1.1 	A bill for an act
1.2 	relating to taxation; income; allowing a refundable
1.3 	credit for adoption expenses; appropriating money;
1.4 	proposing coding for new law in Minnesota Statutes,
1.5 	chapter 290.
1.6 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.7 	Section 1. [290.0676] ADOPTION CREDIT.
1.8 		Subdivision 1.Credit allowed. (a) An individual is
1.9 	allowed a credit against the tax imposed by this chapter equal
1.10 	to the amount of Minnesota qualified adoption expenses.
1.11 	(b) Minnesota qualified adoption expenses for an eligible
1.12 	child who is not a child with special needs equal 50 percent of
1.13 	the following amounts paid or incurred:
1.14 	(1) the total qualified adoption expenses under section 23
1.15 	of the Internal Revenue Code, determined using twice the dollar
1.16 	limitation under section 23(b)(1) of the Internal Revenue Code;
1.17 	minus 
1.18 	(2) the amount of the federal credit allowed under section
1.19 	23 of the Internal Revenue Code, determined without regard to
1.20 	the limitation based on the amount of tax under section 23(b)(4)
1.21 	of the Internal Revenue Code; and minus 
1.22 	(3) the amount of the reduction of the federal credit under
1.23 	the income limitation under section 23(b)(2) of the Internal
1.24 	Revenue Code.
1.25 	(c) Minnesota qualified adoption expenses for a child with
2.1 	special needs equals the greater of the following amounts:
2.2 	(1) the amount determined under paragraph (b), but
2.3 	substituting a credit rate of 100 percent; or 
2.4 	(2) one-half of the federal dollar limitation under section
2.5 	23(b)(1) of the Internal Revenue Code, determined regardless of
2.6 	the expenses paid.
2.7 		Subd. 2.Federal definitions; limitations. Unless
2.8 	otherwise specifically provided, the definitions under section
2.9 	23(d) of the Internal Revenue Code and the limitations on
2.10 	allowable expenses under sections 23(b)(3) and 23(e) of the
2.11 	Internal Revenue Code apply in determining the credit under this
2.12 	section.
2.13 		Subd. 3.Taxable years. For purposes of calculating the
2.14 	credit under this section, expenses and credits are allowed in
2.15 	the same taxable year as allowed under the federal credit under
2.16 	section 23(a)(2) of the Internal Revenue Code.
2.17 		Subd. 4.Credit refundable. If the amount of the credit
2.18 	exceeds the claimant's tax liability under this chapter, the
2.19 	commissioner shall refund the excess to the claimant.
2.20 		Subd. 5.Appropriation. An amount sufficient to pay the
2.21 	refunds required by this section is appropriated to the
2.22 	commissioner from the general fund.
2.23 	
EFFECTIVE DATE. This section is effective for taxable
2.24 	years beginning after December 31, 2004.