1.1 	A bill for an act
1.2 	relating to taxation; eliminating the JOBZ program;
1.3 	amending Minnesota Statutes 2004, sections 290.01,
1.4 	subdivisions 19b, 29; 290.06, subdivision 2c; 290.067,
1.5 	subdivision 1; 290.0671, subdivision 1; 290.091,
1.6 	subdivision 2; 290.0921, subdivision 3; 290.0922,
1.7 	subdivisions 2, 3; 297B.03; repealing Minnesota
1.8 	Statutes 2004, sections 272.02, subdivision 64;
1.9 	272.029, subdivision 7; 290.06, subdivision 29;
1.10 	297A.68, subdivision 37; 469.310; 469.311; 469.312;
1.11 	469.313; 469.314; 469.315; 469.316; 469.317; 469.318;
1.12 	469.319; 469.320; 477A.08.
1.13 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.14 	Section 1. Minnesota Statutes 2004, section 290.01,
1.15 	subdivision 19b, is amended to read:
1.16 		Subd. 19b.Subtractions from federal taxable income.  For
1.17 	individuals, estates, and trusts, there shall be subtracted from
1.18 	federal taxable income:
1.19 	(1) interest income on obligations of any authority,
1.20 	commission, or instrumentality of the United States to the
1.21 	extent includable in taxable income for federal income tax
1.22 	purposes but exempt from state income tax under the laws of the
1.23 	United States;
1.24 	(2) if included in federal taxable income, the amount of
1.25 	any overpayment of income tax to Minnesota or to any other
1.26 	state, for any previous taxable year, whether the amount is
1.27 	received as a refund or as a credit to another taxable year's
1.28 	income tax liability;
1.29 	(3) the amount paid to others, less the amount used to
2.1 	claim the credit allowed under section 290.0674, not to exceed
2.2 	$1,625 for each qualifying child in grades kindergarten to 6 and
2.3 	$2,500 for each qualifying child in grades 7 to 12, for tuition,
2.4 	textbooks, and transportation of each qualifying child in
2.5 	attending an elementary or secondary school situated in
2.6 	Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin,
2.7 	wherein a resident of this state may legally fulfill the state's
2.8 	compulsory attendance laws, which is not operated for profit,
2.9 	and which adheres to the provisions of the Civil Rights Act of
2.10 	1964 and chapter 363A.  For the purposes of this clause,
2.11 	"tuition" includes fees or tuition as defined in section
2.12 	290.0674, subdivision 1, clause (1).  As used in this clause,
2.13 	"textbooks" includes books and other instructional materials and
2.14 	equipment purchased or leased for use in elementary and
2.15 	secondary schools in teaching only those subjects legally and
2.16 	commonly taught in public elementary and secondary schools in
2.17 	this state.  Equipment expenses qualifying for deduction
2.18 	includes expenses as defined and limited in section 290.0674,
2.19 	subdivision 1, clause (3).  "Textbooks" does not include
2.20 	instructional books and materials used in the teaching of
2.21 	religious tenets, doctrines, or worship, the purpose of which is
2.22 	to instill such tenets, doctrines, or worship, nor does it
2.23 	include books or materials for, or transportation to,
2.24 	extracurricular activities including sporting events, musical or
2.25 	dramatic events, speech activities, driver's education, or
2.26 	similar programs.  For purposes of the subtraction provided by
2.27 	this clause, "qualifying child" has the meaning given in section
2.28 	32(c)(3) of the Internal Revenue Code;
2.29 	(4) income as provided under section 290.0802;
2.30 	(5) to the extent included in federal adjusted gross
2.31 	income, income realized on disposition of property exempt from
2.32 	tax under section 290.491;
2.33 	(6) to the extent included in federal taxable income,
2.34 	postservice benefits for youth community service under section
2.35 	124D.42 for volunteer service under United States Code, title
2.36 	42, sections 12601 to 12604;
3.1 	(7) to the extent not deducted in determining federal
3.2 	taxable income by an individual who does not itemize deductions
3.3 	for federal income tax purposes for the taxable year, an amount
3.4 	equal to 50 percent of the excess of charitable contributions
3.5 	allowable as a deduction for the taxable year under section
3.6 	170(a) of the Internal Revenue Code over $500;
3.7 	(8) for taxable years beginning before January 1, 2008, the
3.8 	amount of the federal small ethanol producer credit allowed
3.9 	under section 40(a)(3) of the Internal Revenue Code which is
3.10 	included in gross income under section 87 of the Internal
3.11 	Revenue Code;
3.12 	(9) for individuals who are allowed a federal foreign tax
3.13 	credit for taxes that do not qualify for a credit under section
3.14 	290.06, subdivision 22, an amount equal to the carryover of
3.15 	subnational foreign taxes for the taxable year, but not to
3.16 	exceed the total subnational foreign taxes reported in claiming
3.17 	the foreign tax credit.  For purposes of this clause, "federal
3.18 	foreign tax credit" means the credit allowed under section 27 of
3.19 	the Internal Revenue Code, and "carryover of subnational foreign
3.20 	taxes" equals the carryover allowed under section 904(c) of the
3.21 	Internal Revenue Code minus national level foreign taxes to the
3.22 	extent they exceed the federal foreign tax credit; and 
3.23 	(10) in each of the five tax years immediately following
3.24 	the tax year in which an addition is required under subdivision
3.25 	19a, clause (7), an amount equal to one-fifth of the delayed
3.26 	depreciation.  For purposes of this clause, "delayed
3.27 	depreciation" means the amount of the addition made by the
3.28 	taxpayer under subdivision 19a, clause (7), minus the positive
3.29 	value of any net operating loss under section 172 of the
3.30 	Internal Revenue Code generated for the tax year of the
3.31 	addition.  The resulting delayed depreciation cannot be less
3.32 	than zero; and 
3.33 	(11) job opportunity building zone income as provided under
3.34 	section 469.316.
3.35 	
EFFECTIVE DATE. This section is effective for taxable
3.36 	years beginning after December 31, 2005.

4.1 	Sec. 2. Minnesota Statutes 2004, section 290.01,
4.2 	subdivision 29, is amended to read:
4.3 		Subd. 29.Taxable income.  The term "taxable income"
4.4 	means:
4.5 	(1) for individuals, estates, and trusts, the same as
4.6 	taxable net income;
4.7 	(2) for corporations, the taxable net income less
4.8 	(i) the net operating loss deduction under section 290.095;
4.9 	(ii) the dividends received deduction under section 290.21,
4.10 	subdivision 4; and 
4.11 	(iii) the exemption for operating in a job opportunity
4.12 	building zone under section 469.317; and 
4.13 	(iv) the exemption for operating in a biotechnology and
4.14 	health sciences industry zone under section 469.337.
4.15 	
EFFECTIVE DATE. This section is effective for taxable
4.16 	years beginning after December 31, 2005.

4.17 	Sec. 3. Minnesota Statutes 2004, section 290.06,
4.18 	subdivision 2c, is amended to read:
4.19 		Subd. 2c.Schedules of rates for individuals, estates,
4.20 	and trusts.  (a) The income taxes imposed by this chapter upon
4.21 	married individuals filing joint returns and surviving spouses
4.22 	as defined in section 2(a) of the Internal Revenue Code must be
4.23 	computed by applying to their taxable net income the following
4.24 	schedule of rates:
4.25 	(1) On the first $25,680, 5.35 percent;
4.26 	(2) On all over $25,680, but not over $102,030, 7.05
4.27 	percent;
4.28 	(3) On all over $102,030, 7.85 percent.
4.29 	Married individuals filing separate returns, estates, and
4.30 	trusts must compute their income tax by applying the above rates
4.31 	to their taxable income, except that the income brackets will be
4.32 	one-half of the above amounts.
4.33 	(b) The income taxes imposed by this chapter upon unmarried
4.34 	individuals must be computed by applying to taxable net income
4.35 	the following schedule of rates:
4.36 	(1) On the first $17,570, 5.35 percent;
5.1 	(2) On all over $17,570, but not over $57,710, 7.05
5.2 	percent;
5.3 	(3) On all over $57,710, 7.85 percent.
5.4 	(c) The income taxes imposed by this chapter upon unmarried
5.5 	individuals qualifying as a head of household as defined in
5.6 	section 2(b) of the Internal Revenue Code must be computed by
5.7 	applying to taxable net income the following schedule of rates:
5.8 	(1) On the first $21,630, 5.35 percent;
5.9 	(2) On all over $21,630, but not over $86,910, 7.05
5.10 	percent;
5.11 	(3) On all over $86,910, 7.85 percent.
5.12 	(d) In lieu of a tax computed according to the rates set
5.13 	forth in this subdivision, the tax of any individual taxpayer
5.14 	whose taxable net income for the taxable year is less than an
5.15 	amount determined by the commissioner must be computed in
5.16 	accordance with tables prepared and issued by the commissioner
5.17 	of revenue based on income brackets of not more than $100.  The
5.18 	amount of tax for each bracket shall be computed at the rates
5.19 	set forth in this subdivision, provided that the commissioner
5.20 	may disregard a fractional part of a dollar unless it amounts to
5.21 	50 cents or more, in which case it may be increased to $1.
5.22 	(e) An individual who is not a Minnesota resident for the
5.23 	entire year must compute the individual's Minnesota income tax
5.24 	as provided in this subdivision.  After the application of the
5.25 	nonrefundable credits provided in this chapter, the tax
5.26 	liability must then be multiplied by a fraction in which:
5.27 	(1) the numerator is the individual's Minnesota source
5.28 	federal adjusted gross income as defined in section 62 of the
5.29 	Internal Revenue Code and increased by the additions required
5.30 	under section 290.01, subdivision 19a, clauses (1), (5), and
5.31 	(6), and reduced by the subtraction under section 290.01,
5.32 	subdivision 19b, clause (11), and the Minnesota assignable
5.33 	portion of the subtraction for United States government interest
5.34 	under section 290.01, subdivision 19b, clause (1), after
5.35 	applying the allocation and assignability provisions of section
5.36 	290.081, clause (a), or 290.17; and
6.1 	(2) the denominator is the individual's federal adjusted
6.2 	gross income as defined in section 62 of the Internal Revenue
6.3 	Code of 1986, increased by the amounts specified in section
6.4 	290.01, subdivision 19a, clauses (1), (5), and (6), and reduced
6.5 	by the amounts specified in section 290.01, subdivision 19b,
6.6 	clauses clause (1) and (11).
6.7 	
EFFECTIVE DATE. This section is effective for taxable
6.8 	years beginning after December 31, 2005.

6.9 	Sec. 4. Minnesota Statutes 2004, section 290.067,
6.10 	subdivision 1, is amended to read:
6.11 		Subdivision 1.Amount of credit.  (a) A taxpayer may take
6.12 	as a credit against the tax due from the taxpayer and a spouse,
6.13 	if any, under this chapter an amount equal to the dependent care
6.14 	credit for which the taxpayer is eligible pursuant to the
6.15 	provisions of section 21 of the Internal Revenue Code subject to
6.16 	the limitations provided in subdivision 2 except that in
6.17 	determining whether the child qualified as a dependent, income
6.18 	received as a Minnesota family investment program grant or
6.19 	allowance to or on behalf of the child must not be taken into
6.20 	account in determining whether the child received more than half
6.21 	of the child's support from the taxpayer, and the provisions of
6.22 	section 32(b)(1)(D) of the Internal Revenue Code do not apply.
6.23 	(b) If a child who has not attained the age of six years at
6.24 	the close of the taxable year is cared for at a licensed family
6.25 	day care home operated by the child's parent, the taxpayer is
6.26 	deemed to have paid employment-related expenses.  If the child
6.27 	is 16 months old or younger at the close of the taxable year,
6.28 	the amount of expenses deemed to have been paid equals the
6.29 	maximum limit for one qualified individual under section 21(c)
6.30 	and (d) of the Internal Revenue Code.  If the child is older
6.31 	than 16 months of age but has not attained the age of six years
6.32 	at the close of the taxable year, the amount of expenses deemed
6.33 	to have been paid equals the amount the licensee would charge
6.34 	for the care of a child of the same age for the same number of
6.35 	hours of care.
6.36 	(c) If a married couple:
7.1 	(1) has a child who has not attained the age of one year at
7.2 	the close of the taxable year;
7.3 	(2) files a joint tax return for the taxable year; and
7.4 	(3) does not participate in a dependent care assistance
7.5 	program as defined in section 129 of the Internal Revenue Code,
7.6 	in lieu of the actual employment related expenses paid for that
7.7 	child under paragraph (a) or the deemed amount under paragraph
7.8 	(b), the lesser of (i) the combined earned income of the couple
7.9 	or (ii) the amount of the maximum limit for one qualified
7.10 	individual under section 21(c) and (d) of the Internal Revenue
7.11 	Code will be deemed to be the employment related expense paid
7.12 	for that child.  The earned income limitation of section 21(d)
7.13 	of the Internal Revenue Code shall not apply to this deemed
7.14 	amount.  These deemed amounts apply regardless of whether any
7.15 	employment-related expenses have been paid.
7.16 	(d) If the taxpayer is not required and does not file a
7.17 	federal individual income tax return for the tax year, no credit
7.18 	is allowed for any amount paid to any person unless:
7.19 	(1) the name, address, and taxpayer identification number
7.20 	of the person are included on the return claiming the credit; or
7.21 	(2) if the person is an organization described in section
7.22 	501(c)(3) of the Internal Revenue Code and exempt from tax under
7.23 	section 501(a) of the Internal Revenue Code, the name and
7.24 	address of the person are included on the return claiming the
7.25 	credit.
7.26 	In the case of a failure to provide the information required
7.27 	under the preceding sentence, the preceding sentence does not
7.28 	apply if it is shown that the taxpayer exercised due diligence
7.29 	in attempting to provide the information required.
7.30 	In the case of a nonresident, part-year resident, or a
7.31 	person who has earned income not subject to tax under this
7.32 	chapter including earned income excluded pursuant to section
7.33 	290.01, subdivision 19b, clause (11), the credit determined
7.34 	under section 21 of the Internal Revenue Code must be allocated
7.35 	based on the ratio by which the earned income of the claimant
7.36 	and the claimant's spouse from Minnesota sources bears to the
8.1 	total earned income of the claimant and the claimant's spouse.
8.2 	
EFFECTIVE DATE. This section is effective for taxable
8.3 	years beginning after December 31, 2005.

8.4 	Sec. 5. Minnesota Statutes 2004, section 290.0671,
8.5 	subdivision 1, is amended to read:
8.6 		Subdivision 1.Credit allowed.  (a) An individual is
8.7 	allowed a credit against the tax imposed by this chapter equal
8.8 	to a percentage of earned income.  To receive a credit, a
8.9 	taxpayer must be eligible for a credit under section 32 of the
8.10 	Internal Revenue Code.
8.11 	(b) For individuals with no qualifying children, the credit
8.12 	equals 1.9125 percent of the first $4,620 of earned income.  The
8.13 	credit is reduced by 1.9125 percent of earned income or modified
8.14 	adjusted gross income, whichever is greater, in excess of
8.15 	$5,770, but in no case is the credit less than zero.
8.16 	(c) For individuals with one qualifying child, the credit
8.17 	equals 8.5 percent of the first $6,920 of earned income and 8.5
8.18 	percent of earned income over $12,080 but less than $13,450.
8.19 	The credit is reduced by 5.73 percent of earned income or
8.20 	modified adjusted gross income, whichever is greater, in excess
8.21 	of $15,080, but in no case is the credit less than zero.
8.22 	(d) For individuals with two or more qualifying children,
8.23 	the credit equals ten percent of the first $9,720 of earned
8.24 	income and 20 percent of earned income over $14,860 but less
8.25 	than $16,800.  The credit is reduced by 10.3 percent of earned
8.26 	income or modified adjusted gross income, whichever is greater,
8.27 	in excess of $17,890, but in no case is the credit less than
8.28 	zero.
8.29 	(e) For a nonresident or part-year resident, the credit
8.30 	must be allocated based on the percentage calculated under
8.31 	section 290.06, subdivision 2c, paragraph (e).
8.32 	(f) For a person who was a resident for the entire tax year
8.33 	and has earned income not subject to tax under this chapter,
8.34 	including income excluded under section 290.01, subdivision 19b,
8.35 	clause (11),the credit must be allocated based on the ratio of
8.36 	federal adjusted gross income reduced by the earned income not
9.1 	subject to tax under this chapter over federal adjusted gross
9.2 	income.
9.3 	(g) For tax years beginning after December 31, 2001, and
9.4 	before December 31, 2004, the $5,770 in paragraph (b), the
9.5 	$15,080 in paragraph (c), and the $17,890 in paragraph (d),
9.6 	after being adjusted for inflation under subdivision 7, are each
9.7 	increased by $1,000 for married taxpayers filing joint returns.
9.8 	(h) For tax years beginning after December 31, 2004, and
9.9 	before December 31, 2007, the $5,770 in paragraph (b), the
9.10 	$15,080 in paragraph (c), and the $17,890 in paragraph (d),
9.11 	after being adjusted for inflation under subdivision 7, are each
9.12 	increased by $2,000 for married taxpayers filing joint returns.
9.13 	(i) For tax years beginning after December 31, 2007, and
9.14 	before December 31, 2010, the $5,770 in paragraph (b), the
9.15 	$15,080 in paragraph (c), and the $17,890 in paragraph (d),
9.16 	after being adjusted for inflation under subdivision 7, are each
9.17 	increased by $3,000 for married taxpayers filing joint returns.
9.18 	For tax years beginning after December 31, 2008, the $3,000 is
9.19 	adjusted annually for inflation under subdivision 7.
9.20 	(j) The commissioner shall construct tables showing the
9.21 	amount of the credit at various income levels and make them
9.22 	available to taxpayers.  The tables shall follow the schedule
9.23 	contained in this subdivision, except that the commissioner may
9.24 	graduate the transition between income brackets.
9.25 	
EFFECTIVE DATE. This section is effective for taxable
9.26 	years beginning after December 31, 2005.

9.27 	Sec. 6. Minnesota Statutes 2004, section 290.091,
9.28 	subdivision 2, is amended to read:
9.29 		Subd. 2.Definitions.  For purposes of the tax imposed by
9.30 	this section, the following terms have the meanings given:
9.31 	(a) "Alternative minimum taxable income" means the sum of
9.32 	the following for the taxable year:
9.33 	(1) the taxpayer's federal alternative minimum taxable
9.34 	income as defined in section 55(b)(2) of the Internal Revenue
9.35 	Code;
9.36 	(2) the taxpayer's itemized deductions allowed in computing
10.1 	federal alternative minimum taxable income, but excluding:
10.2 	(i) the charitable contribution deduction under section 170
10.3 	of the Internal Revenue Code to the extent that the deduction
10.4 	exceeds 1.0 percent of adjusted gross income, as defined in
10.5 	section 62 of the Internal Revenue Code;
10.6 	(ii) the medical expense deduction;
10.7 	(iii) the casualty, theft, and disaster loss deduction; and
10.8 	(iv) the impairment-related work expenses of a disabled
10.9 	person;
10.10 	(3) for depletion allowances computed under section 613A(c)
10.11 	of the Internal Revenue Code, with respect to each property (as
10.12 	defined in section 614 of the Internal Revenue Code), to the
10.13 	extent not included in federal alternative minimum taxable
10.14 	income, the excess of the deduction for depletion allowable
10.15 	under section 611 of the Internal Revenue Code for the taxable
10.16 	year over the adjusted basis of the property at the end of the
10.17 	taxable year (determined without regard to the depletion
10.18 	deduction for the taxable year);
10.19 	(4) to the extent not included in federal alternative
10.20 	minimum taxable income, the amount of the tax preference for
10.21 	intangible drilling cost under section 57(a)(2) of the Internal
10.22 	Revenue Code determined without regard to subparagraph (E);
10.23 	(5) to the extent not included in federal alternative
10.24 	minimum taxable income, the amount of interest income as
10.25 	provided by section 290.01, subdivision 19a, clause (1); and
10.26 	(6) the amount of addition required by section 290.01,
10.27 	subdivision 19a, clause (7);
10.28 	less the sum of the amounts determined under the following:
10.29 	(1) interest income as defined in section 290.01,
10.30 	subdivision 19b, clause (1);
10.31 	(2) an overpayment of state income tax as provided by
10.32 	section 290.01, subdivision 19b, clause (2), to the extent
10.33 	included in federal alternative minimum taxable income;
10.34 	(3) the amount of investment interest paid or accrued
10.35 	within the taxable year on indebtedness to the extent that the
10.36 	amount does not exceed net investment income, as defined in
11.1 	section 163(d)(4) of the Internal Revenue Code.  Interest does
11.2 	not include amounts deducted in computing federal adjusted gross
11.3 	income; and
11.4 	(4) amounts subtracted from federal taxable income as
11.5 	provided by section 290.01, subdivision 19b, clauses clause (10)
11.6 	and (11).
11.7 	In the case of an estate or trust, alternative minimum
11.8 	taxable income must be computed as provided in section 59(c) of
11.9 	the Internal Revenue Code.
11.10 	(b) "Investment interest" means investment interest as
11.11 	defined in section 163(d)(3) of the Internal Revenue Code.
11.12 	(c) "Tentative minimum tax" equals 6.4 percent of
11.13 	alternative minimum taxable income after subtracting the
11.14 	exemption amount determined under subdivision 3.
11.15 	(d) "Regular tax" means the tax that would be imposed under
11.16 	this chapter (without regard to this section and section
11.17 	290.032), reduced by the sum of the nonrefundable credits
11.18 	allowed under this chapter.
11.19 	(e) "Net minimum tax" means the minimum tax imposed by this
11.20 	section.
11.21 	
EFFECTIVE DATE. This section is effective for taxable
11.22 	years beginning after December 31, 2005.

11.23 	Sec. 7. Minnesota Statutes 2004, section 290.0921,
11.24 	subdivision 3, is amended to read:
11.25 		Subd. 3.Alternative minimum taxable income.
 11.26 	"Alternative minimum taxable income" is Minnesota net income as
11.27 	defined in section 290.01, subdivision 19, and includes the
11.28 	adjustments and tax preference items in sections 56, 57, 58, and
11.29 	59(d), (e), (f), and (h) of the Internal Revenue Code.  If a
11.30 	corporation files a separate company Minnesota tax return, the
11.31 	minimum tax must be computed on a separate company basis.  If a
11.32 	corporation is part of a tax group filing a unitary return, the
11.33 	minimum tax must be computed on a unitary basis.  The following
11.34 	adjustments must be made.
11.35 	(1) For purposes of the depreciation adjustments under
11.36 	section 56(a)(1) and 56(g)(4)(A) of the Internal Revenue Code,
12.1 	the basis for depreciable property placed in service in a
12.2 	taxable year beginning before January 1, 1990, is the adjusted
12.3 	basis for federal income tax purposes, including any
12.4 	modification made in a taxable year under section 290.01,
12.5 	subdivision 19e, or Minnesota Statutes 1986, section 290.09,
12.6 	subdivision 7, paragraph (c).
12.7 	For taxable years beginning after December 31, 2000, the
12.8 	amount of any remaining modification made under section 290.01,
12.9 	subdivision 19e, or Minnesota Statutes 1986, section 290.09,
12.10 	subdivision 7, paragraph (c), not previously deducted is a
12.11 	depreciation allowance in the first taxable year after December
12.12 	31, 2000.
12.13 	(2) The portion of the depreciation deduction allowed for
12.14 	federal income tax purposes under section 168(k) of the Internal
12.15 	Revenue Code that is required as an addition under section
12.16 	290.01, subdivision 19c, clause (16), is disallowed in
12.17 	determining alternative minimum taxable income.
12.18 	(3) The subtraction for depreciation allowed under section
12.19 	290.01, subdivision 19d, clause (19), is allowed as a
12.20 	depreciation deduction in determining alternative minimum
12.21 	taxable income.
12.22 	(4) The alternative tax net operating loss deduction under
12.23 	sections 56(a)(4) and 56(d) of the Internal Revenue Code does
12.24 	not apply.
12.25 	(5) The special rule for certain dividends under section
12.26 	56(g)(4)(C)(ii) of the Internal Revenue Code does not apply.
12.27 	(6) The special rule for dividends from section 936
12.28 	companies under section 56(g)(4)(C)(iii) does not apply.
12.29 	(7) The tax preference for depletion under section 57(a)(1)
12.30 	of the Internal Revenue Code does not apply.
12.31 	(8) The tax preference for intangible drilling costs under
12.32 	section 57(a)(2) of the Internal Revenue Code must be calculated
12.33 	without regard to subparagraph (E) and the subtraction under
12.34 	section 290.01, subdivision 19d, clause (4).
12.35 	(9) The tax preference for tax exempt interest under
12.36 	section 57(a)(5) of the Internal Revenue Code does not apply.
13.1 	(10) The tax preference for charitable contributions of
13.2 	appreciated property under section 57(a)(6) of the Internal
13.3 	Revenue Code does not apply.
13.4 	(11) For purposes of calculating the tax preference for
13.5 	accelerated depreciation or amortization on certain property
13.6 	placed in service before January 1, 1987, under section 57(a)(7)
13.7 	of the Internal Revenue Code, the deduction allowable for the
13.8 	taxable year is the deduction allowed under section 290.01,
13.9 	subdivision 19e.
13.10 	For taxable years beginning after December 31, 2000, the
13.11 	amount of any remaining modification made under section 290.01,
13.12 	subdivision 19e, not previously deducted is a depreciation or
13.13 	amortization allowance in the first taxable year after December
13.14 	31, 2004.
13.15 	(12) For purposes of calculating the adjustment for
13.16 	adjusted current earnings in section 56(g) of the Internal
13.17 	Revenue Code, the term "alternative minimum taxable income" as
13.18 	it is used in section 56(g) of the Internal Revenue Code, means
13.19 	alternative minimum taxable income as defined in this
13.20 	subdivision, determined without regard to the adjustment for
13.21 	adjusted current earnings in section 56(g) of the Internal
13.22 	Revenue Code.
13.23 	(13) For purposes of determining the amount of adjusted
13.24 	current earnings under section 56(g)(3) of the Internal Revenue
13.25 	Code, no adjustment shall be made under section 56(g)(4) of the
13.26 	Internal Revenue Code with respect to (i) the amount of foreign
13.27 	dividend gross-up subtracted as provided in section 290.01,
13.28 	subdivision 19d, clause (1), (ii) the amount of refunds of
13.29 	income, excise, or franchise taxes subtracted as provided in
13.30 	section 290.01, subdivision 19d, clause (10), or (iii) the
13.31 	amount of royalties, fees or other like income subtracted as
13.32 	provided in section 290.01, subdivision 19d, clause (11).
13.33 	(14) Alternative minimum taxable income excludes the income
13.34 	from operating in a job opportunity building zone as provided
13.35 	under section 469.317.
13.36 	(15) Alternative minimum taxable income excludes the income
14.1 	from operating in a biotechnology and health sciences industry
14.2 	zone as provided under section 469.337.
14.3 	Items of tax preference must not be reduced below zero as a
14.4 	result of the modifications in this subdivision.
14.5 	
EFFECTIVE DATE. This section is effective for taxable
14.6 	years beginning after December 31, 2005.

14.7 	Sec. 8. Minnesota Statutes 2004, section 290.0922,
14.8 	subdivision 2, is amended to read:
14.9 		Subd. 2.Exemptions.  The following entities are exempt
14.10 	from the tax imposed by this section:
14.11 	(1) corporations exempt from tax under section 290.05;
14.12 	(2) real estate investment trusts;
14.13 	(3) regulated investment companies or a fund thereof; and
14.14 	(4) entities having a valid election in effect under
14.15 	section 860D(b) of the Internal Revenue Code;
14.16 	(5) town and farmers' mutual insurance companies; and 
14.17 	(6) cooperatives organized under chapter 308A that provide
14.18 	housing exclusively to persons age 55 and over and are
14.19 	classified as homesteads under section 273.124, subdivision 3;
14.20 	and 
14.21 	(7) an entity, if for the taxable year all of its property
14.22 	is located in a job opportunity building zone designated under
14.23 	section 469.314 and all of its payroll is a job opportunity
14.24 	building zone payroll under section 469.310.
14.25 	Entities not specifically exempted by this subdivision are
14.26 	subject to tax under this section, notwithstanding section
14.27 	290.05.
14.28 	
EFFECTIVE DATE. This section is effective for taxable
14.29 	years beginning after December 31, 2005.

14.30 	Sec. 9. Minnesota Statutes 2004, section 290.0922,
14.31 	subdivision 3, is amended to read:
14.32 		Subd. 3.Definitions.  (a) "Minnesota sales or receipts"
14.33 	means the total sales apportioned to Minnesota pursuant to
14.34 	section 290.191, subdivision 5, the total receipts attributed to
14.35 	Minnesota pursuant to section 290.191, subdivisions 6 to 8,
14.36 	and/or the total sales or receipts apportioned or attributed to
15.1 	Minnesota pursuant to any other apportionment formula applicable
15.2 	to the taxpayer.
15.3 	(b) "Minnesota property" means total Minnesota tangible
15.4 	property as provided in section 290.191, subdivisions 9 to 11,
15.5 	any other tangible property located in Minnesota, but does not
15.6 	include property located in a job opportunity building zone
15.7 	designated under section 469.314 or property of a qualified
15.8 	business located in a biotechnology and health sciences industry
15.9 	zone designated under section 469.334.  Intangible property
15.10 	shall not be included in Minnesota property for purposes of this
15.11 	section.  Taxpayers who do not utilize tangible property to
15.12 	apportion income shall nevertheless include Minnesota property
15.13 	for purposes of this section.  On a return for a short taxable
15.14 	year, the amount of Minnesota property owned, as determined
15.15 	under section 290.191, shall be included in Minnesota property
15.16 	based on a fraction in which the numerator is the number of days
15.17 	in the short taxable year and the denominator is 365.
15.18 	(c) "Minnesota payrolls" means total Minnesota payrolls as
15.19 	provided in section 290.191, subdivision 12, but does not
15.20 	include job opportunity building zone payrolls under section
15.21 	469.310, subdivision 8, or biotechnology and health sciences
15.22 	industry zone payroll under section 469.330, subdivision 8.
15.23 	Taxpayers who do not utilize payrolls to apportion income shall
15.24 	nevertheless include Minnesota payrolls for purposes of this
15.25 	section.
15.26 	
EFFECTIVE DATE. This section is effective for taxable
15.27 	years beginning after December 31, 2005.

15.28 	Sec. 10. Minnesota Statutes 2004, section 297B.03, is
15.29 	amended to read:
15.30 	297B.03 EXEMPTIONS.
15.31 	There is specifically exempted from the provisions of this
15.32 	chapter and from computation of the amount of tax imposed by it
15.33 	the following:
15.34 	(1) purchase or use, including use under a lease purchase
15.35 	agreement or installment sales contract made pursuant to section
15.36 	465.71, of any motor vehicle by the United States and its
16.1 	agencies and instrumentalities and by any person described in
16.2 	and subject to the conditions provided in section 297A.67,
16.3 	subdivision 11;
16.4 	(2) purchase or use of any motor vehicle by any person who
16.5 	was a resident of another state or country at the time of the
16.6 	purchase and who subsequently becomes a resident of Minnesota,
16.7 	provided the purchase occurred more than 60 days prior to the
16.8 	date such person began residing in the state of Minnesota and
16.9 	the motor vehicle was registered in the person's name in the
16.10 	other state or country;
16.11 	(3) purchase or use of any motor vehicle by any person
16.12 	making a valid election to be taxed under the provisions of
16.13 	section 297A.90;
16.14 	(4) purchase or use of any motor vehicle previously
16.15 	registered in the state of Minnesota when such transfer
16.16 	constitutes a transfer within the meaning of section 118, 331,
16.17 	332, 336, 337, 338, 351, 355, 368, 721, 731, 1031, 1033, or
16.18 	1563(a) of the Internal Revenue Code of 1986, as amended through
16.19 	December 31, 1999;
16.20 	(5) purchase or use of any vehicle owned by a resident of
16.21 	another state and leased to a Minnesota-based private or
16.22 	for-hire carrier for regular use in the transportation of
16.23 	persons or property in interstate commerce provided the vehicle
16.24 	is titled in the state of the owner or secured party, and that
16.25 	state does not impose a sales tax or sales tax on motor vehicles
16.26 	used in interstate commerce;
16.27 	(6) purchase or use of a motor vehicle by a private
16.28 	nonprofit or public educational institution for use as an
16.29 	instructional aid in automotive training programs operated by
16.30 	the institution.  "Automotive training programs" includes motor
16.31 	vehicle body and mechanical repair courses but does not include
16.32 	driver education programs;
16.33 	(7) purchase of a motor vehicle for use as an ambulance by
16.34 	an ambulance service licensed under section 144E.10;
16.35 	(8) purchase of a motor vehicle by or for a public library,
16.36 	as defined in section 134.001, subdivision 2, as a bookmobile or
17.1 	library delivery vehicle;
17.2 	(9) purchase of a ready-mixed concrete truck;
17.3 	(10) purchase or use of a motor vehicle by a town for use
17.4 	exclusively for road maintenance, including snowplows and dump
17.5 	trucks, but not including automobiles, vans, or pickup trucks;
17.6 	(11) purchase or use of a motor vehicle by a corporation,
17.7 	society, association, foundation, or institution organized and
17.8 	operated exclusively for charitable, religious, or educational
17.9 	purposes, except a public school, university, or library, but
17.10 	only if the vehicle is:
17.11 	(i) a truck, as defined in section 168.011, a bus, as
17.12 	defined in section 168.011, or a passenger automobile, as
17.13 	defined in section 168.011, if the automobile is designed and
17.14 	used for carrying more than nine persons including the driver;
17.15 	and
17.16 	(ii) intended to be used primarily to transport tangible
17.17 	personal property or individuals, other than employees, to whom
17.18 	the organization provides service in performing its charitable,
17.19 	religious, or educational purpose;
17.20 	(12) purchase of a motor vehicle for use by a transit
17.21 	provider exclusively to provide transit service is exempt if the
17.22 	transit provider is either (i) receiving financial assistance or
17.23 	reimbursement under section 174.24 or 473.384, or (ii) operating
17.24 	under section 174.29, 473.388, or 473.405;
17.25 	(13) purchase or use of a motor vehicle by a qualified
17.26 	business, as defined in section 469.310, located in a job
17.27 	opportunity building zone, if the motor vehicle is principally
17.28 	garaged in the job opportunity building zone and is primarily
17.29 	used as part of or in direct support of the person's operations
17.30 	carried on in the job opportunity building zone.  The exemption
17.31 	under this clause applies to sales, if the purchase was made and
17.32 	delivery received during the duration of the job opportunity
17.33 	building zone.  The exemption under this clause also applies to
17.34 	any local sales and use tax.

17.35 	EFFECTIVE DATE. This section is effective for sales made
17.36 	after June 30, 2005.

18.1 	Sec. 11. REPEALER.
 18.2 	(a) Minnesota Statutes 2004, section 272.02, subdivision
18.3 	64, is repealed.
18.4 	(b) Minnesota Statutes 2004, section 272.029, subdivision
18.5 	7, is repealed.
18.6 	(c) Minnesota Statutes 2004, sections 290.06, subdivision
18.7 	29; 469.316; 469.317; and 469.318, are repealed.
18.8 	(d) Minnesota Statutes 2004, section 297A.68, subdivision
18.9 	37, is repealed.
18.10 	(e) Minnesota Statutes 2004, sections 469.310; 469.311;
18.11 	469.312; 469.313; 469.314; 469.315; and 469.320, are repealed.
18.12 	(f) Minnesota Statutes 2004, section 477A.08, is repealed.
18.13 	(g) Minnesota Statutes 2004, section 469.319, is repealed.

18.14 	EFFECTIVE DATE. Paragraph (a) is effective for taxes
18.15 	levied in 2005, payable in 2006, and thereafter.
18.16 	Paragraph (b) is effective for electricity produced in
18.17 	calendar years beginning after December 31, 2005.
18.18 	Paragraph (c) is effective for taxable years beginning
18.19 	after December 31, 2005.
18.20 	Paragraph (d) is effective for sales made after June 30,
18.21 	2005.
18.22 	Paragraph (e) is effective the day following final
18.23 	enactment, subject to paragraphs (a) to (d), (f), and (g).
18.24 	Paragraph (f) is effective for aids paid in 2006 and
18.25 	thereafter.
18.26 	Paragraph (g) is effective January 1, 2008.