2007 Minnesota Statutes

290.07 NET INCOME; COMPUTATION, ACCOUNTING PERIOD.
    Subdivision 1. Annual accounting period. Net income and taxable net income shall be
computed upon the basis of the taxpayer's annual accounting period. If a taxpayer has no annual
accounting period, or has one other than a fiscal year, as heretofore defined, the net income
and taxable net income shall be computed on the basis of the calendar year. Taxpayers shall
employ the same accounting period on which they report, or would be required to report, their
net income under the Internal Revenue Code. The commissioner shall provide by rule for the
determination of the accounting period for taxpayers who file a combined report under section
290.34, subdivision 2, when members of the group use different accounting periods for federal
income tax purposes. Unless the taxpayer changes its accounting period for federal purposes, the
due date of the return is not changed.
A taxpayer may change accounting periods only with the consent of the commissioner. In
case of any such change, the taxpayer shall pay a tax for the period not included in either the
taxpayer's former or newly adopted taxable year, computed as provided in section 290.32.
    Subd. 2. Accounting methods. Except as specifically provided to the contrary by this
chapter, net income and taxable net income shall be computed in accordance with the method of
accounting regularly employed in keeping the taxpayer's books. If no such accounting system
has been regularly employed, or if that employed does not clearly or fairly reflect income or
the income taxable under this chapter, the computation shall be made in accordance with such
method as in the opinion of the commissioner does clearly and fairly reflect income and the
income taxable under this chapter.
Except as otherwise expressly provided in this chapter, a taxpayer who changes the method
of accounting for regularly computing the taxpayer's income in keeping books shall, before
computing net income and taxable net income under the new method, secure the consent of the
commissioner.
    Subd. 3.[Repealed, 1988 c 719 art 3 s 11]
    Subd. 4. Refunded income. If (a) an item was included in gross income for a prior taxable
year (or years) because it appeared that the taxpayer had an unrestricted right to such item, and (b)
a deduction is allowable for the taxable year because it was established after the close of such
prior taxable year (or years) that the taxpayer did not have an unrestricted right to such item or to
a portion of such item, and (c) the amount of such deduction exceeds $3,000, then the tax imposed
by this chapter for the taxable year shall be the lesser of the following: (d) the tax for the taxable
year computed with such deduction; or (e) an amount equal to (1) the tax for the taxable year
computed without such deduction, minus (2) the decrease in tax under this chapter for the prior
taxable year (or years) which would result solely from the exclusion of such item (or portion
thereof) from gross income for such prior taxable year (or years).
If the decrease in tax ascertained under part (e) (2) of the preceding paragraph exceeds the
tax imposed by this chapter for the taxable year (computed without the deduction) such excess
shall be considered to be a payment of tax on the last day prescribed by law for the payment of
tax for the taxable year, and shall be refunded or credited in the same manner as if it were an
overpayment for such taxable year. The preceding paragraph does not apply to any deduction
allowable with respect to an item which was included in gross income by reason of the sale or
other disposition of stock in trade of the taxpayer (or other property of a kind which would
properly have been included in the inventory of the taxpayer if on hand at the close of the prior
taxable year) or property held by the taxpayer primarily for sale to customers in the ordinary
course of the taxpayer's trade or business. This paragraph shall not apply if the deduction arises
out of refunds or repayments made by a regulated public utility (as defined in section 7701(a)(33)
of the Internal Revenue Code without regard to the limitation contained in the last two sentences
thereof) if such refunds or repayments are required to be made by the government, political
subdivision, agency, or instrumentality referred to in such section.
    Subd. 5.[Repealed, 1987 c 268 art 1 s 127]
    Subd. 5a.[Repealed, 1983 c 15 s 33]
    Subd. 6.[Repealed, 1988 c 719 art 3 s 11]
    Subd. 7. Deductions, credits; time for taking. The deductions and credits provided for in
this chapter shall be taken for a taxable year in which "paid or accrued" or "paid and incurred,"
dependent upon the method of accounting upon the basis of which the net income is computed,
unless in order to clearly reflect the income the deductions or credits should be taken as of a
different period.
The provisions of sections 461 to 468A of the Internal Revenue Code shall determine the
taxable year for which a deduction or credit may be taken.
History: (2394-9) 1933 c 405 s 9; 1939 c 446 s 4; 1945 c 604 s 4,5; 1947 c 635 s 5; 1955 c
426 s 1; 1957 c 621 s 10; 1957 c 772 s 1; 1961 c 507 s 1; 1965 c 488 s 1; 1965 c 489 s 1; 1971 c
761 s 1; 1971 c 769 s 2; 1973 c 711 s 3; 1975 c 349 s 29; 1977 c 376 s 13; 1980 c 419 s 3; 1980 c
607 art 1 s 32; 1981 c 60 s 3,27; 1981 c 178 s 17; 1982 c 523 art 40 s 14; 1983 c 207 s 43; 1983 c
342 art 1 s 14,43; 1984 c 514 art 1 s 8; 1985 c 248 s 70; 1Sp1985 c 14 art 21 s 8,9,49; 1986 c 444;
1Sp1986 c 1 art 1 s 9; 1987 c 268 art 1 s 126; 1988 c 719 art 3 s 12; 1989 c 28 s 25; 1990 c 604
art 2 s 16; 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