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Chapter 290

Section 290.091

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290.091 ALTERNATIVE MINIMUM TAX ON PREFERENCE ITEMS.
    Subdivision 1. Imposition of tax. In addition to all other taxes imposed by this chapter a tax
is imposed on individuals, estates, and trusts equal to the excess (if any) of
(a) an amount equal to 6.4 percent of alternative minimum taxable income after subtracting
the exemption amount, over
(b) the regular tax for the taxable year.
    Subd. 2. Definitions. For purposes of the tax imposed by this section, the following terms
have the meanings given:
(a) "Alternative minimum taxable income" means the sum of the following for the taxable
year:
(1) the taxpayer's federal alternative minimum taxable income as defined in section 55(b)(2)
of the Internal Revenue Code;
(2) the taxpayer's itemized deductions allowed in computing federal alternative minimum
taxable income, but excluding:
(i) the charitable contribution deduction under section 170 of the Internal Revenue Code:
(A) for taxable years beginning before January 1, 2006, to the extent that the deduction
exceeds 1.0 percent of adjusted gross income;
(B) for taxable years beginning after December 31, 2005, to the full extent of the deduction.
For purposes of this clause, "adjusted gross income" has the meaning given in section 62 of
the Internal Revenue Code;
(ii) the medical expense deduction;
(iii) the casualty, theft, and disaster loss deduction; and
(iv) the impairment-related work expenses of a disabled person;
(3) for depletion allowances computed under section 613A(c) of the Internal Revenue Code,
with respect to each property (as defined in section 614 of the Internal Revenue Code), to the
extent not included in federal alternative minimum taxable income, the excess of the deduction
for depletion allowable under section 611 of the Internal Revenue Code for the taxable year over
the adjusted basis of the property at the end of the taxable year (determined without regard to
the depletion deduction for the taxable year);
(4) to the extent not included in federal alternative minimum taxable income, the amount of
the tax preference for intangible drilling cost under section 57(a)(2) of the Internal Revenue Code
determined without regard to subparagraph (E);
(5) to the extent not included in federal alternative minimum taxable income, the amount of
interest income as provided by section 290.01, subdivision 19a, clause (1); and
(6) the amount of addition required by section 290.01, subdivision 19a, clauses (7), (8),
and (9);
less the sum of the amounts determined under the following:
(1) interest income as defined in section 290.01, subdivision 19b, clause (1);
(2) an overpayment of state income tax as provided by section 290.01, subdivision 19b,
clause (2), to the extent included in federal alternative minimum taxable income;
(3) the amount of investment interest paid or accrued within the taxable year on indebtedness
to the extent that the amount does not exceed net investment income, as defined in section
163(d)(4) of the Internal Revenue Code. Interest does not include amounts deducted in computing
federal adjusted gross income; and
(4) amounts subtracted from federal taxable income as provided by section 290.01,
subdivision 19b
, clauses (9) to (16).
In the case of an estate or trust, alternative minimum taxable income must be computed as
provided in section 59(c) of the Internal Revenue Code.
(b) "Investment interest" means investment interest as defined in section 163(d)(3) of the
Internal Revenue Code.
(c) "Tentative minimum tax" equals 6.4 percent of alternative minimum taxable income after
subtracting the exemption amount determined under subdivision 3.
(d) "Regular tax" means the tax that would be imposed under this chapter (without regard
to this section and section 290.032), reduced by the sum of the nonrefundable credits allowed
under this chapter.
(e) "Net minimum tax" means the minimum tax imposed by this section.
    Subd. 3. Exemption amount. (a) For purposes of computing the alternative minimum tax,
the exemption amount is:
(1) for taxable years beginning before January 1, 2006, the exemption determined under
section 55(d) of the Internal Revenue Code, as amended through December 31, 1992; and
(2) for taxable years beginning after December 31, 2005, $60,000 for married couples filing
joint returns, $30,000 for married individuals filing separate returns, estates, and trusts, and
$45,000 for unmarried individuals.
(b) The exemption amount determined under this subdivision is subject to the phase out
under section 55(d)(3) of the Internal Revenue Code, except that alternative minimum taxable
income as determined under this section must be substituted in the computation of the phase out.
(c) For taxable years beginning after December 31, 2006, the exemption amount under
paragraph (a), clause (2), must be adjusted for inflation. The commissioner shall make the
inflation adjustments in accordance with section 1(f) of the Internal Revenue Code except that for
the purposes of this subdivision the percentage increase must be determined from the year starting
September 1, 2005, and ending August 31, 2006, as the base year for adjusting for inflation for the
tax year beginning after December 31, 2006. The determination of the commissioner under this
subdivision is not a rule under the Administrative Procedure Act.
    Subd. 4. Part year residents; estates and trusts. (a) An individual who is not a Minnesota
resident for the entire year must compute alternative minimum tax liability using a regular tax
liability determined under section 290.06, subdivision 2c, paragraph (e), without regard to the
provision for allocation to Minnesota. The resulting alternative minimum tax liability must be
multiplied by the fraction defined in section 290.06, subdivision 2c, paragraph (e).
(b) In the case of an estate or trust, the alternative minimum tax liability must be computed
by multiplying alternative minimum taxable income and the exemption amount by a fraction, the
numerator of which is the amount of the taxpayer's alternative minimum taxable income allocated
to this state pursuant to the provisions of sections 290.17 to 290.20, and the denominator of which
is the taxpayer's total alternative minimum taxable income.
    Subd. 5. Tax benefit rule. The tax benefit rule contained in section 59(g) of the Internal
Revenue Code applies to the computation of the tax under this section only to the extent that it
determines if there is an item of tax preference for purposes of subdivision 2, clause (a)(1).
    Subd. 6. Credit for prior years' liability. (a) A credit is allowed against the tax imposed by
this chapter on individuals, trusts, and estates equal to the minimum tax credit for the taxable year.
The minimum tax credit equals the adjusted net minimum tax for taxable years beginning after
December 31, 1988, reduced by the minimum tax credits allowed in a prior taxable year. The
credit may not exceed the excess (if any) for the taxable year of
(1) the regular tax, over
(2) the greater of (i) the tentative alternative minimum tax, or (ii) zero.
(b) The adjusted net minimum tax for a taxable year equals the lesser of the net minimum
tax or the excess (if any) of
(1) the tentative minimum tax, over
(2) 6.4 percent of the sum of
(i) adjusted gross income as defined in section 62 of the Internal Revenue Code,
(ii) interest income as defined in section 290.01, subdivision 19a, clause (1),
(iii) interest on specified private activity bonds, as defined in section 57(a)(5) of the Internal
Revenue Code, to the extent not included under clause (ii),
(iv) depletion as defined in section 57(a)(1), determined without regard to the last sentence
of paragraph (1), of the Internal Revenue Code, less
(v) the deductions allowed in computing alternative minimum taxable income provided in
subdivision 2, paragraph (a), clause (2) of the first series of clauses and clauses (1), (2), and (3)
of the second series of clauses, and
(vi) the exemption amount determined under subdivision 3.
In the case of an individual who is not a Minnesota resident for the entire year, adjusted
net minimum tax must be multiplied by the fraction defined in section 290.06, subdivision 2c,
paragraph (e). In the case of a trust or estate, adjusted net minimum tax must be multiplied by the
fraction defined under subdivision 4, paragraph (b).
History: 1977 c 423 art 1 s 14; 1978 c 767 s 17; 1979 c 303 art 1 s 15; 1980 c 607 art 1 s
15; 1981 c 60 s 11; 3Sp1981 c 2 art 3 s 9; 1982 c 523 art 1 s 17; art 40 s 6,14; 1983 c 207 s 13;
1984 c 514 art 2 s 20; 1Sp1985 c 14 art 1 s 37; 1Sp1985 c 16 art 2 s 28; 1986 c 398 art 21 s 3;
1986 c 444; 1Sp1986 c 1 art 1 s 4; art 3 s 6; 1987 c 268 art 1 s 49-53; 1988 c 719 art 3 s 12;
1Sp1989 c 1 art 10 s 20,21; 1990 c 604 art 2 s 7; 1991 c 291 art 6 s 29,30,46; 1992 c 511 art 6 s
19; art 7 s 15,16; 1993 c 375 art 8 s 10,11; 1994 c 416 art 2 s 3; 1994 c 587 art 1 s 17,18; 1996 c
471 art 1 s 6; 1997 c 7 art 1 s 120; 1998 c 389 art 6 s 12,13; 1999 c 243 art 2 s 16-18; 2000 c 490
art 4 s 25-27; 1Sp2001 c 5 art 9 s 13; 2002 c 377 art 2 s 10; 1Sp2002 c 2 s 1; 1Sp2003 c 21 art 1
s 9; art 11 s 13; 1Sp2005 c 3 art 3 s 11; art 4 s 15; art 10 s 8; 2006 c 259 art 1 s 3

NOTE: The amendment to subdivision 2 by Laws 2005, First Special Session chapter 3,
article 10, section 8, is effective for tax years beginning after December 31, 2006. Laws 2005,
First Special Session chapter 3, article 10, section 8, the effective date.

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Revisor of Statutes