1997 Minnesota Statutes

     290.31 Partnerships; individual liability of partners. 

    Subdivision 1.    Partners, not partnership, subject to 
 tax.  A partnership as such shall not be subject to the income 
 tax imposed by this chapter, but is subject to the tax imposed 
 under section 290.0922.  Persons carrying on business as 
 partners shall be liable for income tax only in their separate 
 or individual capacities. 

    Subd. 2.    Income and credits of partner.  (1) In 
 determining income tax, each partner shall take into account 
 separately the partner's distributive share of the partnership's 

    (a) gains and losses from sales or exchanges of short-term 
 capital assets as defined in section 290.16, subdivision 3, 

    (b) gains and losses from sales or exchanges of long-term 
 capital assets as defined in section 290.16, subdivision 3, 

    (c) gains and losses from sales or exchanges of property 
 described in section 1231 of the Internal Revenue Code (relating 
 to certain property used in a trade or business and involuntary 
 conversions), 

    (d) charitable contributions as defined in section 170(c) 
 of the Internal Revenue Code, 

    (e) dividends with respect to which there is provided a 
 deduction under sections 241 to 247 of the Internal Revenue 
 Code, 

    (f) other items of income, gain, loss, deduction, or 
 credit, to the extent provided by rules prescribed by the 
 commissioner, and 

    (g) taxable net income or loss, exclusive of items 
 requiring separate computation under other subparagraphs of this 
 paragraph (1). 

    (2) The character of any item of income, gain, loss, 
 deduction, or credit included in a partner's distributive share 
 under paragraphs (a) through (f) of paragraph (1) shall be 
 determined as if such item were realized directly from the 
 source from which realized by the partnership, or incurred in 
 the same manner as incurred by the partnership. 

    (3) In any case where it is necessary to determine the 
 gross income of a partner for purposes of this chapter, such 
 amount shall include the partner's distributive share of the 
 gross income of the partnership. 

    Subd. 2a.  The provisions of subdivisions 2 and 5 do not 
 apply to individuals, and items of income, gain, loss, or 
 deduction must be reported as provided in section 290.01, 
 subdivisions 19 to 19b. 

    Subd. 3.    Partnership computations.  The taxable net 
 income of a partnership shall be computed as provided in section 
 703(a) of the Internal Revenue Code except that, in the case of 
 a corporate partner, the deduction for depletion shall be 
 computed under section 290.01, subdivisions 19c and 19d. 

    Any election affecting the computation of taxable net 
 income derived from a partnership shall be made by the 
 partnership except as provided in section 703(b) of the Internal 
 Revenue Code. 

    Subd. 4.    Partner's distributive share.  The 
 provisions of sections 704, 706 to 741, and 743 to 761 of the 
 Internal Revenue Code shall apply to partners and partnerships. 

    Subd. 5.    Determination of basis of partner's interest. 
  The adjusted basis of a partner's interest in a partnership 
 shall, except as provided in the last paragraph of this 
 subdivision, be the basis of such interest determined under 
 section 722 or 742 of the Internal Revenue Code relating to 
 contributions to a partnership or transfers of partnership 
 interests 

    (1) increased by the sum of the partner's distributive 
 share for the taxable year and prior taxable years of 

    (a) net income of the partnership as determined under 
 subdivision 3(1) and (2), 

    (b) income of the partnership exempt from tax under this 
 chapter, 

    (c) the excess of the deductions for depletion over the 
 basis of the property subject to depletion, and 

    (2) decreased (but not below zero) by distributions by the 
 partnership as provided in section 733 of the Internal Revenue 
 Code and by the sum of the partner's distributive share for the 
 taxable year and prior taxable years of 

    (a) losses of the partnership, and 

    (b) expenditures of the partnership not deductible in 
 computing its taxable net income and not properly chargeable to 
 capital account, and 

    (3) decreased, but not below zero, by the amount of the 
 partner's deduction for depletion for any partnership oil and 
 gas property to the extent the deduction does not exceed the 
 proportionate share of the adjusted basis of the property 
 allocated to the partner under section 613A(c)(7)(D) of the 
 Internal Revenue Code.  For corporate partners, the deduction 
 for depletion with respect to oil and gas wells shall be 
 computed as provided in section 290.01, subdivisions 19c and 19d.

    The commissioner shall prescribe by rule the circumstances 
 under which the adjusted basis of a partner's interest in a 
 partnership may be determined by reference to the partner's 
 proportionate share of the adjusted basis of partnership 
 property upon a termination of the partnership.  

    Subd. 6. Repealed, 1982 c 523 art 1 s 72 

    Subd. 7. Repealed, 1982 c 523 art 1 s 72 

    Subd. 8. Repealed, 1982 c 523 art 1 s 72 

    Subd. 8a. Repealed, 1982 c 523 art 1 s 72 

    Subd. 9. Repealed, 1982 c 523 art 1 s 72 

    Subd. 10. Repealed, 1982 c 523 art 1 s 72 

    Subd. 11. Repealed, 1982 c 523 art 1 s 72 

    Subd. 12. Repealed, 1982 c 523 art 1 s 72 

    Subd. 13. Repealed, 1982 c 523 art 1 s 72 

    Subd. 14. Repealed, 1982 c 523 art 1 s 72 

    Subd. 15. Repealed, 1982 c 523 art 1 s 72 

    Subd. 16. Repealed, 1982 c 523 art 1 s 72 

    Subd. 17. Repealed, 1982 c 523 art 1 s 72 

    Subd. 18. Repealed, 1982 c 523 art 1 s 72 

    Subd. 19.    Basis of transferee partner's interest.  
 The basis of an interest in a partnership acquired other than by 
 contribution shall be determined under this chapter. 

    Subd. 20. Repealed, 1982 c 523 art 1 s 72 

    Subd. 21. Repealed, 1982 c 523 art 1 s 72 

    Subd. 22. Repealed, 1982 c 523 art 1 s 72 

    Subd. 23. Repealed, 1982 c 523 art 1 s 72 

    Subd. 24. Repealed, 1982 c 523 art 1 s 72 

    Subd. 25. Repealed, 1982 c 523 art 1 s 72 

    Subd. 26. Repealed, 1982 c 523 art 1 s 72 

    Subd. 27.    Allocation of partnership income to state.  
  The taxable net income of the partnership shall be assigned 
 to this state under sections 290.17 to 290.20. 

    Subd. 28. Repealed, 1980 c 419 s 46 

    HIST: (2394-30) 1933 c 405 s 30; Ex1937 c 49 s 20; 1939 c 446 
 s 13; 1945 c 596 s 2; 1945 c 604 s 30; 1947 c 635 s 11; 1955 c 
 406 s 1; 1981 c 60 s 18; 1981 c 178 s 77-85; 1982 c 523 art 1 s 
 33-36; art 40 s 14; 1983 c 207 s 43; 1983 c 342 art 1 s 
 30,31,43; 1984 c 514 art 1 s 8; 1Sp1985 c 14 art 21 s 35-37,49; 
 1986 c 444; 1Sp1986 c 1 art 1 s 9; 1987 c 268 art 1 s 83-86,126; 
 1988 c 719 art 3 s 12; 1989 c 28 s 25; 1990 c 604 art 2 s 13,16; 
 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