2007 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]
History: 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