290.095 Operating loss deduction.
Subdivision 1. Allowance of deduction. (a) There shall be allowed as a deduction for the taxable year the amount of any net operating loss deduction as provided in section 172 of the Internal Revenue Code, subject to the limitations and modifications provided in this section.
(b) A net operating loss deduction shall be available under this section only to corporate taxpayers except that subdivisions 7, 9, and 11 hereof apply only to individuals, estates, and trusts.
(c) In the case of a regulated investment company or fund thereof, as defined in section 851(a) or 851(q) of the Internal Revenue Code, the deduction provided by this section shall not be allowed.
Subd. 1a. Insurance companies. Insurance companies may deduct for the taxable year the amount of any operations loss deduction as provided in section 810, or a net operating loss deduction as provided in sections 172 and 832(c)(10) of the Internal Revenue Code, subject to the limitations provided in this section.
Subd. 2. Defined and limited. (a) The term "net operating loss" as used in this section shall mean a net operating loss as defined in section 172(c) or 810(a), in the case of life insurance companies, of the Internal Revenue Code, with the modifications specified in subdivision 4. The deductions provided in section 290.21 and the modification provided in section 290.01, subdivision 19d, clause (11), cannot be used in the determination of a net operating loss.
(b) The term "net operating loss deduction" as used in this section means the aggregate of the net operating loss carryovers to the taxable year, computed in accordance with subdivision 3. The provisions of section 172(b) or 810(b), in the case of life insurance companies, of the Internal Revenue Code relating to the carryback of net operating losses, do not apply.
Subd. 3. Carryover. (a) A net operating loss incurred in a taxable year: (i) beginning after December 31, 1986, shall be a net operating loss carryover to each of the 15 taxable years following the taxable year of such loss; (ii) beginning before January 1, 1987, shall be a net operating loss carryover to each of the five taxable years following the taxable year of such loss subject to the provisions of Minnesota Statutes 1986, section 290.095; and (iii) beginning before January 1, 1987, shall be a net operating loss carryback to each of the three taxable years preceding the loss year subject to the provisions of Minnesota Statutes 1986, section 290.095.
(b) The entire amount of the net operating loss for any taxable year shall be carried to the earliest of the taxable years to which such loss may be carried. The portion of such loss which shall be carried to each of the other taxable years shall be the excess, if any, of the amount of such loss over the sum of the taxable net income, adjusted by the modifications specified in subdivision 4, for each of the taxable years to which such loss may be carried.
(c) Where a corporation does business both within and without Minnesota, and apportions its income under the provisions of section 290.191, the net operating loss deduction incurred in any taxable year shall be allowed to the extent of the apportionment ratio of the loss year.
(d) The provisions of sections 381, 382, and 384 of the Internal Revenue Code apply to carryovers in certain corporate acquisitions and special limitations on net operating loss carryovers. The limitation amount determined under section 382 shall be applied to net income, before apportionment, in each post change year to which a loss is carried.
Subd. 4. Computation and modifications. The following modifications shall be made in computing a net operating loss in any taxable year and also in computing the taxable net income for any taxable year before a net operating loss deduction shall be allowed:
(a) No deduction shall be allowed for or with respect to losses connected with income producing activities if the income therefrom would not be required to be either assignable to this state or included in computing the taxpayer's taxable net income.
(b) A net operating loss deduction shall not be allowed.
(c) The amount deductible on account of losses from sales or exchanges of capital assets shall not exceed the amount includable on account of gains from sales or exchanges of capital assets.
(d) Renegotiation of profits for a prior taxable year under the renegotiation laws of the United States of America, including renegotiation of the profits with a subcontractor, shall not enter into the computation.
(e) Federal income and excess profits taxes shall not be allowed as a deduction.
Subd. 5. Return covering less than 12 months. Wherever, under the provisions of this chapter, any taxpayer is required or permitted to make a return for a period of less than 12 months, such period shall be deemed a taxable year in the application of the provisions of this section.
Subd. 6. Repealed, 1980 c 419 s 46
Subd. 7. Tentative carryback adjustments. (a) Application for adjustment. An individual, estate or trust may file an application for a tentative carryback adjustment of the tax for the prior taxable year affected by a loss carryback from any taxable year. The application shall be signed and verified as provided in section 289A.08, subdivision 9, and shall be filed on or after the date of filing of the return for the taxable year from which the carryback results and within a period of 12 months from the end of such taxable year, in the manner and form required by rules prescribed by the commissioner. The application shall set forth in such detail and with such supporting data and explanation as such rules shall require:
(1) the amount of the loss;
(2) the amount of the tax previously determined for the prior taxable year affected by such carryback;
(3) the amount of decrease in such tax, attributable to such carryback, such decrease being determined by applying the carryback in the manner provided by law to the items on the basis of which such tax was determined;
(4) the unpaid amount of such tax;
(5) such other information for purposes of carrying out the provisions of this subdivision as may be required by such rules.
An application under this subdivision shall not constitute a claim for refund until 90 days from the date on which the application was filed, at which time it will become a claim for refund under the provisions of section 289A.50.
(b) Allowance of adjustments. Within a period of 90 days from the date on which an application for a tentative carryback adjustment is filed under (a), or from the last day of the month in which falls the last date prescribed by law (including any extension of time granted the taxpayer) for filing the return for the taxable year from which such carryback results, whichever is the later, the commissioner shall make, to the extent the commissioner deems practicable in such period a limited examination of the application, to discover omissions and errors of computation therein, and shall determine the amount of the decrease in the tax attributable to such carryback upon the basis of the application and the examination, except that the commissioner may disallow, without further action, any application on finding that it contains errors of computation which the commissioner deems cannot be corrected by the commissioner within such 90-day period or material omissions. Such decrease shall be applied against any unpaid amount of tax decreased and any remainder shall, within such 90-day period, be either credited against any tax or installment thereof then due from the taxpayer, or refunded to the taxpayer.
(c) The provisions of this subdivision shall apply to net operating loss carrybacks as provided in subdivision 11; capital loss carrybacks as provided in section 290.01, subdivisions 19, 19a, and 19b; and to any other carrybacks which may be provided in this chapter.
Subd. 8. Repealed, 1987 c 268 art 1 s 127
Subd. 9. Special period of limitation with respect to net operating loss carrybacks. For the purposes of sections 289A.40 and 289A.50 if the claim for refund relates to an overpayment attributable to a net operating loss carryback under this section, in lieu of the period of limitation prescribed in section 289A.40, the period shall be that period which ends with the expiration of the 15th day of the 46th month following the end of the taxable year of the net operating loss which results in such carryback, plus any extension of time granted for filing the return, but only if the return was filed within the extended time.
Subd. 10. Repealed, 1987 c 268 art 1 s 127
Subd. 11. Carryback or carryover adjustments. (a) For individuals, estates, and trusts the amount of a net operating loss that may be carried back or carried over shall be the same dollar amount allowable in the determination of federal taxable income, provided that, notwithstanding any other provision, estates and trusts must apply the following adjustments to the amount of the net operating loss that may be carried back or carried over:
(1) Nonassignable income or losses as required by section 290.17.
(2) Deductions not allocable to Minnesota under section 290.17.
(b) The net operating loss carryback or carryover applied as a deduction in the taxable year to which the net operating loss is carried back or carried over shall be equal to the net operating loss carryback or carryover applied in the taxable year in arriving at federal taxable income provided that trusts and estates must apply the following modifications:
(1) Increase the amount of carryback or carryover applied in the taxable year by the amount of losses and interest, taxes and other expenses not assignable or allowable to Minnesota incurred in the taxable year.
(2) Decrease the amount of carryback or carryover applied in the taxable year by the amount of income not assignable to Minnesota earned in the taxable year. For estates and trusts, the net operating loss carryback or carryover to the next consecutive taxable year shall be the net operating loss carryback or carryover as calculated in clause (b) less the amount applied in the earlier taxable year(s). No additional net operating loss carryback or carryover shall be allowed to estates and trusts if the entire amount has been used to offset Minnesota income in a year earlier than was possible on the federal return. However, if a net operating loss carryback or carryover was allowed to offset federal income in a year earlier than was possible on the Minnesota return, an estate or trust shall still be allowed to offset Minnesota income but only if the loss was assignable to Minnesota in the year the loss occurred.
Subd. 12. Repealed, 1988 c 719 art 2 s 57
HIST: 1945 c 604 s 28; 1957 c 769 s 2; Ex1957 c 1 art 6 s 2; Ex1959 c 70 art 3 s 8; 1961 c 259 s 1,2; 1963 c 355 s 5-7; 1965 c 402 s 1,2; 1967 c 597 s 1-3; 1971 c 769 s 2; 1973 c 74 s 1-4; 1973 c 711 s 3; 1975 c 349 s 29; 1977 c 376 s 13; 1979 c 303 art 1 s 16; 1980 c 419 s 13,14; 1980 c 607 art 1 s 16,17,32; 1981 c 60 s 27; 1981 c 178 s 38; 1981 c 343 s 6-8; 1982 c 523 art 1 s 18,19; art 29 s 2; art 40 s 7,14; 1983 c 15 s 15; 1983 c 207 s 43; 1983 c 342 art 1 s 43; 1984 c 514 art 1 s 8; art 2 s 21; 1985 c 210 art 2 s 3; 1985 c 248 s 70; 1Sp1985 c 14 art 1 s 38-40; art 21 s 49; 1986 c 444; 1Sp1986 c 1 art 1 s 9; art 3 s 7,8; 1987 c 268 art 1 s 56-62; 1988 c 719 art 2 s 25-28; art 3 s 4,12; 1989 c 28 s 15,25; 1Sp1989 c 1 art 10 s 23,24; 1990 c 480 art 1 s 46; 1990 c 604 art 2 s 16; 1991 c 199 art 2 s 1; 1991 c 291 art 6 s 46; 1992 c 511 art 6 s 19; 1993 c 375 art 8 s 14; 1994 c 587 art 1 s 24; 1996 c 471 art 9 s 2; 1997 c 84 art 2 s 2
Official Publication of the State of Minnesota
Revisor of Statutes