bonus depreciation
allowance equals one-fifth of the delayed depreciation.
new text end

new text begin (b) For purposes of this subdivision, "delayed depreciation" means the amount of the
addition made by the taxpayer under section 290.0131, subdivision 9, or its predecessor
provisions, for a shareholder of an S corporation, minus the positive value of any net
operating loss under section 172 of the Internal Revenue Code generated for the taxable
year of the addition. The resulting delayed depreciation cannot be less than zero.
new text end

new text begin (c) A taxpayer is allowed a current year bonus depreciation allowance subtraction from
federal taxable income under section 290.0132, subdivision 9, as determined under this
subdivision.
new text end

new text begin Subd. 3. new text end

new text begin Carryover bonus depreciation and section 179 expensing allowance. new text end

new text begin (a)
For purposes of this subdivision, the sum of the current year allowances under subdivisions
1 and 2 is considered to be the last modification allowed under section 290.0132 in
determining net income. If the sum of the amounts allowed under subdivisions 1 and 2
exceeds net income computed without regard to the sum of the current year allowances,
then the excess is a carryover allowance in each of the ten succeeding taxable years. The
entire amount of the carryover allowance is carried first to the earliest taxable year to which
the carryover may be carried, and then to each succeeding year to which the carryover may
be carried.
new text end

new text begin (b) If applying the rules under paragraph (a) to a taxable year beginning after December
31, 2016, and before January 1, 2020, would result in a carryover allowance in that year,
the taxpayer may use the resulting amount as a carryover allowance starting in a taxable
year beginning after December 31, 2019, and the first year of the ten-year period under
paragraph (a) is taxable year 2020.
new text end

new text begin (c) A taxpayer is allowed a carryover bonus depreciation and section 179 allowance
subtraction under section 290.0132, subdivision 30, as determined 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, 2019.
new text end

Sec. 5.

Minnesota Statutes 2019 Supplement, section 290.091, subdivision 2, is amended
to read:


Subd. 2.

Definitions.

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

(a) "Alternative minimum taxable income" means the sum of the following for the taxable
year:

(1) the taxpayer's federal alternative minimum taxable income as defined in section
55(b)(2) of the Internal Revenue Code;

(2) the taxpayer's itemized deductions allowed in computing federal alternative minimum
taxable income, but excluding:

(i) the charitable contribution deduction under section 170 of the Internal Revenue Code;

(ii) the medical expense deduction;

(iii) the casualty, theft, and disaster loss deduction; and

(iv) the impairment-related work expenses of a person with a disability;

(3) for depletion allowances computed under section 613A(c) of the Internal Revenue
Code, with respect to each property (as defined in section 614 of the Internal Revenue Code),
to the extent not included in federal alternative minimum taxable income, the excess of the
deduction for depletion allowable under section 611 of the Internal Revenue Code for the
taxable year over the adjusted basis of the property at the end of the taxable year (determined
without regard to the depletion deduction for the taxable year);

(4) to the extent not included in federal alternative minimum taxable income, the amount
of the tax preference for intangible drilling cost under section 57(a)(2) of the Internal Revenue
Code determined without regard to subparagraph (E);

(5) to the extent not included in federal alternative minimum taxable income, the amount
of interest income as provided by section 290.0131, subdivision 2;

(6) the amount of addition required by section 290.0131, subdivisions 9, 10, and 16;

(7) the deduction allowed under section 199A of the Internal Revenue Code, to the extent
not included in the addition required under clause (6); and

(8) to the extent not included in federal alternative minimum taxable income, the amount
of foreign-derived intangible income deducted under section 250 of the Internal Revenue
Code;

less the sum of the amounts determined under the following:

(i) interest income as defined in section 290.0132, subdivision 2;

(ii) an overpayment of state income tax as provided by section 290.0132, subdivision
3
, to the extent included in federal alternative minimum taxable income;

(iii) the amount of investment interest paid or accrued within the taxable year on
indebtedness to the extent that the amount does not exceed net investment income, as defined
in section 163(d)(4) of the Internal Revenue Code. Interest does not include amounts deducted
in computing federal adjusted gross income;

(iv) amounts subtracted from federal taxable or adjusted gross income as provided by
section 290.0132, subdivisions 7, 9 to 15, 17, 21, 24, and 26 to deleted text begin29deleted text endnew text begin 30new text end;

(v) the amount of the net operating loss allowed under section 290.095, subdivision 11,
paragraph (c); and

(vi) the amount allowable as a Minnesota itemized deduction under section 290.0122,
subdivision 7.

In the case of an estate or trust, alternative minimum taxable income must be computed
as provided in section 59(c) of the Internal Revenue Code, except alternative minimum
taxable income must be increased by the addition in section 290.0131, subdivision 16.

(b) "Investment interest" means investment interest as defined in section 163(d)(3) of
the Internal Revenue Code.

(c) "Net minimum tax" means the minimum tax imposed by this section.

(d) "Regular tax" means the tax that would be imposed under this chapter (without regard
to this section and section 290.032), reduced by the sum of the nonrefundable credits allowed
under this chapter.

(e) "Tentative minimum tax" equals 6.75 percent of alternative minimum taxable income
after subtracting the exemption amount determined under subdivision 3.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2019.
new text end