2000 Minnesota Statutes

     290.068 Credit for increasing research activities. 

    Subdivision 1.    Credit allowed.  A corporation, other 
 than a corporation treated as an "S" corporation under section 
 290.9725, is allowed a credit against the portion of the 
 franchise tax computed under section 290.06, subdivision 1, for 
 the taxable year equal to: 

    (a) 5 percent of the first $2,000,000 of the excess (if 
 any) of 

    (1) the qualified research expenses for the taxable year, 
 over 

    (2) the base amount; and 

    (b) 2.5 percent on all of such excess expenses over 
 $2,000,000. 

    Subd. 2.    Definitions.  For purposes of this section, 
 the following terms have the meanings given.  

    (a) "Qualified research expenses" means (i) qualified 
 research expenses and basic research payments as defined in 
 section 41(b) and (e) of the Internal Revenue Code, except it 
 does not include expenses incurred for qualified research or 
 basic research conducted outside the state of Minnesota pursuant 
 to section 41(d) and (e) of the Internal Revenue Code; and (ii) 
 contributions to a nonprofit corporation established and 
 operated pursuant to the provisions of chapter 317A for the 
 purpose of promoting the establishment and expansion of business 
 in this state, provided the contributions are invested by the 
 nonprofit corporation for the purpose of providing funds for 
 small, technologically innovative enterprises in Minnesota 
 during the early stages of their development.  

    (b) "Qualified research" means qualified research as 
 defined in section 41(d) of the Internal Revenue Code, except 
 that the term does not include qualified research conducted 
 outside the state of Minnesota.  

    (c) "Base amount" means base amount as defined in section 
 41(c) of the Internal Revenue Code, except that the average 
 annual gross receipts must be calculated using Minnesota sales 
 or receipts under section 290.191 and the definitions contained 
 in clauses (a) and (b) shall apply.  

    Subd. 3.    Limitation; carryover.  (a)(1) The credit 
 for the taxable year shall not exceed the liability for tax.  
 "Liability for tax" for purposes of this section means the tax 
 imposed under this chapter for the taxable year reduced by the 
 sum of the nonrefundable credits allowed under this chapter. 

    (2) In the case of a corporation which is a partner in a 
 partnership, the credit allowed for the taxable year shall not 
 exceed the lesser of the amount determined under clause (1) for 
 the taxable year or an amount (separately computed with respect 
 to the corporation's interest in the trade or business or 
 entity) equal to the amount of tax attributable to that portion 
 of taxable income which is allocable or apportionable to the 
 corporation's interest in the trade or business or entity.  

    (b) If the amount of the credit determined under this 
 section for any taxable year exceeds the limitation under clause 
 (a), the excess shall be a research credit carryover to each of 
 the 15 succeeding taxable years.  The entire amount of the 
 excess unused credit for the taxable year shall be carried first 
 to the earliest of the taxable years to which the credit may be 
 carried and then to each successive year to which the credit may 
 be carried.  The amount of the unused credit which may be added 
 under this clause shall not exceed the taxpayer's liability for 
 tax less the research credit for the taxable year.  

    Subd. 4.    Partnerships.  In the case of partnerships 
 the credit shall be allocated in the same manner provided by 
 section 41(f)(2) of the Internal Revenue Code. 

    Subd. 5.    Adjustments; acquisitions and dispositions.  
 If a taxpayer acquires or disposes of the major portion of a 
 trade or business or the major portion of a separate unit of a 
 trade or business in a transaction with another taxpayer, the 
 taxpayer's qualified research expenses and base amount are 
 adjusted in the same manner provided by section 41(f)(3) of the 
 Internal Revenue Code.  

    Subd. 6. Repealed, 1991 c 291 art 7 s 26 

    HIST: 3Sp1981 c 2 art 3 s 6; 1982 c 523 art 1 s 70; art 9 s 1; 
 1983 c 15 s 8; 1983 c 207 s 8,9,43; 1983 c 342 art 1 s 43; art 8 
 s 12; 1984 c 514 art 1 s 8; 1Sp1985 c 14 art 1 s 21-23; art 21 s 
 5-7; 1Sp1986 c 1 art 3 s 4; 1987 c 268 art 1 s 39-44; 1988 c 719 
 art 3 s 12; 1989 c 28 s 25; 1989 c 304 s 137; 1990 c 604 art 2 s 
 6,16; 1991 c 291 art 6 s 46; art 7 s 11-13; 1992 c 511 art 6 s 
 19; 1993 c 375 art 8 s 14; 1994 c 587 art 1 s 14,24; 1997 c 231 
 art 6 s 13 

*   NOTE:  Laws 1991, chapter 291, article 7, section 27, 
*provides that the carryover for the credit provided under 
*subdivision 6, that is repealed by Laws 1991, chapter 29, 
*article 7, section 26, remains in effect for taxable years 
*beginning before 2003.