1.1                          A bill for an act 
  1.2             relating to taxation; income; modifying alternative 
  1.3             minimum taxable income; amending Minnesota Statutes 
  1.4             2002, section 290.091, subdivision 3; Minnesota 
  1.5             Statutes 2003 Supplement, section 290.091, subdivision 
  1.6             2. 
  1.7   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.8      Section 1.  Minnesota Statutes 2003 Supplement, section 
  1.9   290.091, subdivision 2, is amended to read: 
  1.10     Subd. 2.  [DEFINITIONS.] For purposes of the tax imposed by 
  1.11  this section, the following terms have the meanings given: 
  1.12     (a) "Alternative minimum taxable income" means the sum of 
  1.13  the following for the taxable year: 
  1.14     (1) the taxpayer's federal alternative minimum taxable 
  1.15  income as defined in section 55(b)(2) of the Internal Revenue 
  1.16  Code; 
  1.17     (2) the taxpayer's itemized deductions allowed in computing 
  1.18  federal alternative minimum taxable income, but excluding: 
  1.19     (i) the charitable contribution deduction under section 170 
  1.20  of the Internal Revenue Code to the extent that the deduction 
  1.21  exceeds 1.0 percent the applicable percentage for the taxable 
  1.22  year of adjusted gross income, as defined in section 62 of the 
  1.23  Internal Revenue Code, the applicable percentage for the tax 
  1.24  year beginning January 1, 2004, is 0.75 percent; the applicable 
  1.25  percentage for the tax year beginning January 1, 2005, is 0.50 
  1.26  percent; the applicable percentage for the tax year beginning 
  2.1   January 1, 2006, is 0.25 percent; the applicable percentage for 
  2.2   tax years beginning after December 31, 2006, is zero percent; 
  2.3      (ii) the medical expense deduction; 
  2.4      (iii) the casualty, theft, and disaster loss deduction; and 
  2.5      (iv) the impairment-related work expenses of a disabled 
  2.6   person; and 
  2.7      (v) the mortgage interest deduction not to exceed a maximum 
  2.8   amount of $5,000.  For taxable years beginning after December 
  2.9   31, 2004, the maximum dollar amount that may be deducted for 
  2.10  mortgage interest shall be adjusted for inflation by the 
  2.11  percentage determined under section 290.06, subdivision 2d, 
  2.12  paragraph (b); 
  2.13     (3) for depletion allowances computed under section 613A(c) 
  2.14  of the Internal Revenue Code, with respect to each property (as 
  2.15  defined in section 614 of the Internal Revenue Code), to the 
  2.16  extent not included in federal alternative minimum taxable 
  2.17  income, the excess of the deduction for depletion allowable 
  2.18  under section 611 of the Internal Revenue Code for the taxable 
  2.19  year over the adjusted basis of the property at the end of the 
  2.20  taxable year (determined without regard to the depletion 
  2.21  deduction for the taxable year); 
  2.22     (4) to the extent not included in federal alternative 
  2.23  minimum taxable income, the amount of the tax preference for 
  2.24  intangible drilling cost under section 57(a)(2) of the Internal 
  2.25  Revenue Code determined without regard to subparagraph (E); 
  2.26     (5) to the extent not included in federal alternative 
  2.27  minimum taxable income, the amount of interest income as 
  2.28  provided by section 290.01, subdivision 19a, clause (1); and 
  2.29     (6) the amount of addition required by section 290.01, 
  2.30  subdivision 19a, clause (7); 
  2.31     less the sum of the amounts determined under the following: 
  2.32     (1) interest income as defined in section 290.01, 
  2.33  subdivision 19b, clause (1); 
  2.34     (2) an overpayment of state income tax as provided by 
  2.35  section 290.01, subdivision 19b, clause (2), to the extent 
  2.36  included in federal alternative minimum taxable income; 
  3.1      (3) the amount of investment interest paid or accrued 
  3.3   within the taxable year on indebtedness to the extent that the 
  3.4   amount does not exceed net investment income, as defined in 
  3.5   section 163(d)(4) of the Internal Revenue Code.  Interest does 
  3.6   not include amounts deducted in computing federal adjusted gross 
  3.7   income; and 
  3.8      (4) amounts subtracted from federal taxable income as 
  3.9   provided by section 290.01, subdivision 19b, clauses (10) and 
  3.10  (11). 
  3.11     In the case of an estate or trust, alternative minimum 
  3.12  taxable income must be computed as provided in section 59(c) of 
  3.13  the Internal Revenue Code. 
  3.14     (b) "Investment interest" means investment interest as 
  3.15  defined in section 163(d)(3) of the Internal Revenue Code. 
  3.16     (c) "Tentative minimum tax" equals 6.4 percent of 
  3.17  alternative minimum taxable income after subtracting the 
  3.18  exemption amount determined under subdivision 3. 
  3.19     (d) "Regular tax" means the tax that would be imposed under 
  3.20  this chapter (without regard to this section and section 
  3.21  290.032), reduced by the sum of the nonrefundable credits 
  3.22  allowed under this chapter.  
  3.23     (e) "Net minimum tax" means the minimum tax imposed by this 
  3.24  section. 
  3.25     <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
  3.26  years beginning after December 31, 2003. 
  3.27     Sec. 2.  Minnesota Statutes 2002, section 290.091, 
  3.28  subdivision 3, is amended to read: 
  3.29     Subd. 3.  [EXEMPTION AMOUNT.] For purposes of computing the 
  3.30  alternative minimum tax, the exemption amount is the exemption 
  3.31  determined under section 55(d) of the Internal Revenue Code, as 
  3.32  amended through December 31, 1992, except that alternative 
  3.33  minimum taxable income as determined under this section must be 
  3.34  substituted in the computation of the phase out under section 
  3.35  55(d)(3) $45,000 for married individuals filing joint returns 
  3.36  and surviving spouses as defined in section 2(a) of the Internal 
  3.37  Revenue Code, and $33,750 for unmarried individuals and 
  4.1   individuals qualifying as a head of household as defined in 
  4.2   section 2(b) of the Internal Revenue Code.  For taxable years 
  4.3   beginning after December 31, 2004, the exemption amount shall be 
  4.4   adjusted for inflation by the percentage determined under 
  4.5   section 290.06, subdivision 2d, paragraph (b). 
  4.6      <b>[EFFECTIVE DATE.]</b> This section is effective for taxable 
  4.7   years beginning after December 31, 2003.