1.1                          A bill for an act 
  1.2             relating to taxation; providing a low-income housing 
  1.3             tax credit; proposing coding for new law in Minnesota 
  1.4             Statutes, chapter 290. 
  1.5   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.6      Section 1.  [290.0681] [LOW-INCOME HOUSING TAX CREDIT.] 
  1.7      Subdivision 1.  [CREDIT ALLOWED.] A taxpayer is allowed a 
  1.8   credit against the tax computed under section 290.06 for the 
  1.9   taxable year equal to the applicable percentage of the qualified 
  1.10  basis of each building located in Minnesota for which the 
  1.11  taxpayer receives a credit under section 42 of the Internal 
  1.12  Revenue Code. 
  1.13     Subd. 2.  [FEDERAL LAW APPLICABLE.] For purposes of this 
  1.14  section, the determination of: 
  1.15     (1) applicable percentage shall be made under section 42(b) 
  1.16  of the Internal Revenue Code; 
  1.17     (2) qualified basis and qualified low-income building shall 
  1.18  be made under section 42(c) of the Internal Revenue Code; 
  1.19     (3) eligible basis shall be made under section 42(d) of the 
  1.20  Internal Revenue Code; 
  1.21     (4) qualified low-income housing project shall be made 
  1.22  under section 42(g) of the Internal Revenue Code; 
  1.23     (5) recapture of credit shall be made under section 42(j) 
  1.24  of the Internal Revenue Code, except that the tax for the 
  1.25  taxable year shall be increased under section 42(j)(1) of the 
  2.1   Internal Revenue Code, only with respect to credits that were 
  2.2   used to reduce state income taxes; and 
  2.3      (6) application of at-risk rules shall be made under 
  2.4   section 42(k) of the Internal Revenue Code. 
  2.5      As provided in section 42(e) of the Internal Revenue Code, 
  2.6   rehabilitation expenditures will be treated as a separate new 
  2.7   building and their treatment under this section will be the same 
  2.8   as in section 42(e) of the Internal Revenue Code.  The 
  2.9   definitions and special rules relating to the credit period in 
  2.10  section 42(f) of the Internal Revenue code and the definitions 
  2.11  and special rules in section 42(i) of the Internal Revenue Code 
  2.12  shall be applied for the purposes of this section. 
  2.13     The state housing credit ceiling under section 42(h) of the 
  2.14  Internal Revenue Code shall be zero for the calendar year 
  2.15  immediately following the expiration of the federal low-income 
  2.16  housing tax credit program and for any calendar year thereafter, 
  2.17  except for the carryover of any credit ceiling amount for 
  2.18  certain projects in progress which, at the time of the federal 
  2.19  expiration, meet the requirements of section 42 of the Internal 
  2.20  Revenue Code. 
  2.21     Section 469 of the Internal Revenue Code, relating to 
  2.22  passive activity losses and credits, shall be applied in 
  2.23  claiming the credit under this section. 
  2.24     Subd. 3.  [CARRYOVER; ELIGIBILITY.] A tax credit under this 
  2.25  section which exceeds the taxpayer's liability computed under 
  2.26  section 290.06 may be used as a credit against the taxpayer's 
  2.27  liability under section 290.06 in subsequent years until 
  2.28  exhausted.  All claims for a tax credit under this section must 
  2.29  be filed on or before the end of the 12th month following the 
  2.30  close of the taxable year for which the credit may be claimed.  
  2.31  Failure to properly claim the credit shall constitute a waiver 
  2.32  of the right to claim the credit.  In order to claim a credit 
  2.33  under this section, a taxpayer must claim a credit under section 
  2.34  42 of the Internal Revenue Code. 
  2.35     Subd. 4.  [TRANSFER OF CREDITS.] All or any portion of tax 
  2.36  credits granted under this section may be transferred, sold, or 
  3.1   assigned to taxpayers who are eligible for the credit.  An owner 
  3.2   or transferee desiring to make a transfer, sale, or assignment 
  3.3   shall submit to the commissioner a statement which describes the 
  3.4   amount of credit for which the transfer, sale, or assignment of 
  3.5   credit is eligible.  The owner shall provide to the commissioner 
  3.6   appropriate information so that the low-income housing tax 
  3.7   credit can be properly allocated. 
  3.8      If recapture of low-income housing tax credits is required 
  3.9   under subdivision 2, clause (5), any statement submitted to the 
  3.10  commissioner as provided in this section shall include the 
  3.11  proportion of the state credit required to be recaptured, the 
  3.12  identity of each transferee subject to recapture, and the amount 
  3.13  of credit previously transferred to the transferee. 
  3.14     Sec. 2.  [EFFECTIVE DATE.] 
  3.15     Section 1 is effective for taxable years beginning after 
  3.16  December 31, 1997.