Minnesota Legislature
Office of the Revisor of Statutes
Minnesota Session Laws - 1984, Regular Session
Key: (1) language to be deleted (2) new language
Laws of Minnesota 1984
CHAPTER 514-H.F.No. 1528
An act relating to taxation; updating references to
the internal revenue code; simplifying certain income
tax and property tax refund provisions; making
technical corrections and administrative changes to
income tax, inheritance tax and property tax refund
provisions; making child support withholding
permanent; providing for withholding of attorneys fees
and costs; amending Minnesota Statutes 1982, sections
10A.31, subdivision 1; 62E.11, subdivision 8; 171.31;
271.19; 290.01, subdivision 20e; 290.05, subdivision
4; 290.06, subdivisions 3e, and 3f; 290.095,
subdivision 11; 290.17, subdivision 1a; 290.23,
subdivision 3; 290.311, subdivision 1; 290.41,
subdivision 2, and by adding a subdivision; 290.50,
subdivision 6; 290.56, subdivisions 4 and 5; 290.61;
290.931, subdivision 1; 290A.07, subdivision 2a;
600.21; Minnesota Statutes 1983 Supplement, sections
176.186; 290.01, subdivisions 20, 20a, 20b, and 20f;
290.032, subdivision 2; 290.06, subdivisions 2c, 3d,
13, and 14; 290.067, subdivisions 1 and 2; 290.077,
subdivision 4; 290.089, subdivisions 2 and 3; 290.09,
subdivisions 5 and 29; 290.091; 290.10; 290.17,
subdivisions 1 and 2; 290.174; 290.175; 290.18,
subdivision 1; 290.21, subdivision 3; 290.37,
subdivision 1; 290.431; 290.45, subdivision 1; 290.46;
290.92, subdivision 26; 290.93, subdivision 10;
290.9726, subdivision 5; 290A.03, subdivisions 3, 6,
11, 12, and 14; 290A.04, subdivisions 1 and 2;
290A.07, subdivision 3; and 296.18, subdivision 1;
Laws 1980, chapter 439, section 36; Laws 1982, chapter
523, article 4, section 2; repealing Minnesota
Statutes 1982, sections 290.011; 290.311, subdivision
2; Minnesota Statutes 1983 Supplement, section
290A.16; and Laws 1983, chapter 207, section 6.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
ARTICLE 1
UPDATE
Section 1. Minnesota Statutes 1983 Supplement, section
290.01, subdivision 20, is amended to read:
Subd. 20. [GROSS INCOME.] Except as otherwise provided in
this chapter, the term "gross income," as applied to
corporations includes every kind of compensation for labor or
personal services of every kind from any private or public
employment, office, position or services; income derived from
the ownership or use of property; gains or profits derived from
every kind of disposition of, or every kind of dealing in,
property; income derived from the transaction of any trade or
business; and income derived from any source.
The term "gross income" in its application to individuals,
estates, and trusts shall mean the adjusted gross income as
defined in the Internal Revenue Code of 1954, as amended through
the date specified herein for the applicable taxable year, with
the modifications specified in this subdivision and in
subdivisions 20a to 20f. For estates and trusts the adjusted
gross income shall be their federal taxable income as defined in
the Internal Revenue Code of 1954, as amended through the date
specified herein for the applicable taxable year, with the
modifications specified in this subdivision and in subdivisions
20a to 20f, and with the modification that the federal deduction
for personal exemptions for trusts and estates shall not be
allowed.
(i) The Internal Revenue Code of 1954, as amended through
December 31, 1976, including the amendments made to section 280A
(relating to licensed day care centers) in H.R. 3477 as it
passed the Congress on May 16, 1977, shall be in effect for the
taxable years beginning after December 31, 1976. The provisions
of the Tax Reform Act of 1976, P.L. 94-455, which affect
adjusted gross income shall become effective for purposes of
this chapter at the same time they become effective for federal
income tax purposes.
The provisions of section 4 of P.L. 95-458, sections 131,
133, 134, 141, 152, 156, 157, 405, and 543 of P.L. 95-600, and
section 2 of P.L. 96-608 (relating to pensions, individual
retirement accounts, deferred compensation plans, the sale of a
residence and to conservation payments to farmers) including the
amendments made to these sections in P.L. 96-222 shall be
effective at the same time that these provisions became
effective for federal income tax purposes.
(ii) The Internal Revenue Code of 1954, as amended through
December 31, 1979, shall be in effect for taxable years
beginning after December 31, 1979.
(iii) The Internal Revenue Code of 1954, as amended through
December 31, 1980, and as amended by sections 302(b) and 501 to
509 of Public Law Number 97-34, shall be in effect for taxable
years beginning after December 31, 1980 including the provisions
of section 404 (relating to partial exclusions of dividends and
interest received by individuals) of the Crude Oil Windfall
Profit Tax Act of 1980, P.L. 96-223. The provisions of P.L.
96-471 (relating to installment sales) sections 122, 123, 126,
201, 202, 203, 204, 211, 213, 214, 251, 261, 264, 265,
311(g)(3), 313, 314(a)(1), 321(a), 501 to 507, 811, and 812 of
the Economic Recovery Tax Act of 1981, Public Law Number 97-34
and section 113 of Public Law Number 97-119 shall be effective
at the same time that they become effective for federal income
tax purposes.
(iv) The Internal Revenue Code of 1954, as amended through
December 31, 1981, shall be in effect for taxable years
beginning after December 31, 1981. The provisions of sections
205(a), 214 to 222, 231, 232, 236, 247, 251, 252, 253, 265, 266,
285, 288, and 335 of the Tax Equity and Fiscal Responsibility
Act of 1982, Public Law Number 97-248, section 6(b)(2) and (3)
of the Subchapter S Revision Act of 1982, Public Law Number
97-354, section 517 of Public Law Number 97-424, sections 101(c)
and (d), 102(a), (aa), (f)(4), (g), (j), (l), 103(c), 104(b)(3),
105, 305(d), 306(a)(9) of Public Law Number 97-448, and sections
101 and 102 of Public Law Number 97-473 shall be effective at
the same time that they become effective for federal income tax
purposes. The Payment-in-Kind Tax Treatment Act of 1983, Public
Law Number 98-4, shall be effective at the same time that it
becomes effective for federal income tax purposes.
(v) The Internal Revenue Code of 1954, as amended through
January 15, 1983, shall be in effect for taxable years beginning
after December 31, 1982.
(vi) The Internal Revenue Code of 1954, as amended through
December 31, 1983, shall be in effect for taxable years
beginning after December 31, 1983.
References to the Internal Revenue Code of 1954 in
subdivisions 20a, 20b, 20c, 20e, and 20f shall mean the code in
effect for the purpose of defining gross income for the
applicable taxable year.
Sec. 2. Minnesota Statutes 1983 Supplement, section
290.01, subdivision 20b, is amended to read:
Subd. 20b. [MODIFICATIONS REDUCING FEDERAL ADJUSTED GROSS
INCOME.] There shall be subtracted from federal adjusted gross
income:
(1) Interest income on obligations of any authority,
commission or instrumentality of the United States to the extent
includible in gross income for federal income tax purposes but
exempt from state income tax under the laws of the United States;
(2) The portion of any gain, from the sale or other
disposition of property having a higher adjusted basis for
Minnesota income tax purposes than for federal income tax
purposes, that does not exceed such difference in basis; but if
such gain is considered a long-term capital gain for federal
income tax purposes, the modification shall be limited to 40 per
centum of the portion of the gain. This modification shall not
be applicable if the difference in basis is due to disallowance
of depreciation pursuant to section 290.101.
(3) Income from the performance of personal or professional
services which is subject to the reciprocity exclusion contained
in section 290.081, clause (a);
(4) Losses, not otherwise reducing federal adjusted gross
income assignable to Minnesota, arising from events or
transactions which are assignable to Minnesota under the
provisions of sections 290.17 to 290.20, including any capital
loss or net operating loss carryforwards or carrybacks or out of
state loss carryforwards resulting from the losses, and
including any farm loss carryforwards or carrybacks;
(5) If included in federal adjusted gross income, the
amount of any credit received, whether received as a refund or
credit to another taxable year's income tax liability, pursuant
to chapter 290A, and the amount of any overpayment of income tax
to Minnesota, or any other state, for any previous taxable year,
whether the amount is received as a refund or credited to
another taxable year's income tax liability;
(6) To the extent included in federal adjusted gross
income, or the amount reflected as the ordinary income portion
of a lump sum distribution under section 402(e) of the Internal
Revenue Code of 1954, notwithstanding any other law to the
contrary, the amount received by any person (i) from the United
States, its agencies or instrumentalities, the Federal Reserve
Bank or from the state of Minnesota or any of its political or
governmental subdivisions or from any other state or its
political or governmental subdivisions, or a Minnesota volunteer
firefighter's relief association, by way of payment as a
pension, public employee retirement benefit, or any combination
thereof, (ii) as a retirement or survivor's benefit made from a
plan qualifying under section 401, 403, 404, 405, 408, 409 or
409A of the Internal Revenue Code of 1954, or (iii) severance
pay distributed to an individual upon discontinuance of the
individual's employment due to termination of business
operations by the individual's employer, provided that the
termination is reasonably likely to be permanent, involves the
discharge of at least 75 percent of the employees at that site
within a one-year period, and the business is not acquired by
another person who continues operations at that site. The
maximum amount of this subtraction shall be $11,000 less the
amount by which the individual's federal adjusted gross income,
plus the ordinary income portion of a lump sum distribution as
defined in section 402(e) of the Internal Revenue Code of 1954,
exceeds $17,000. For purposes of the preceding sentence,
"federal adjusted gross income" shall not include railroad
retirement or social security benefit amounts provided in
sections 86 and 72(r) of the Internal Revenue Code of 1954. For
purposes of this clause, "severance pay" means an amount
received for cancellation of an employment contract or a
collectively bargained termination payment made as a substitute
for income which would have been earned for personal services to
be rendered in the future. In the case of a volunteer
firefighter who receives an involuntary lump sum distribution of
his pension or retirement benefits, the maximum amount of this
subtraction shall be $11,000; this subtraction shall not be
reduced by the amount of the individual's federal adjusted gross
income in excess of $17,000;
(7) To the extent included in the taxpayer's federal
adjusted gross income for the taxable year, gain recognized upon
a transfer of property to the spouse or former spouse of the
taxpayer in exchange for the release of the spouse's marital
rights;
(8) The amount of any distribution from a qualified pension
or profit sharing plan included in federal adjusted gross income
in the year of receipt to the extent of any contribution not
previously allowed as a deduction by reason of a change in
federal law which was not adopted by Minnesota law for a taxable
year beginning in 1974 or later;
(9) Interest, including payment adjustment to the extent
that it is applied to interest, earned by the seller of the
property on a family farm security loan executed before January
1, 1986 that is guaranteed by the commissioner of agriculture as
provided in sections 41.51 to 41.60;
(10) The first $3,000 of compensation for personal services
in the armed forces of the United States or the United Nations,
and the next $2,000 of compensation for personal services in the
armed forces of the United States or the United Nations wholly
performed outside the state of Minnesota. This modification
does not apply to compensation defined in subdivision 20b,
clause (6);
(11) The amount of any income earned for personal services
rendered outside of Minnesota prior to the date when the
taxpayer became a resident of Minnesota. This modification does
not apply to compensation defined in subdivision 20b, clause (6);
(12) In the case of wages or salaries paid or incurred on
or after January 1, 1977, the amount of any credit for
employment of certain new employees under sections 44B and 51 to
53 of the Internal Revenue Code of 1954 which is claimed as a
credit against the taxpayer's federal tax liability, but only to
the extent that the credit is connected with or allocable
against the production or receipt of income included in the
measure of the tax imposed by this chapter;
(13) In the case of work incentive program expenses paid or
incurred on or after January 1, 1979, the amount of any credit
for expenses of work incentive programs under sections 40, 50A
and 50B of the Internal Revenue Code of 1954 which is claimed as
a credit against the taxpayer's federal tax liability, but only
to the extent that the credit is connected with or allocable
against the production or receipt of income included in the
measure of the tax imposed by this chapter;
(14) Unemployment compensation to the extent includible in
gross income for federal income tax purposes under section 85 of
the Internal Revenue Code of 1954;
(15) The amount of any income or gain which is not
assignable to Minnesota under the provisions of section 290.17;
(16) Interest earned on a contract for deed entered into
for the sale of property for agricultural use if the rate of
interest set in the contract is no more than nine percent per
year for the duration of the term of the contract. This
exclusion shall be available only if (1) the purchaser is an
individual who, together with his spouse and dependents, has a
total net worth valued at less than $150,000 and (2) the
property sold under the contract is farm land as defined in
section 41.52, subdivision 6 of no more than 1,000 acres that
the purchaser intends to use for agricultural purposes.
Compliance with these requirements shall be stated in an
affidavit to be filed with the first income tax return on which
the taxpayer claims the exclusion provided in this clause. Upon
request accompanied by the information necessary to make the
determination, the commissioner shall determine whether interest
to be paid on a proposed transaction will qualify for this
exclusion; the determination shall be provided within 30 days of
receipt of the request, unless the commissioner finds it
necessary to obtain additional information, or verification of
the information provided, in which case the determination shall
be provided within 30 days of receipt of the final item of
information or verification. The exclusion provided in this
clause shall apply to interest earned on contracts for deed
entered into after December 31, 1981 and before July 1, 1983;
(17) Income from the business of mining as defined in
section 290.05, subdivision 1, clause (a) which is not subject
to the Minnesota income tax;
(18) To the extent included in federal adjusted gross
income, distributions from a qualified governmental pension plan
which represent a return of designated employee contributions to
the plan and which contributions were included in gross income
pursuant to subdivision 20a, clause (20); and
(19) To the extent included in federal adjusted gross
income, distributions from an individual retirement account
which represent a return of designated employee contributions if
the contributions were included in gross income pursuant to
subdivision 20a, clause (19). The distribution shall be
allocated first to return of contributions included in gross
income until the amount of the contributions has been exhausted;
and
(20) To the extent included in federal adjusted gross
income, social security benefits as defined and as provided in
section 86 of the Internal Revenue Code of 1954, railroad
retirement benefits as provided in section 72(r) of the Internal
Revenue Code of 1954, and sick pay paid under the Railroad
Unemployment Insurance Act as provided in section 105(i) of the
Internal Revenue Code of 1954, provided that any amount
subtracted under this clause may not be subtracted under clause
(6).
Sec. 3. Minnesota Statutes 1983 Supplement, section
290.10, is amended to read:
290.10 [NONDEDUCTIBLE ITEMS.]
In computing the net income no deduction shall in any case
be allowed for:
(1) Personal, living or family expenses;
(2) Amounts paid out for new buildings or for permanent
improvements or betterments made to increase the value of any
property or estate, except as otherwise provided in this chapter;
(3) Amounts expended in restoring property or in making
good the exhaustion thereof for which an allowance is or has
been made;
(4) Premiums paid on any life insurance policy covering the
life of the taxpayer or of any other person;
(5) The shrinkage in value, due to the lapse of time, of a
life or terminable interest of any kind in property acquired by
gift, devise, bequest or inheritance;
(6) Losses from sales or exchanges of property, directly or
indirectly, between related taxpayers as defined and as provided
in section 267 of the Internal Revenue Code of 1954, as amended
through December 31, 1982;
(7) In computing net income, no deduction shall be allowed
under section 290.09, subdivision 2, relating to expenses
incurred or under section 290.09, subdivision 3, relating to
interest accrued as provided in section 267 of the Internal
Revenue Code of 1954, as amended through December 31, 1982;
(8) (a) Contributions by employees under the federal
railroad retirement act and the federal social security act.
(b) Payments to Minnesota or federal public employee retirement
funds. (c) Three-fourths (75 percent) of the amount of taxes
imposed on self-employment income under section 1401 of the
Internal Revenue Code of 1954, as amended through December 31,
1982, provided that effective for taxable years beginning after
December 31, 1989, no deduction is allowed for self-employment
taxes where the taxpayer claimed a deduction for those taxes
under section 164(f) of the Internal Revenue Code of 1954, as
amended through December 31, 1983.
(9) Expenses, interest and taxes connected with or
allocable against the production or receipt of all income not
included in the measure of the tax imposed by this chapter.
(10) In situations where this chapter provides for a
subtraction from gross income of a specific dollar amount of an
item of income assignable to this state, and within the measure
of the tax imposed by this chapter, that portion of the federal
income tax liability assessed upon such income subtracted, and
any expenses attributable to earning such income, shall not be
deductible in computing net income.
(11) Amounts paid or accrued for such taxes and carrying
charges as, under rules prescribed by the commissioner, are
chargeable to capital account with respect to property, if the
taxpayer elects, in accordance with such rules, to treat such
taxes or charges as so chargeable.
(12) No deduction or credit shall be allowed for any amount
paid or incurred during the taxable year in carrying on any
trade or business if the trade or business (or the activities
which comprise the trade or business) consists of trafficking in
controlled substances (within the meaning of schedule I and II
of the federal Controlled Substances Act) which is prohibited by
federal law or the law of Minnesota.
Sec. 4. Minnesota Statutes 1982, section 290.41,
subdivision 2, is amended to read:
Subd. 2. [BY PERSONS, CORPORATIONS, COOPERATIVES,
GOVERNMENTAL ENTITIES OR SCHOOL DISTRICTS.] Every person,
corporation, or cooperative, the state of Minnesota and its
political subdivisions, and every city, county and school
district in Minnesota, making payments in the regular course of
a trade or business during the taxable year to any person or
corporation of $600 or more on account of rents or royalties, or
of $10 or more on account of interest, or $10 or more on account
of dividends or patronage dividends, or $600 or more on account
of either wages, salaries, commissions, fees, prizes, awards,
pensions, annuities, or any other fixed or determinable gains,
profits or income, not otherwise reportable under section
290.92, subdivision 7, or on account of earnings of $10 or more
distributed to its members by savings, building and loan
associations or credit unions chartered under the laws of this
state or the United States, (a) shall make a return (except in
cases where a valid agreement to participate in the combined
federal and state information reporting system has been entered
into, and such return is therefore filed only with the
commissioner of internal revenue pursuant to the applicable
filing and informational reporting requirements of the Internal
Revenue Code of 1954 as amended through December 31, 1981) in
respect to such payments in excess of the amounts specified,
giving the names and addresses of the persons to whom such
payments were made, the amounts paid to each, and (b) shall make
a return in respect to the total number of such payments and
total amount of such payments, for each category of income
specified, which were in excess of the amounts specified. This
subdivision shall not apply to the payment of interest or
dividends to a person who was a nonresident of Minnesota for the
entire year.
A person, corporation, or cooperative required to file
returns under this subdivision on interest, dividends, or
patronage dividend payments with respect to more than 50 payees
for any calendar year must file all of these returns on magnetic
media unless the person establishes to the satisfaction of the
commissioner that compliance with this requirement would be an
undue hardship.
Sec. 5. Minnesota Statutes 1982, section 290.41, is
amended by adding a subdivision to read:
Subd. 10. [RETURNS RELATING TO SOCIAL SECURITY BENEFITS.]
The appropriate federal official who is required to make a
return under section 6050F (relating to social security
benefits) of the Internal Revenue Code of 1954, as amended
through December 31, 1983, shall file with the commissioner a
copy of the return containing the information required under
that section.
Sec. 6. Minnesota Statutes 1983 Supplement, section
290.92, subdivision 26, is amended to read:
Subd. 26. [EXTENSION OF WITHHOLDING TO CERTAIN PAYMENTS
WHERE IDENTIFYING NUMBER NOT FURNISHED OR INACCURATE.] (a) If,
in the case of any backup withholding reportable payment, (1)
the payee fails to furnish his social security account number to
the payor, or (2) the commissioner notifies the payor that the
social security account number furnished by the payee is
incorrect, then the payor shall deduct and withhold from the
payment a tax equal to five ten percent of the payment.
(b) (1) In the case of any failure described in clause (a)
(1), clause (a) shall apply to any backup withholding reportable
payment made by the payor during the period during which the
social security account number has not been furnished.
(2) In any case where there is a notification described in
clause (a)(2), clause (a) shall apply to any backup withholding
reportable payment made by the payor (i) after the close of the
15th 30th day after the day on which the payor was so notified
received the notification, and (ii) before the payee furnishes
another social security account number.
(3) (i) Unless the payor otherwise elects not to have this
subparagraph apply with respect to the payee, clause (a) shall
also apply to any backup withholding reportable payment made
after the close of the period described in paragraph (1) or (2)
(as the case may be) and before the 30th day after the close of
the period.
(ii) If the payor so elects the application of this
subparagraph with respect to the payee, clause (a) shall also
apply to any backup withholding reportable payment made during
the 15-day 30-day period described in paragraph (2).
(iii) The payor may elect a period shorter than the grace
period set forth in subparagraph (i) or (ii) as the case may be.
(c) The provisions of section 3402(s) 3406 of the Internal
Revenue Code of 1954, as amended through December 31, 1982 1983,
shall apply and shall govern when withholding shall be required
and the definition of terms. The term "backup withholding
reportable payment" shall include only those payments for
personal services. No tax shall be deducted or withheld under
this subdivision with respect to any amount for which
withholding is otherwise required under this section. For
purposes of this section, payments which are subject to
withholding under this subdivision shall be treated as if they
were wages paid by an employer to an employee and amounts
deducted and withheld under this subdivision shall be treated as
if deducted and withheld under subdivision 2a.
(d) Whenever the commissioner notifies a payor under this
subdivision that the social security account number furnished by
any payee is incorrect, notwithstanding section 290.61, the
commissioner shall at the same time furnish a copy of the notice
to the payor, and the payor shall promptly furnish the copy to
the payee. If the commissioner notifies a payor under this
subdivision that the social security account number furnished by
any payee is incorrect and the payee subsequently furnishes
another social security account number to the payor, the payor
shall promptly notify the commissioner of the other social
security account number furnished.
Sec. 7. Minnesota Statutes 1983 Supplement, section
290A.03, subdivision 3, is amended to read:
Subd. 3. [INCOME.] (1) "Income" means the sum of the
following:
(a) federal adjusted gross income as defined in the
Internal Revenue Code of 1954 as amended through March 12, 1982
December 31, 1983; and
(b) the sum of the following amounts to the extent not
included in clause (a):
(i) additions to federal adjusted gross income as provided
in Minnesota Statutes, section 290.01, subdivision 20a, clauses
(1), (2), (6), (11), (12), and (16);
(ii) all nontaxable income;
(iii) recognized net long term capital gains;
(iv) dividends and interest excluded from federal adjusted
gross income under sections 116 or 128 of the Internal Revenue
Code of 1954;
(v) cash public assistance and relief;
(vi) any pension or annuity (including railroad retirement
benefits, all payments received under the federal social
security act, supplemental security income, and veterans
benefits), which was not exclusively funded by the claimant or
spouse, or which was funded exclusively by the claimant or
spouse and which funding payments were excluded from federal
adjusted gross income in the years when the payments were made;
(vii) nontaxable interest received from the state or
federal government or any instrumentality or political
subdivision thereof;
(viii) workers' compensation;
(ix) unemployment benefits;
(x) nontaxable strike benefits; and
(xi) the gross amounts of payments received in the nature
of disability income or sick pay as a result of accident,
sickness, or other disability, whether funded through insurance
or otherwise. In the case of an individual who files an income
tax return on a fiscal year basis, the term "federal adjusted
gross income" shall mean federal adjusted gross income reflected
in the fiscal year ending in the calendar year. Federal
adjusted gross income shall not be reduced by the amount of a
net operating loss carryback.
(2) "Income" does not include
(a) amounts excluded pursuant to the Internal Revenue Code,
Sections 101(a), 102, 117, and 121;
(b) amounts of any pension or annuity which was exclusively
funded by the claimant or spouse and which funding payments were
not excluded from federal adjusted gross income in the years
when the payments were made;
(c) surplus food or other relief in kind supplied by a
governmental agency;
(d) relief granted under sections 290A.01 to 290A.20;
(e) child support payments received under a temporary or
final decree of dissolution or legal separation;
(f) federal adjusted gross income shall be reduced by wage
or salary expense, or expense of work incentive programs which
are not allowed as a deduction under provisions of section 280C
of the Internal Revenue Code of 1954; or
(g) federal adjusted gross income shall be reduced by the
amount of the penalty on the early withdrawal of an all-savers
certificate as provided in section 128(e) of the Internal
Revenue Code of 1954.
Sec. 8. [INSTRUCTIONS TO THE REVISOR.]
In the next edition of Minnesota Statutes, the revisor of
statutes shall substitute the phrase "Internal Revenue Code of
1954, as amended through December 31, 1983" for the words
"Internal Revenue Code of 1954, as amended through December 31,
1982," or for the words "Internal Revenue Code of 1954, as
amended through January 15, 1983," or for the words "Internal
Revenue Code of 1954, as amended through March 12, 1983,"
wherever the phrase occurs in chapter 290, except section
290.01, subdivision 20.
Sec. 9. [EFFECTIVE DATE.]
Sections 1 and 2 are effective for taxable years beginning
after December 31, 1983. Section 4 is effective for payments
made after December 31, 1983. Section 5 is effective for
benefits received after December 31, 1983. Section 6 is
effective for payments made after May 15, 1984. Section 7 is
effective for claims based on rent paid in 1983 and thereafter
and property taxes payable in 1984 and thereafter. Section 8 is
effective for taxable years beginning after December 31, 1983.
ARTICLE 2
SIMPLIFICATION
Section 1. Minnesota Statutes 1982, section 10A.31,
subdivision 1, is amended to read:
Subdivision 1. Every individual resident of Minnesota who
files a an income tax return or a renter and homeowner property
tax refund return with the commissioner of revenue may designate
on their original return that $2 shall be paid from the general
fund of the state into the state elections campaign fund. If a
husband and wife file a joint return, each spouse may designate
that $2 shall be paid. An individual who is 18 years of age or
older, who is a resident of Minnesota, and who is a dependent of
another individual who files a tax return or a renter and
homeowner property tax refund return, may designate that $2
shall be paid from the general fund of the state into the state
elections campaign fund. No individual shall be allowed to
designate $2 more than once in any year.
Sec. 2. Minnesota Statutes 1982, section 62E.11,
subdivision 8, is amended to read:
Subd. 8. Any annual fiscal year end or interim assessment
levied against a contributing member may be offset, in an amount
equal to the assessment paid to the association, against the
income tax or the premium tax payable by that contributing
member pursuant to section 60A.15 for the year in which the
annual fiscal year end or interim assessment is levied. The
commissioner of revenue shall annually, on or before January 15,
report to the chairmen of the senate finance, house
appropriations, senate commerce and house financial institutions
and insurance committees as to the total amount of income tax or
premium tax offset claimed by contributing members during the
preceding calendar year.
Sec. 3. Minnesota Statutes 1983 Supplement, section
290.01, subdivision 20, is amended to read:
Subd. 20. [GROSS INCOME.] Except as otherwise provided in
this chapter, the term "gross income," as applied to
corporations includes every kind of compensation for labor or
personal services of every kind from any private or public
employment, office, position or services; income derived from
the ownership or use of property; gains or profits derived from
every kind of disposition of, or every kind of dealing in,
property; income derived from the transaction of any trade or
business; and income derived from any source.
The term "gross income" in its application to individuals,
estates, and trusts shall mean the adjusted gross income as
defined in the Internal Revenue Code of 1954, as amended through
the date specified herein for the applicable taxable year, with
the modifications specified in this subdivision and in
subdivisions 20a to 20f. For estates and trusts the adjusted
gross income shall be their federal taxable income as defined in
the Internal Revenue Code of 1954, as amended through the date
specified herein for the applicable taxable year, with the
modifications specified in this subdivision and in subdivisions
20a to 20f, and with the modification that the federal deduction
for personal exemptions for trusts and estates shall not be
allowed.
(i) The Internal Revenue Code of 1954, as amended through
December 31, 1976, including the amendments made to section 280A
(relating to licensed day care centers) in H.R. 3477 as it
passed the Congress on May 16, 1977, shall be in effect for the
taxable years beginning after December 31, 1976. The provisions
of the Tax Reform Act of 1976, P.L. 94-455, which affect
adjusted gross income shall become effective for purposes of
this chapter at the same time they become effective for federal
income tax purposes.
The provisions of section 4 of P.L. 95-458, sections 131,
133, 134, 141, 152, 156, 157, 405, and 543 of P.L. 95-600, and
section 2 of P.L. 96-608 (relating to pensions, individual
retirement accounts, deferred compensation plans, the sale of a
residence and to conservation payments to farmers) including the
amendments made to these sections in P.L. 96-222 shall be
effective at the same time that these provisions became
effective for federal income tax purposes.
(ii) The Internal Revenue Code of 1954, as amended through
December 31, 1979, shall be in effect for taxable years
beginning after December 31, 1979.
(iii) The Internal Revenue Code of 1954, as amended through
December 31, 1980, and as amended by sections 302(b) and 501 to
509 of Public Law Number 97-34, shall be in effect for taxable
years beginning after December 31, 1980 including the provisions
of section 404 (relating to partial exclusions of dividends and
interest received by individuals) of the Crude Oil Windfall
Profit Tax Act of 1980, P.L. 96-223. The provisions of P.L.
96-471 (relating to installment sales) sections 122, 123, 126,
201, 202, 203, 204, 211, 213, 214, 251, 261, 264, 265,
311(g)(3), 313, 314(a)(1), 321(a), 501 to 507, 811, and 812 of
the Economic Recovery Tax Act of 1981, Public Law Number 97-34
and section 113 of Public Law Number 97-119 shall be effective
at the same time that they become effective for federal income
tax purposes.
(iv) The Internal Revenue Code of 1954, as amended through
December 31, 1981, shall be in effect for taxable years
beginning after December 31, 1981. The provisions of sections
205(a), 214 to 222, 231, 232, 236, 247, 251, 252, 253, 265, 266,
285, 288, and 335 of the Tax Equity and Fiscal Responsibility
Act of 1982, Public Law Number 97-248, section 6(b)(2) and (3)
of the Subchapter S Revision Act of 1982, Public Law Number
97-354, section 517 of Public Law Number 97-424, sections 101(c)
and (d), 102(a), (aa), (f)(4), (g), (j), (l), 103(c), 104(b)(3),
105, 305(d), 306(a)(9) of Public Law Number 97-448, and sections
101 and 102 of Public Law Number 97-473 shall be effective at
the same time that they become effective for federal income tax
purposes. The Payment-in-Kind Tax Treatment Act of 1983, Public
Law Number 98-4, shall be effective at the same time that it
becomes effective for federal income tax purposes.
(v) The Internal Revenue Code of 1954, as amended through
January 15, 1983, shall be in effect for taxable years beginning
after December 31, 1982.
References to the Internal Revenue Code of 1954 in
subdivisions 20a, 20b, 20c, 20e, and 20f shall mean the code in
effect for the purpose of defining gross income for the
applicable taxable year.
Sec. 4. Minnesota Statutes 1983 Supplement, section
290.01, subdivision 20a, is amended to read:
Subd. 20a. [MODIFICATIONS INCREASING FEDERAL ADJUSTED
GROSS INCOME.] There shall be added to federal adjusted gross
income:
(1) Interest income on obligations of any state other than
Minnesota or a political subdivision of any other state exempt
from federal income taxes under the Internal Revenue Code of
1954;
(2) Income taxes imposed by this state or any other taxing
jurisdiction, to the extent deductible in determining federal
adjusted gross income and not credited against federal income
tax;
(3) Interest on indebtedness incurred or continued to
purchase or carry securities the income from which is exempt
from tax under this chapter, to the extent deductible in
determining federal adjusted gross income;
(4) In the case of a change of residence from Minnesota to
another state or nation, the amount of moving expenses which
exceed total reimbursements and which were therefore deducted in
arriving at federal adjusted gross income;
(5) The amount of any increase in the taxpayer's federal
tax liability under section 47 of the Internal Revenue Code of
1954 to the extent of the credit under section 38 of the
Internal Revenue Code of 1954 that was previously allowed as a
deduction under Minnesota Statutes 1982, section 290.01,
subdivision 20b, clause (7);
(6) (4) Expenses and losses arising from a farm which are
not allowable under section 290.09, subdivision 29;
(7) (5) Expenses and depreciation attributable to
substandard buildings disallowed by section 290.101;
(8) (6) The amount by which the gain determined pursuant to
section 41.59, subdivision 2 exceeds the amount of such gain
included in federal adjusted gross income;
(9) (7) To the extent deducted in computing the taxpayer's
federal adjusted gross income for the taxable year, losses
recognized upon a transfer of property to the spouse or former
spouse of the taxpayer in exchange for the release of the
spouse's marital rights;
(10) (8) Interest income from qualified scholarship funding
bonds as defined in section 103(e) of the Internal Revenue Code
of 1954, if the nonprofit corporation is domiciled outside of
Minnesota;
(11) (9) Exempt-interest dividends, as defined in section
852(b)(5)(A) of the Internal Revenue Code of 1954, not included
in federal adjusted gross income pursuant to section
852(b)(5)(B) of the Internal Revenue Code of 1954, except for
that portion of exempt-interest dividends derived from interest
income on obligations of the state of Minnesota, any of its
political or governmental subdivisions, any of its
municipalities, or any of its governmental agencies or
instrumentalities;
(12) (10) The amount of any excluded gain recognized by a
trust on the sale or exchange of property as defined in section
641(c)(1) of the Internal Revenue Code of 1954;
(13) (11) To the extent not included in the taxpayer's
federal adjusted gross income, the amount of any gain, from the
sale or other disposition of property having a lower adjusted
basis for Minnesota income tax purposes than for federal income
tax purposes. This modification shall not exceed the difference
in basis. If the gain is considered a long term capital gain
for federal income tax purposes, the modification shall be
limited to 40 percent of the portion of the gain. This
modification is limited to property that qualified for the
equity investment credit contained in section 290.069,
subdivision 4, and to property acquired in exchange for the
release of the taxpayer's marital rights contained in section
290.14, clause (7);
(14) (12) For an estate or trust, the amount of any loss
from a source outside of Minnesota which is not allowed under
section 290.17 including any capital loss or net operating loss
carryforwards or carrybacks resulting from the loss;
(15) (13) To the extent deducted in computing the
taxpayer's estate or trust's federal adjusted gross taxable
income, interest, taxes and other expenses which are not allowed
under section 290.10, clause (9) or (10);
(16) (14) The deduction for two-earner married couples
provided in section 221 of the Internal Revenue Code of 1954;
(17) (15) Losses from the business of mining as defined in
section 290.05, subdivision 1, clause (a) which is not subject
to the Minnesota income tax;
(18) (16) Expenses and depreciation attributable to
property subject to Laws 1982, chapter 523, article 7, section 3
which has not been registered;
(19) (17) The amount of contributions to an individual
retirement account, including a qualified voluntary employee
contribution, simplified employee pension plan, or self-employed
retirement plan which is allowed under sections 311 and 312 of
Public Law Number 97-34, section 238 of Public Law Number
97-248, and section 103(d)(1)(B) of Public Law Number 97-448 to
the extent those contributions were not an allowable deduction
prior to the enactment of that law; and
(20) (18) To the extent not included in the taxpayer's
federal adjusted gross income, the amount of any contributions
to a qualified pension plan, designated as employee
contributions but which the employing unit picks up and which
are treated as employer contributions pursuant to section
414(h)(2) of the Internal Revenue Code of 1954.
Sec. 5. Minnesota Statutes 1983 Supplement, section
290.01, subdivision 20b, is amended to read:
Subd. 20b. [MODIFICATIONS REDUCING FEDERAL ADJUSTED GROSS
INCOME.] There shall be subtracted from federal adjusted gross
income:
(1) Interest income on obligations of any authority,
commission or instrumentality of the United States to the extent
includible in gross income for federal income tax purposes but
exempt from state income tax under the laws of the United States;
(2) The portion of any gain, from the sale or other
disposition of property having a higher adjusted basis for
Minnesota income tax purposes than for federal income tax
purposes, that does not exceed such difference in basis; but if
such gain is considered a long-term capital gain for federal
income tax purposes, the modification shall be limited to 40 per
centum of the portion of the gain. This modification shall not
be applicable if the difference in basis is due to disallowance
of depreciation pursuant to section 290.101.
(3) Income from the performance of personal or professional
services which is subject to the reciprocity exclusion contained
in section 290.081, clause (a);
(4) Losses, not otherwise reducing federal adjusted gross
income assignable to Minnesota, arising from events or
transactions which are assignable to Minnesota under the
provisions of sections 290.17 to 290.20, including any capital
loss or net operating loss carryforwards or carrybacks or out of
state loss carryforwards resulting from the losses, and
including any farm loss carryforwards or carrybacks;
(5) If included in federal adjusted gross income, the
amount of any credit received, whether received as a refund or
credit to another taxable year's income tax liability, pursuant
to chapter 290A, and the amount of any overpayment of income tax
to Minnesota, or any other state, for any previous taxable year,
whether the amount is received as a refund or credited to
another taxable year's income tax liability;
(6) To the extent included in federal adjusted gross
income, or the amount reflected as the ordinary income portion
of a lump sum distribution under section 402(e) of the Internal
Revenue Code of 1954, notwithstanding any other law to the
contrary, the amount received by any person (i) from the United
States, its agencies or instrumentalities, the Federal Reserve
Bank or from the state of Minnesota or any of its political or
governmental subdivisions or from any other state or its
political or governmental subdivisions, or a Minnesota volunteer
firefighter's relief association, by way of payment as a
pension, public employee retirement benefit, or any combination
thereof, (ii) as a retirement or survivor's benefit made from a
plan qualifying under section 401, 403, 404, 405, 408, 409 or
409A of the Internal Revenue Code of 1954, or (iii) severance
pay distributed to an individual upon discontinuance of the
individual's employment due to termination of business
operations by the individual's employer, provided that the
termination is reasonably likely to be permanent, involves the
discharge of at least 75 percent of the employees at that site
within a one-year period, and the business is not acquired by
another person who continues operations at that site. The
maximum amount of this subtraction shall be $11,000 less the
amount by which the individual's federal adjusted gross income,
plus the ordinary income portion of a lump sum distribution as
defined in section 402(e) of the Internal Revenue Code of 1954,
exceeds $17,000. For purposes of this clause, "severance pay"
means an amount received for cancellation of an employment
contract or a collectively bargained termination payment made as
a substitute for income which would have been earned for
personal services to be rendered in the future. In the case of
a volunteer firefighter who receives an involuntary lump sum
distribution of his pension or retirement benefits, the maximum
amount of this subtraction shall be $11,000; this subtraction
shall not be reduced by the amount of the individual's federal
adjusted gross income in excess of $17,000;
(7) To the extent included in the taxpayer's federal
adjusted gross income for the taxable year, gain recognized upon
a transfer of property to the spouse or former spouse of the
taxpayer in exchange for the release of the spouse's marital
rights;
(8) The amount of any distribution from a qualified pension
or profit sharing plan included in federal adjusted gross income
in the year of receipt to the extent of any contribution not
previously allowed as a deduction by reason of a change in
federal law which was not adopted by Minnesota law for a taxable
year beginning in 1974 or later;
(9) Interest, including payment adjustment to the extent
that it is applied to interest, earned by the seller of the
property on a family farm security loan executed before January
1, 1986 that is guaranteed by the commissioner of agriculture as
provided in sections 41.51 to 41.60;
(10) The first $3,000 of compensation for personal services
in the armed forces of the United States or the United Nations,
and the next $2,000 of compensation for personal services in the
armed forces of the United States or the United Nations wholly
performed outside the state of Minnesota. This modification
does not apply to compensation defined in subdivision 20b,
clause (6);
(11) The amount of any income earned for personal services
rendered outside of Minnesota prior to the date when the
taxpayer became a resident of Minnesota. This modification does
not apply to compensation defined in subdivision 20b, clause (6);
(12) In the case of wages or salaries paid or incurred on
or after January 1, 1977, the amount of any credit for
employment of certain new employees under sections 44B and 51 to
53 of the Internal Revenue Code of 1954 which is claimed as a
credit against the taxpayer's federal tax liability, but only to
the extent that the credit is connected with or allocable
against the production or receipt of income included in the
measure of the tax imposed by this chapter;
(13) In the case of work incentive program expenses paid or
incurred on or after January 1, 1979, the amount of any credit
for expenses of work incentive programs under sections 40, 50A
and 50B of the Internal Revenue Code of 1954 which is claimed as
a credit against the taxpayer's federal tax liability, but only
to the extent that the credit is connected with or allocable
against the production or receipt of income included in the
measure of the tax imposed by this chapter;
(14) (12) Unemployment compensation to the extent
includible in gross income for federal income tax purposes under
section 85 of the Internal Revenue Code of 1954;
(15) (13) For an estate or trust, the amount of any income
or gain which is not assignable to Minnesota under the
provisions of section 290.17;
(16) (14) Interest earned on a contract for deed entered
into for the sale of property for agricultural use if the rate
of interest set in the contract is no more than nine percent per
year for the duration of the term of the contract. This
exclusion shall be available only if (1) the purchaser is an
individual who, together with his spouse and dependents, has a
total net worth valued at less than $150,000 and (2) the
property sold under the contract is farm land as defined in
section 41.52, subdivision 6 of no more than 1,000 acres that
the purchaser intends to use for agricultural purposes.
Compliance with these requirements shall be stated in an
affidavit to be filed with the first income tax return on which
the taxpayer claims the exclusion provided in this clause. Upon
request accompanied by the information necessary to make the
determination, the commissioner shall determine whether interest
to be paid on a proposed transaction will qualify for this
exclusion; the determination shall be provided within 30 days of
receipt of the request, unless the commissioner finds it
necessary to obtain additional information, or verification of
the information provided, in which case the determination shall
be provided within 30 days of receipt of the final item of
information or verification. The exclusion provided in this
clause shall apply to interest earned on contracts for deed
entered into after December 31, 1981 and before July 1, 1983;
(17) (15) Income from the business of mining as defined in
section 290.05, subdivision 1, clause (a) which is not subject
to the Minnesota income tax;
(18) (16) To the extent included in federal adjusted gross
income, distributions from a qualified governmental pension plan
which represent a return of designated employee contributions to
the plan and which contributions were included in gross income
pursuant to subdivision 20a, clause (20) (18). The provisions
of this clause shall apply before the provisions of clause (6)
apply and an amount subtracted under this clause may not be
subtracted under clause (6); and
(19) (17) To the extent included in federal adjusted gross
income, distributions from an individual retirement account
which represent a return of designated employee contributions if
the contributions were included in gross income pursuant to
subdivision 20a, clause (19) (17). The distribution shall be
allocated first to return of contributions included in gross
income until the amount of the contributions has been exhausted.
Sec. 6. Minnesota Statutes 1982, section 290.01,
subdivision 20e, is amended to read:
Subd. 20e. [MODIFICATION IN COMPUTING TAXABLE INCOME OF THE
ESTATE OF A DECEDENT.] Amounts allowable under section 291.07,
subdivision 1, clause (2) in computing Minnesota inheritance or
estate tax liability shall not be allowed as a deduction (or as
an offset against the sales price of property in determining
gain or loss) in computing the taxable income of the estate or
any person unless there is filed within the time and in the
manner and form prescribed by the commissioner a statement that
the amounts have not been allowed as a deduction under section
291.07 and a waiver of the right to have the amounts allowed at
any time as deductions under section 291.07. The provisions of
this paragraph shall not apply with respect to deductions
allowed under section 290.077 (relating to income in respect of
decedents). In the event that The election made for federal tax
purposes under section 642(g) of the Internal Revenue Code of
1954 differs from the election made under this paragraph
appropriate modification of the estate's federal taxable income
shall be made to implement the election made under this
paragraph in accordance with regulations prescribed by the
commissioner is binding for Minnesota tax purposes.
Sec. 7. Minnesota Statutes 1983 Supplement, section
290.01, subdivision 20f, is amended to read:
Subd. 20f. [MODIFICATION FOR ACCELERATED COST RECOVERY
SYSTEM.] A modification shall be made for the allowable
deduction under the accelerated cost recovery system. The
allowable deduction for the accelerated cost recovery system as
provided in section 168 of the Internal Revenue Code of 1954
shall be the same amount as provided in that section for
individuals, estates, and trusts with the following
modifications:
(1) For property placed in service after December 31, 1980,
and for taxable years beginning before January 1, 1982, 15
percent of the allowance provided in section 168 of the Internal
Revenue Code of 1954 shall not be allowed.
(2)(a) For taxable years beginning after December 31, 1981,
and before January 1, 1983, for 15-year real property as defined
in section 168 of the Internal Revenue Code of 1954, 40 percent
of the allowance provided in section 168 of the Internal Revenue
Code of 1954 shall not be allowed and for all other property, 17
percent of the allowance shall not be allowed.
(b) For taxable years beginning after December 31, 1982,
and with respect to property placed in service in taxable years
beginning before January 1, 1983, for 15-year real property as
defined in section 168 of the Internal Revenue Code of 1954, 40
percent of the allowance provided in section 168 of the Internal
Revenue Code of 1954 shall not be allowed and for all other
property 20 percent of the allowance shall not be allowed.
(3) For property placed in service in taxable years
beginning after December 31, 1982, the allowable deduction shall
be the amount provided by section 168 of the Internal Revenue
Code of 1954.
(4) For property placed in service after December 31, 1980,
for which the taxpayer elects to use the straight line method
provided in section 168(b)(3) or a method provided in section
168(e)(2) of the Internal Revenue Code of 1954, the
modifications provided in clauses (1) and (2) do not apply.
(5) For property subject to the modifications contained in
clause (1) or (2) above or subject to a reduction in basis
pursuant to section 48(q) of the Internal Revenue Code of 1954,
the following modification shall be made after the entire amount
of the allowable deduction for that property under the provision
of section 168 of the Internal Revenue Code of 1954 has been
obtained. The remaining depreciable basis in those assets for
Minnesota purposes shall be a depreciation allowance computed by
using the straight line method over the following number of
years:
(a) 3 year property - 1 year.
(b) 5 year property - 2 years.
(c) 10 year property - 5 years.
(d) All 15 year property - 7 years.
(6) The basis of property to which section 168 of the
Internal Revenue Code of 1954 applies shall be its basis as
provided in this chapter and including the modifications
provided in this subdivision. The recapture tax provisions
provided in sections 1245 and 1250 of the Internal Revenue Code
of 1954 shall apply but shall be calculated using the basis
provided in the preceding sentence. When an asset is exchanged
for another asset including an involuntary conversion and under
the provision of the Internal Revenue Code of 1954 gain is not
recognized in whole or in part on the exchange of the first
asset, the basis of the second asset shall be the same as its
federal basis provided that the difference in basis due to
clause (1) or (2) can be written off as provided in clause (5).
(7) The modifications provided in this subdivision shall
apply before applying any limitation to out-of-state losses
contained in section 290.17 or farm losses contained in section
290.09, subdivision 29.
(8) The first taxable year after the entire amount of the
allowable deduction for that property under the provisions of
section 168 of the Internal Revenue Code of 1954 has been
obtained, or where the straight line method provided in section
168(b)(3) is used, the last taxable year in which an amount of
allowable depreciation for that property under section 168 is
obtained, the remaining depreciable basis in those assets for
Minnesota purposes that is allowable under clause (5) shall
include the amount of any attributable to the basis reduction
made for federal purposes under section 48(q) of the Internal
Revenue Code of 1954 to reflect the investment tax credit shall
be allowed as a deduction. No amount shall be allowed as a
deduction under section 196 of the Internal Revenue Code of 1954.
Sec. 8. Minnesota Statutes 1982, section 290.05,
subdivision 4, is amended to read:
Subd. 4. (a) Corporations, individuals, estates, trusts or
organizations claiming exemption under the provisions of
subdivision 2 shall furnish information as to their exempt
status under the Internal Revenue Code.
(b) Such corporations, individuals, estates, trusts, and
organizations shall file with the commissioner of revenue a copy
of any annual report that is required to be filed with the
Internal Revenue Service, no later than ten days after filing
the same with the Internal Revenue Service. Any annual report
required of a pension plan under sections 6057 to 6059 of the
Internal Revenue Code of 1954, does not need to be filed with
the commissioner.
Any person required to file a copy of a federal return
pursuant to the preceding paragraph who wilfully fails to file
such return shall be guilty of a misdemeanor.
(c) In the event that the Internal Revenue Service revokes,
cancels or suspends, in whole or part, the exempt status of any
corporation, individual, estate, trust or organization referred
to in clause (a), or if the amount of gross income, deductions,
credits, items of tax preference or taxable income is changed or
corrected by either the taxpayer or the Internal Revenue
Service, or if the taxpayer consents to any extension of time
for assessment of federal income taxes such corporation,
individual, estate, trust or organization shall notify the
commissioner in writing of such action within 90 days thereafter.
(d) The periods of limitations contained in section 290.56
shall apply whenever there has been any action referred to in
clause (c), notwithstanding any period of limitations to the
contrary.
Sec. 9. Minnesota Statutes 1983 Supplement, section
290.06, subdivision 2c, is amended to read:
Subd. 2c. [SCHEDULE OF RATES FOR INDIVIDUALS, ESTATES AND
TRUSTS.] (a) The income taxes imposed by this chapter upon
individuals, estates and trusts, other than those taxable as
corporations, shall be computed by applying to their taxable net
income the following schedule of rates:
(1) On the first $500, one and six-tenths percent;
(2) On the second $500, two and two-tenths percent;
(3) On the next $1,000, three and five-tenths percent;
(4) On the next $1,000, five and eight-tenths percent;
(5) On the next $1,000, seven and three-tenths percent;
(6) On the next $1,000, eight and eight-tenths percent;
(7) On the next $2,000, ten and two-tenths percent;
(8) On the next $2,000, eleven and five-tenths percent;
(9) On the next $3,500, twelve and eight-tenths percent;
(10) On all over $12,500, and not over $20,000, fourteen
percent;
(11) On all over $20,000 and not over $27,500, fifteen
percent;
(12) On all over $27,500, sixteen percent.
(b) In lieu of a tax computed according to the rates set
forth in clause (a) of this subdivision, the tax of any
individual taxpayer whose taxable net income for the taxable
year is less than $40,000 shall be computed in accordance with
tables prepared and issued by the commissioner of revenue based
on income brackets of not more than $100. The amount of tax for
each bracket shall be computed at the rates set forth in this
subdivision, provided that the commissioner may disregard a
fractional part of a dollar unless it amounts to 50 cents or
more, in which case it may be increased to $1.
(c) An individual who is not a Minnesota resident for the
entire year must compute his Minnesota income tax as provided in
clause (a). After the application of the nonrefundable credits
provided in this chapter, the tax liability must then be
multiplied by a fraction in which:
(1) The numerator is the individual's Minnesota gross
income, computed as if the provisions of section 290.17,
subdivision 2, or 290.171 applied; and
(2) the denominator is the individual's federal adjusted
gross income.
Sec. 10. Minnesota Statutes 1983 Supplement, section
290.06, subdivision 3d, is amended to read:
Subd. 3d. [LOW INCOME ALTERNATIVE TAX CREDIT.] A claimant
as defined in section 290.012 may must pay a the tax computed
under this subdivision in lieu of the tax computed under
subdivision 2c as reduced by this credit and by any
nonrefundable credits provided in this chapter without the
provisions of section 290.012 and this subdivision:.
(1) The alternative tax shall be zero credit provided in
this subdivision equals the tax liability for the following
claimants:
(a) An unmarried claimant with an income of $5,800 or less;
(b) A claimant with one dependent, with an income of $7,400
or less;
(c) A claimant with two dependents, with an income of
$8,800 or less;
(d) A claimant with three dependents, with an income of
$10,000 or less;
(e) A claimant with four dependents, with an income of
$10,500 or less; and
(f) A claimant with five or more dependents, with an income
of $11,000 or less.
(2) In the case of a claimant with an income in excess of
that set forth in the appropriate category of clause (1), he may
pay a tax equal to 15 percent of that portion of his income that
is in excess of the amount set forth in the appropriate category
of clause (1), or his tax obligation as it would have been in
the absence of section 290.012 and this subdivision, whichever
is less.
(3) The total income for the entire calendar year of the
claimant and his spouse, if any, including income not assignable
to this state, shall be the figure employed for the purposes of
this subdivision. No individual dependent upon and receiving
his chief support from any other individual may be a claimant
under section 290.012 and this subdivision. The commissioner of
revenue shall prescribe the additional forms or alterations in
existing forms as necessary to comply with the provisions of
section 290.012 and this subdivision. All claimants shall
submit their returns on these forms.
The commissioner of revenue shall provide alternative tax
tables.
Sec. 11. Minnesota Statutes 1982, section 290.06,
subdivision 3e, is amended to read:
Subd. 3e. [HOMEMAKER CREDIT.] A credit of $50 may be
deducted from the tax due from the taxpayer and his spouse, if
any, under this chapter if either the taxpayer or his spouse
devotes his time to caring for his children and their home and
is not employed outside of the home. A taxpayer would qualify
for the credit if
(a) he has a child who is twelve years of age or younger
under the age of 15 residing in his home at any time during the
taxable year;
(b) either the taxpayer or his spouse remains unemployed
throughout the taxable year for the purpose of caring for the
child in the home; and
(c) the combined federal adjusted gross income, plus the
ordinary income portion of a lump sum distribution as defined in
section 402(e) of the Internal Revenue Code of 1954, as amended
through December 31, 1981, of the taxpayer and his spouse is not
in excess of $25,000.
A married claimant shall file his income tax return for the
year for which he claims the credit either jointly or separately
on one form with his spouse. In the case of the married
claimant, only one spouse may claim the credit.
A taxpayer and his spouse, if any, may not claim this
credit if they claim the dependent care credit provided in
section 290.067.
Sec. 12. Minnesota Statutes 1982, section 290.06,
subdivision 3f, is amended to read:
Subd. 3f. [CREDITS AGAINST TAX.] Subject to the provisions
of subdivision 3g the taxes due under the computation in
accordance with this section shall be credited with the
following amounts:
(1) In the case of an unmarried individual and in the case
of the estate of a decedent, $60, and in the case of a trust, $5
$68;
(2) In the case of a married individual, $120 $136. If the
spouses file separate, combined or joint returns the personal
credits may be taken by either or divided between them;
(3) In the case of an individual, $60 $68 for each person
(other than a spouse) dependent upon and receiving his chief
support from the taxpayer. One taxpayer only shall be allowed
this credit with respect to any given dependent. A payment to a
divorced or separated spouse, other than a payment for support
of minor children under a temporary order or final decree of
dissolution or legal separation, shall not be considered a
payment by the other spouse for the support of any dependent.
(4) (a) In the case of an unmarried individual who has
attained the age of 65 before the close of his taxable year, an
additional $60 $68;
(b) In the case of an unmarried individual who is blind at
the close of the taxable year, an additional $60 $68;
(c) In the case of a married individual, an additional $60
$68 for each spouse who has attained the age of 65 before the
close of the individual's taxable year, and an additional $60
$68 for each spouse who is blind at the close of the
individual's taxable year. If the spouses file separate,
combined or joint returns, these credits may be taken by either
or divided between them;
(d) In the case of an individual, another $60 $68 for each
person, other than a spouse, who is blind and dependent upon and
receiving his chief support from the taxpayer;
(e) For the purposes of subparagraphs (b), (c) and (d) of
paragraph (4), an individual is blind if his central visual
acuity does not exceed 20/200 in the better eye with correcting
lenses, or if his visual acuity is greater than 20/200 but is
accompanied by a limitation in the fields of vision such that
the widest diameter of the visual field subtends an angle no
greater than 20 degrees.
(f) In the case of an unmarried individual who is deaf at
the close of the taxable year, an additional $60 $68.
(g) In the case of a married individual, an additional $60
$68 for each spouse who is deaf at the close of the taxable year.
If the spouses file separate, combined or joint returns, these
credits may be taken by either or divided between them.
(h) In the case of an individual, an additional $60 $68 for
each person (other than a spouse) who is deaf and dependent upon
and receiving his chief support from the taxpayer.
(i) For the purposes of subparagraphs (f), (g) and (h) of
paragraph (4), an individual is deaf if the average loss in the
speech frequencies (500-2000 Hertz) in the better ear, unaided,
is 92 decibels, American National Standards Institute, or worse.
(5) (a) In the case of an unmarried individual who is a
quadriplegic at the close of the taxable year, an additional $60
$68;
(b) In the case of a married individual, an additional $60
$68 for each spouse who is a quadriplegic at the close of the
taxable year. If the spouses file separate, combined or joint
returns, these credits may be taken by either or divided between
them;
(c) In the case of an individual, another $60 $68 for each
person, other than a spouse, who is quadriplegic and dependent
upon and receiving his chief support from the taxpayer; and
(d) For the purposes of subparagraphs (a), (b) and (c) of
paragraph 5, "quadriplegic" means an individual who has a
congenital or traumatic partial or total loss of all four limbs
or who has a disability that substantially impairs the
functioning of all four limbs.
(6) In the case of an insurance company, it shall receive a
credit on the tax computed as above equal in amount to any taxes
based on premiums paid by it during the period for which the tax
under this chapter is imposed by virtue of any law of this
state, other than the surcharge on premiums imposed by sections
69.54 to 69.56.
(7) In the case of a nonresident individual, credits under
paragraphs 1, 2, 3, 4 and 5 shall be apportioned in the
proportion of the gross income from sources in Minnesota to the
gross income from all sources, and in any event a minimum credit
of $5 shall be allowed.
Sec. 13. Minnesota Statutes 1983 Supplement, section
290.06, subdivision 13, is amended to read:
Subd. 13. [GASOLINE AND SPECIAL FUEL TAX REFUND.] Subject
to the provisions of section 296.18, a credit equal to the
amount paid by the taxpayer person during the taxable year as
Minnesota excise tax on gasoline bought and used for any a
qualifying purpose other than use in motor vehicles,
snowmobiles, or motorboats, or on special fuel bought and used
for any a qualifying purpose other than use in licensed motor
vehicles may be deducted from any tax due under this chapter.
Any amount by which the credit exceeds the tax due shall be
refunded. Gasoline or special fuel bought and used for "a
qualifying purpose" means:
(1) Gasoline or special fuel used in carrying on a trade or
business, used on a farm situated in Minnesota, and used for a
farming purpose. "Farm" and "farming purpose" have the meanings
given them in section 6420(c)(2), (3), and (4) of the Internal
Revenue Code of 1954, as amended through December 31, 1983.
(2) Gasoline or special fuel used for off-highway business
use. "Off-highway business use" means any use by a person in
that person's trade, business, or activity for the production of
income. "Off-highway business use" does not include use as a
fuel in a motor vehicle which, at the time of use, is registered
or is required to be registered for highway use under the laws
of any state or foreign country.
Sec. 14. Minnesota Statutes 1983 Supplement, section
290.06, subdivision 14, is amended to read:
Subd. 14. [RESIDENTIAL ENERGY CREDIT.] A credit of 20
percent of the first $10,000 of renewable energy source
expenditures, including the expenditures described in clauses
(a), (b) and (d) if made by an individual taxpayer on a
Minnesota building of six dwelling units or less and
expenditures for biomass conversion equipment described in
clause (c), may be deducted from the tax due under this chapter
for the taxable year in which the expenditures were made. For
purposes of this subdivision, the term "building" shall include
a condominium or townhouse used by the taxpayer as a residence.
In the case of qualifying expenditures incurred in connection
with a building under construction by a contractor, the credit
shall be deducted from the tax liability of the first individual
to purchase the building for use as a principal residence or for
residential rental purposes; the contractor shall not be
eligible for the credit given pursuant to this subdivision for
that expenditure.
A "renewable energy source expenditure" which qualifies
shall include:
(a) Expenditures which qualify for the federal renewable
energy source credit, pursuant to Section 44C of the Internal
Revenue Code of 1954, as amended through December 31, 1981, and
any regulations promulgated pursuant thereto, provided that,
after December 31, 1980, any solar collector included in the
claimed expenditure is certified by the commissioner of energy,
planning and development. A solar collector is a device
designed to absorb incident solar radiation, convert it to
thermal energy, and transfer the thermal energy to a fluid
passing through or in contact with the device. "Solar
collector" shall not include passive solar energy systems as
defined in clause (d);
(b) Expenditures for earth sheltered dwelling units. For
purposes of this credit, an "earth sheltered dwelling unit"
shall mean a structure which complies with applicable building
standards and which is constructed so that:
(1) 80 percent or more of the roof area is covered with a
minimum depth of 12 inches of earth; and
(2) 50 percent or more of the wall area is covered with a
minimum depth of 12 inches of earth; and
(3) Those portions of the structure not insulated with a
minimum of seven feet of earth shall have additional insulation;
(c) Expenditures for biomass conversion equipment located
in Minnesota which produces ethanol, methane or methanol for use
as a gaseous or as a liquid fuel which is not offered for sale;
and
(d) Expenditures for passive solar energy systems. For
purposes of this credit, a "passive solar energy system" is
defined to include systems which utilize elements of the
building and its operable components to heat or cool a building
with the sun's energy by means of conduction, convection,
radiation, or evaporation. A passive system shall include:
(1) Collection aperture, including glazing installed in
south facing walls and roofs; and
(2) Storage element, including thermal mass in the form of
water, masonry, rock, concrete, or other mediums which is
designed to store heat collected from solar radiation.
A passive system may include either or both:
(1) Control and distribution element, including fans,
louvers, and air ducts; or
(2) Retention element, including movable insulation used to
minimize heat loss caused by nocturnal radiation through areas
used for direct solar heat gain during daylight hours.
Eligible passive expenditures shall be for equipment,
materials or devices that are an integral part of the components
listed above and essential to the functioning of a passive
design which qualifies pursuant to rules adopted by the
commissioner of revenue in cooperation with the commissioner of
energy, planning and development. Expenditures for equipment,
materials, or devices which are a part of the normal heating,
cooling, or insulation system of a building are not eligible for
the credit.
If a credit was allowed to a taxpayer under this
subdivision for any prior taxable year, the dollar amount of the
maximum expenditure for which a taxpayer may qualify for a
credit under this subdivision in subsequent years shall be
$10,000 reduced by the amount of expenditures which a credit was
claimed pursuant to this subdivision in prior years. A taxpayer
shall never be allowed to claim more than $10,000 of
expenditures during the duration of the renewable energy credit.
The credit provided in this subdivision shall not be
allowed in a taxable year if the amount of the credit would be
less than $10.
If the credit allowable under this subdivision exceeds the
amount of tax due in a taxable year, the excess credit shall not
be refunded but may be carried forward to the succeeding taxable
year and added to the credit allowable for that year. No amount
may be carried forward to a taxable year beginning after
December 31, 1987.
The credit provided in this subdivision may not be claimed
by a corporate taxpayer, except that a shareholder in a family
farm corporation and each partner in a partnership operating a
family farm shall be eligible for the credit provided by this
subdivision in the same manner and to the same extent allowed a
joint owner of property under section 44C (d) of the Internal
Revenue Code of 1954, as amended through December 31, 1981.
"Family farm corporation" and "family farm" have the meanings
given in section 500.24.
The credit provided in this subdivision is subject to the
provisions of Section 44C, (c) (7) and (10), and (d) (1) to (3),
of the Internal Revenue Code of 1954, as amended through
December 31, 1981, and any regulations promulgated pursuant
thereto.
The commissioner of revenue in cooperation with the
commissioner of energy, planning and development shall adopt
rules establishing additional qualifications and definitions for
the credits provided in this subdivision.
Notwithstanding section 290.61, the commissioner of revenue
may request the commissioner of energy, planning and development
to assist in the review and auditing of the information
furnished by the taxpayer for purposes of claiming this credit.
The provisions of section 290.61 shall apply to employees of the
department of energy, planning and development who receive
information furnished by a taxpayer for purposes of claiming
this credit.
The commissioner of energy, planning and development shall
adopt rules establishing the criteria for certification of solar
collectors as required by clause (a). The criteria shall:
(1) Specify the testing procedures to be used in the
evaluation of solar collectors;
(2) Establish minimum levels of collector quality for
safety;
(3) Provide a means to determine the maintainability and
structural integrity of solar collectors;
(4) Establish a system for evaluating and rating the
thermal performance of solar collectors;
(5) Specify the procedures to follow to obtain
certification of a solar collector;
(6) Conform to the maximum extent practicable to the solar
collector certification requirements of other states which have
adopted certification procedures; and
(7) Allow for individual variation so as not to hamper the
development of innovative solar collectors.
The commissioner of energy, planning and development may
adopt temporary rules pursuant to sections 14.29 to 14.36 to
establish this certification procedure.
This subdivision is effective for expenditures made during
taxable years beginning after December 31, 1978 and before
January 1, 1986.
Sec. 15. Minnesota Statutes 1983 Supplement, section
290.067, subdivision 1, is amended to read:
Subdivision 1. [AMOUNT OF CREDIT.] A taxpayer may take as
a credit against the tax due from him and his spouse, if any,
under this chapter an amount equal to the dependent care credit
for which he is eligible pursuant to the provisions of section
44A of the Internal Revenue Code of 1954, as amended through
December 31, 1982, except that the applicable percentage of the
employment-related expenses shall be 20 percent and 1983,
subject to the other limitations provided in subdivision 2.
Sec. 16. Minnesota Statutes 1983 Supplement, section
290.067, subdivision 2, is amended to read:
Subd. 2. [LIMITATIONS.] The credit for expenses incurred
for the care of each dependent shall not exceed $720 in any
taxable year, and the total credit for all dependents of a
claimant shall not exceed $1,440 in a taxable year. The total
credit shall be reduced according to the amount of the combined
federal adjusted gross income, plus the ordinary income portion
of any lump sum distribution under section 402(e) of the
Internal Revenue Code of 1954, as amended through December 31,
1982 1983, of the claimant and his spouse, if any, as follows:
income up to $10,000, $720 maximum for one dependent,
$1,440 for all dependents;
income of $10,001 to $11,000, $670 $660 maximum for one
dependent, $1,340 $1,320 for all dependents;
income of $11,001 to $12,000, $620 maximum for one
dependent, $1,240 for all dependents;
income of $12,001 to $13,000, $570 maximum for one
dependent, $1,140 for all dependents;
income of $13,001 to $15,000, $520 maximum for one
dependent, $1,040 for all dependents;
income of $15,001 to $22,000, $400 maximum for one
dependent, $800 for all dependents, reduced by five percent of
the amount by which the income exceeds $15,000, plus $70;
income of $22,001 to $23,000, $70 for one dependent, $140
for all dependents;
income of $23,001 to $24,000, $20 for one dependent, $40
for all dependents;
income over $11,000, the maximum credit for one dependent
shall be reduced by $10 for every $200 of additional income, $20
for all dependents;
$24,001 and over, no credit.
A married claimant shall file his income tax return for the
year for which he claims the credit either jointly or separately
on one form with his spouse. In the case of a married claimant
only one spouse may claim the credit.
The commissioner shall construct and make available to
taxpayers tables showing the amount of the credit at various
levels of income and expenses. The tables shall follow the
schedule contained in this subdivision, except that the
commissioner may graduate the transitions between expenses and
income brackets.
Sec. 17. Minnesota Statutes 1983 Supplement, section
290.089, subdivision 2, is amended to read:
Subd. 2. [ITEMIZED DEDUCTIONS.] Subject to the provisions
of section 290.18, subdivision 1, An amount equal to the amount
determined pursuant to section 63(f) of the Internal Revenue
Code is allowed with the following adjustments:
(a) Add the amount paid to others not to exceed $500 for
each dependent in grades K to 6 and $700 for each dependent in
grades 7 to 12, for tuition, textbooks, and transportation of
each dependent in attending an elementary or secondary school
situated in Minnesota, North Dakota, South Dakota, Iowa, or
Wisconsin, wherein a resident of this state may legally fulfill
the state's compulsory attendance laws, which is not operated
for profit, and which adheres to the provisions of the Civil
Rights Act of 1964 and chapter 363. As used in this clause,
"textbooks" includes books and other instructional materials and
equipment used in elementary and secondary schools in teaching
only those subjects legally and commonly taught in public
elementary and secondary schools in this state. "Textbooks"
does not include instructional books and materials used in the
teaching of religious tenets, doctrines, or worship, the purpose
of which is to instill such tenets, doctrines, or worship, nor
does it include books or materials for, or transportation to,
extracurricular activities including sporting events, musical or
dramatic events, speech activities, driver's education, or
similar programs;
(b) Add the amount of Minnesota and other states' estate or
inheritance taxes which were allowed as a deduction under
section 290.077, subdivision 4, on income in respect of a
decedent;
(c) Add the amount by which the deduction for the taxable
year allowed pursuant to subdivision 4 exceeds the amount
determined pursuant to section 222 of the Internal Revenue Code;
(d) Subtract income taxes paid or accrued within the
taxable year under this chapter;
(e) Subtract income taxes paid to any other state or to any
province or territory of Canada if a credit is allowed for the
taxes under section 290.081;
(f) If the deduction computed under section 164 of the
Internal Revenue Code is not reduced by the amount of the credit
or refund allowed under chapter 290A, subtract that amount;
(g) Subtract the amount of interest on investment
indebtedness paid or accrued in a taxable year beginning before
January 1, 1981, which has been carried forward and is allowed
as a deduction in the taxable year under section 163(d) of the
Internal Revenue Code;
(h) Subtract the amount of charitable contributions
deducted under section 170 of the Internal Revenue Code that (i)
exceeds the following limitations: (A) an overall limit of 30
percent of the taxpayer's Minnesota gross income which, for
purposes of this paragraph, shall include the ordinary income
portion of a lump sum distribution as defined in section 402(e)
of the Internal Revenue Code; and (B) the aggregate of
contributions to organizations described in section 290.21,
subdivision 3, clause (c) shall not exceed 20 percent of the
taxpayer's Minnesota gross income; or (ii) was deducted as a
carryover under section 170(d) of the Internal Revenue Code.
Sec. 18. Minnesota Statutes 1983 Supplement, section
290.089, subdivision 3, is amended to read:
Subd. 3. [STANDARD DEDUCTION.] In lieu of the deductions
provided in subdivision 2, an individual may claim or be allowed
a standard deduction as follows:
(a) Subject to modification pursuant to clause (b), the
standard deduction shall be an amount equal to ten percent of
the adjusted gross income of the taxpayer, up to a maximum
deduction of $2,250 $2,268.
In the case of a husband and wife, the standard deduction
shall not be allowed to either if the net income of one of the
spouses is determined without regard to the standard deduction.
(b) The maximum amount of the standard deduction shall be
adjusted for inflation in the same manner as provided in section
290.06, subdivision 2d, for the expansion of the taxable net
income brackets. The commissioner shall then round the maximum
amount of the standard deduction to the nearest hundred dollar
amount. When adjusting the maximum amount of standard deduction
for inflation, the commissioner shall use the actual dollar
amount of the maximum amount of the standard deduction prior to
rounding the dollar amounts.
(c) The commissioner of revenue may establish a standard
deduction tax table incorporating the rates set forth in section
290.06, subdivision 2c, and the standard deduction. The tax of
any individual taxpayer whose adjusted gross income is less than
$20,000 shall, if an election is made not to itemize nonbusiness
deductions, be computed in accordance with tables prepared and
issued by the commissioner of revenue. The tables shall be
prepared to reflect the allowance of the standard deduction and
the personal and dependent credits.
Sec. 19. Minnesota Statutes 1983 Supplement, section
290.09, subdivision 29, is amended to read:
Subd. 29. [DEDUCTIONS ATTRIBUTABLE TO FARMING.] (a)
[DEFINITIONS.] For purposes of this subdivision, income and
gains and expenses and losses shall be considered as "arising
from a farm" if such items are received or incurred in
connection with cultivating the soil, or in connection with
raising or harvesting any agricultural or horticultural
commodity, including the raising, shearing, feeding, caring for,
training, and management of livestock, including horses for
horse racing, bees, poultry, and fur-bearing animals and
wildlife, and all operations incident thereto, including but not
limited to the common use of "hedging."
(b) [DEDUCTIONS LIMITED.] Except as provided in this
subdivision, expenses and losses, except for interest and taxes,
arising from a farm shall not be allowed as deductions in excess
of income and gains arising from a farm.
(c) [DEDUCTIONS ALLOWED; CARRYOVER DEDUCTIONS.] Expenses
and losses arising from a farm or farms shall be allowed as
deductions up to the amount of the income and gains arising from
a farm or farms in any taxable year, plus the first $30,000 of
nonfarm gross income, or nonfarm taxable net income in the case
of a corporation, provided however that in any case where
nonfarm income exceeds $30,000, the maximum allowable amount of
$30,000 shall be reduced by an amount equal to the nonfarm
income in excess of $30,000 multiplied by three. For this
purpose and for the purpose of applying the limitation in the
following paragraph regarding the application of any carryback
or carryforward, the term gross income shall include the
ordinary income portion of a lump sum distribution as defined in
section 402(e) of the Internal Revenue Code of 1954, as amended
through December 31, 1981, and no deduction shall be allowed for
two-earner married couples as provided in section 221 of the
Internal Revenue Code of 1954, as amended through December 31,
1981. Any remaining balance of the deductions shall be carried
back three years and carried forward five years, in
chronological order, provided, however, that in any case in
which any individual, estate or trust which elects a net
operating loss carryforward under section 172(b)(3)(C) of the
Internal Revenue Code of 1954, as amended through December 31,
1981, such losses shall not be carried back but shall only be
carried forward.
Current expenses and losses shall be utilized as deductions
in any taxable year, to the extent herein allowable, prior to
the application of any carryback or carryover deductions. In
any event, the combined amounts of such current expenses and
losses and carryback or carryover deductions shall be allowed as
deductions up to the amount of the income and gains arising from
a farm or farms in any taxable year, plus the first $30,000 of
nonfarm gross income, or nonfarm taxable net income in the case
of a corporation, provided however that in any case where
nonfarm income exceeds $30,000, the maximum allowable amount of
$30,000 shall be reduced by an amount equal to the nonfarm
income in excess of $30,000 multiplied by three.
(d) [SHAREHOLDERS SEPARATE ENTITIES.] For purposes of this
subdivision, individual shareholders of an S corporation shall
be considered separate entities.
(e) [SPECIAL PERIOD OF LIMITATION WITH RESPECT TO FARM LOSS
LIMITATION CARRYBACKS.] For the purposes of sections 290.46 and
290.50, if the claim for refund relates to an overpayment
attributable to a farm loss limitation carryback under this
subdivision, in lieu of the period of limitation prescribed in
sections 290.46 and 290.50, the period of limitation shall be
that period which ends with the expiration of the 15th day of
the 46th month (or the 45th month, in the case of a corporation)
following the end of the taxable year of the farm loss which
results in the carryback. During this extended period, married
individuals who elected to file separate returns or a combined
return may change their election and file a joint return.
(f) [INTEREST ON CLAIMS.] In any case in which a taxpayer
is entitled to a refund in a carryback year due to the carryback
of a farm loss, interest shall be computed only from the end of
the taxable year in which the loss occurs.
(g) [ORDER OF APPLICATION.] The application of this
subdivision shall be made after applying any limitation to out
of state losses contained in section 290.17.
Sec. 20. Minnesota Statutes 1983 Supplement, section
290.091, is amended to read:
290.091 [MINIMUM TAX ON PREFERENCE ITEMS.]
In addition to all other taxes imposed by this chapter
there is hereby imposed, on individuals, estates, and trusts a
tax which, in the case of a resident individual, shall be equal
to 40 percent of the amount of the taxpayer's alternative
minimum tax liability for tax preference items pursuant to the
provisions of sections 55 to, 57, 58 and 443(d) of the Internal
Revenue Code of 1954 as amended through January 15 December 31,
1983. For purposes of the tax imposed by this section, the
following modifications shall be made:
(1) Capital gain as defined in section 57(a) of the
Internal Revenue Code shall not include that portion of any gain
occasioned by sale, transfer or the granting of a perpetual
easement pursuant to any eminent domain proceeding or threat
thereof as described in section 290.13, subdivision 5. This
modification shall apply to the years in which the gain or
reduction in loss is actually included in federal adjusted gross
income even though amounts received pursuant to the eminent
domain proceedings were received in prior years.
(2) In the case of a corporate taxpayer, percentage
depletion shall not be a preference item.
(3) In the case of a corporate taxpayer, the capital gain
preference item shall not include the timber preference income
defined in section 57(e)(1) of the Internal Revenue Code.
(4) The preference item of reserves for losses on bad debts
shall not include reserves allowable under section 593 of the
Internal Revenue Code, but which are not allowable under section
290.09, subdivision 6, clause (c).
(5) In the case of an individual, Alternative tax itemized
deductions shall include the amount allowable as a deduction for
the taxable year under section 164 of the Internal Revenue Code
for Minnesota income tax paid or accrued.
(6) (2) The capital gain preference item shall be reduced
where the gain would be modified because some or all of the
assets have a higher basis for Minnesota purposes than for
federal purposes.
(7) (3) In the case of a nonresident individual, or an
estate or trust, with a net operating loss that is a larger
amount for Minnesota than for federal, the capital gain
preference item shall be reduced to the extent it was reduced in
the allowance of the net operating loss.
(8) (4) Federal preference items from the business of
mining or producing iron ore and other ores which are subject to
the occupation tax and exempt from taxation under section
290.05, subdivision 1, shall not be a preference item for
Minnesota.
(5) The term "regular tax" as defined in section 55(f)(2)
of the Internal Revenue Code shall be increased by the amount of
the credit allowable under section 38 of the Internal Revenue
Code and it shall be computed before the limitation on tax
provided in section 1301 of the Internal Revenue Code.
(6) Federal preference items which arise from a farm shall
not be a preference item to the extent they exceed the loss
allowed under section 290.09, subdivision 29, other than
interest and taxes.
(9) In the case of a corporate taxpayer, amortization of
certified pollution control facilities, shall not be a
preference item.
In the case of a resident individual, having preference
items which could not be taken to reduce income from sources
outside the state pursuant to section 290.17, subdivision 1, or
any other taxpayer who is not a full year resident individual,
or who is an estate or trust the tax shall equal 40 percent of
that federal liability, multiplied by a fraction the numerator
of which is the amount of the taxpayer's preference item 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 preference item income for federal purposes.
The tax benefit rule contained in section 58(h) of the
Internal Revenue Code is applied to the Minnesota minimum tax
only to the extent that it determines if there is a federal
minimum tax. No separate tax benefit rule is allowable for the
Minnesota minimum tax.
For property placed in service after December 31, 1980, and
in a taxable year beginning before January 1, 1983, the
preference items contained in section 57 (a)(12) of the Internal
Revenue Code of 1954, as amended through January 15 December 31,
1983, shall not apply.
Sec. 21. Minnesota Statutes 1982, section 290.095,
subdivision 11, is amended to read:
Subd. 11. [CARRYBACK OR CARRYOVER ADJUSTMENTS.] (a) For
individuals the amount of a net operating loss that may be
carried back or carried over shall be the same dollar amount
allowable in the determination of federal adjusted gross
income. For estates and trusts the amount of a net operating
loss that may be carried back or carried over shall be the same
dollar amount allowable in the determination of federal taxable
income.
(b) The following adjustments to the amount of the net
operating loss that may be carried back or carried over must be
made for:
(1) Nonassignable income or losses as required by section
290.17, subdivision 2.
(2) Losses which constitute tax preference items as
required in section 290.17, subdivision 1.
(3) Modifications required because of the restrictions on
farm losses as provided in section 290.09, subdivision 29.
(4) (3) Adjustments to the determination of federal
adjusted gross income that must be made because of changes in
the Internal Revenue Code that have not yet been adopted by the
legislature by updating the reference to the Internal Revenue
Code contained in section 290.01, subdivision 20.
(5) (4) Modifications to income contained in federal
adjusted gross income according to the provisions of section
290.01, subdivision 20c.
(6) (5) Gains or losses which result from the sale or other
disposition of property having a higher adjusted basis for
Minnesota income tax purposes than for federal income tax
purposes subject to the limitations contained in section 290.01,
subdivision 20b, clauses (2) and (4).
(7) (6) Interest, taxes, and other expenses not allowed
under section 290.10, clause (9) or section 290.101.
(8) (7) The modification for accelerated cost recovery
system depreciation as provided in section 290.01, subdivision
28 20f.
(c) (1) The net operating loss carryback or carryover
applied as a deduction in the taxable year to which the net
operating loss is carried back or carried over shall be equal to
the net operating loss carryback or carryover applied in the
taxable year in arriving at federal adjusted gross income (or
federal taxable income for trusts and estates) subject to the
modifications contained in clause (b) and to the following
modifications:
(A) Increase the amount of carryback or carryover applied
in the taxable year by the amount of losses and interest, taxes
and other expenses not assignable or allowable to Minnesota
incurred in the taxable year.
(B) Decrease the amount of carryback or carryover applied
in the taxable year by the amount of income not assignable to
Minnesota earned in the taxable year and the amount of federal
jobs credit or WIN credit earned in the taxable year.
(C) A taxpayer who is not a resident of Minnesota during
any part of the taxable year and who has no income assignable to
Minnesota during the taxable year shall apply no net operating
loss carryback or carryover in the taxable year.
(2) The provisions of section 172(b) of the Internal
Revenue Code of 1954 as amended through December 31, 1981
(relating to carrybacks and carryovers) shall apply. The net
operating loss carryback or carryover to the next consecutive
taxable year shall be the net operating loss carryback or
carryover as calculated in clause (c) (1) less the amount
applied in the earlier taxable year(s). No additional net
operating loss carryback or carryover shall be allowed if the
entire amount has been used to offset Minnesota income in a year
earlier than was possible on the federal return. A net
operating loss carryback or carryover that was allowed to offset
federal income in a year earlier than was possible on the
Minnesota return shall still be allowed to offset Minnesota
income but only if the loss was assignable to Minnesota in the
year the loss occurred.
(d) A net operating loss shall be allowed to be carried
back or carried forward only to the extent that loss was
assignable to Minnesota in the year the loss occurred or in the
year to which the loss was carried over, whichever would allow
more of the loss to be allowed for Minnesota purposes.
(e) If a taxpayer has a net operating loss for federal
purposes and the provisions of the farm loss limitation as
provided in section 290.09, subdivision 29 apply, the
limitations applying to the farm losses that are carried back or
carried over are applied first and the net operating loss that
is carried back or carried over is limited to the excess, if
any, that the net operating loss exceeds the farm loss
limitation.
Sec. 22. Minnesota Statutes 1983 Supplement, section
290.17, subdivision 1, is amended to read:
Subdivision 1. [INCOME OF RESIDENT INDIVIDUALS.] The gross
income of individuals during the period of time when they are
residents of Minnesota shall be their gross income as defined in
section 290.01, subdivision 20, except that the amount of
otherwise deductible losses incurred in connection with income
derived from sources outside the state shall be reduced by the
sum of the taxpayer's items of tax preference as defined in
section 57, as limited by section 58(i)(7) of the Internal
Revenue Code of 1954, as amended through December 31, 1982,
which are attributable to losses incurred in connection with
sources of income outside the state.
Sec. 23. Minnesota Statutes 1982, section 290.17,
subdivision 1a, is amended to read:
Subd. 1a. [SUBSEQUENT ADJUSTMENT.] When a loss has been
reduced by the amount of tax preference items pursuant to
Minnesota Statutes 1983 Supplement, section 290.17, subdivision
1, and the taxpayer subsequently sells or otherwise disposes of
an asset in relation to which arose an item of tax preference
which caused the reduction of the loss, the taxpayer may
increase the basis of the asset by the amount of the tax
preference item that was used to reduce the loss. If the asset
is a depletable asset, the taxpayer may elect to so increase its
basis upon disposition or to reduce the amount of otherwise
taxable income subsequently produced by that asset by the amount
of the tax preference item.
Sec. 24. Minnesota Statutes 1983 Supplement, section
290.17, subdivision 2, is amended to read:
Subd. 2. [OTHER TAXPAYERS.] In the case of an individual
who is not a full year resident, this subdivision applies to
determine what income is assignable to Minnesota for purposes of
determining the numerator of the fraction used in section
290.06, subdivision 2c. In the case of taxpayers not subject to
the provisions of subdivision 1, items of gross income shall be
assigned to this state or other states or countries in
accordance with the following principles:
(1) (a) The entire income of all resident or domestic
taxpayers from compensation for labor or personal services, or
from a business consisting principally of the performance of
personal or professional services, shall be assigned to this
state, and the income of nonresident taxpayers from such sources
shall be assigned to this state if, and to the extent that, the
labor or services are performed within it; all other income from
such sources shall be treated as income from sources without
this state.
(b) In the case of an individual who is a nonresident of
Minnesota and who is an athlete or entertainer, income from
compensation for labor or personal services performed within
this state shall be determined in the following manner.
(i) The amount of income to be assigned to Minnesota for an
individual who is a nonresident salaried athletic team employee
shall be determined by using a fraction in which the denominator
contains the total number of days in which the individual is
under a duty to perform for the employer, and the numerator is
the total number of those days spent in Minnesota. In order to
eliminate the need to file state or provincial income tax
returns in several states or provinces, Minnesota will exclude
from income any income assigned to Minnesota under the
provisions of this clause for a nonresident athlete who is
employed by an athletic team whose operations are not based in
this state if the state or province in which the athletic team
is based provides a similar income exclusion. If the state or
province in which the athletic team's operations are based does
not have an income tax on an individual's personal service
income, it will be deemed that that state or province has a
similar income exclusion. As used in the preceding sentence,
the term "province" means a province of Canada.
(ii) The amount of income to be assigned to Minnesota for
an individual who is a nonresident, and who is an athlete not
listed in clause (i), or who is an entertainer, for that
person's athletic or entertainment performance in Minnesota
shall be determined by assigning to this state all income from
performances or athletic contests in this state.
(2) Income from the operation of a farm shall be assigned
to this state if the farm is located within this state and to
other states only if the farm is not located in this state.
Income from winnings on Minnesota pari-mutuel betting tickets
shall be assigned to this state. Income and gains received from
tangible property not employed in the business of the recipient
of such income or gains, and from tangible property employed in
the business of such recipient if such business consists
principally of the holding of such property and the collection
of the income and gains therefrom, shall be assigned to this
state if such property has a situs within it, and to other
states only if it has no situs in this state. Income or gains
from intangible personal property not employed in the business
of the recipient of such income or gains, and from intangible
personal property employed in the business of such recipient if
such business consists principally of the holding of such
property and the collection of the income and gains therefrom,
wherever held, whether in trust, or otherwise, shall be assigned
to this state if the recipient thereof is domiciled within this
state or is a resident trust or estate.
(3) Income derived from carrying on a trade or business,
including in the case of a business owned by natural persons the
income imputable to the owner for his services and the use of
his property therein, shall be assigned to this state if the
trade or business is conducted wholly within this state, and to
other states if conducted wholly without this state. This
provision shall not apply to business income subject to the
provisions of clause (1);
(4) When a trade or business is carried on partly within
and partly without this state, the entire income derived from
such trade or business, including income from intangible
property employed in such business and including, in the case of
a business owned by natural persons, the income imputable to the
owner for his services and the use of his property therein,
shall be governed, except as otherwise provided in sections
290.35 and 290.36, by the provisions of section 290.19,
notwithstanding any provisions of this section to the contrary.
This shall not apply to business income subject to the
provisions of clause (1), nor shall it apply to income from the
operation of a farm which is subject to the provisions of clause
(2). For the purposes of this clause, a trade or business
located in Minnesota is carried on partly within and partly
without this state if tangible personal property is sold by such
trade or business and delivered or shipped to a purchaser
located outside the state of Minnesota.
If the trade or business carried on wholly or partly in
Minnesota is part of a unitary business, the entire income of
that unitary business shall be subject to apportionment under
section 290.19 except for business income subject to the
provisions of clause (1) and farm income subject to the
provisions of clause (2). The term "unitary business" shall
mean business activities or operations which are of mutual
benefit, dependent upon, or contributory to one another,
individually or as a group. Unity shall be presumed whenever
there is unity of ownership, operation, and use, evidenced by
centralized management or executive force, centralized
purchasing, advertising, accounting, or other controlled
interaction but the absence of these centralized activities will
not necessarily evidence a nonunitary business. Unity of
ownership will not be deemed to exist when a corporation is
involved unless that corporation is a member of a group of two
or more corporations more than 50 percent of the voting stock of
each member of the group is directly or indirectly owned by a
common owner or by common owners, either corporate or
noncorporate, or by one or more of the member corporations of
the group.
The entire income of a unitary business shall be subject to
apportionment as provided in section 290.19. None of the income
of a unitary business shall be considered as derived from any
particular source and none shall be allocated to any particular
place except as provided by the applicable apportionment formula.
In determining whether or not intangible property is
employed in a unitary business carried on partly within and
partly without this state so that income derived therefrom is
subject to apportionment under section 290.19 the following
rules and guidelines shall apply.
(a) Intangible property is employed in a business if the
business entity owning intangible property holds it as a means
of furthering the business operation of which a part is located
within the territorial confines of this state.
(b) Where a business operation conducted in Minnesota, is
owned by a business entity which carries on business activity
outside of the state different in kind from that conducted
within this state, and such other business is conducted entirely
outside the state, it will be presumed that the two business
operations are unitary in nature, interrelated, connected and
interdependent unless it can be shown to the contrary.
(5) For purposes of this section, amounts received by a
nonresident from the United States, its agencies or
instrumentalities, the Federal Reserve Bank, the state of
Minnesota or any of its political or governmental subdivisions,
or a Minnesota volunteer fireman's relief association, by way of
payment as a pension, public employee retirement benefit, or any
combination thereof, or as a retirement or survivor's benefit
made from a plan qualifying under section 401, 403, 404, 405,
408, 409 or 409A of the Internal Revenue Code of 1954, as
amended through December 31, 1981, are not considered income
derived from carrying on a trade or business or from performing
personal or professional services in Minnesota, and are not
taxable under this chapter.
(6) All other items of gross income shall be assigned to
the taxpayer's domicile.
Sec. 25. Minnesota Statutes 1983 Supplement, section
290.18, subdivision 1, is amended to read:
Subdivision 1. [TAXABLE NET INCOME.] (a) For resident
individuals, taxable net income shall be the same as net income.
(b) For all other taxpayers, the taxable net income shall,
except insofar as section 290.19 is applicable, be computed by
deducting from the gross income assignable to this state under
section 290.17 deductions of the kind permitted by sections
290.089, section 290.09, and section 62 of the Internal Revenue
Code of 1954, as amended through March 12, 1983, in accordance
with the following provisions:
(1) Such deductions shall be allowed to the extent that
they are connected with and allocable against the production or
receipt of such gross income assignable to this state;
(2) That proportion of such deductions, so far as not
connected with and allocable against the production or receipt
of such gross income assignable to this state and so far as not
connected with and allocable against the production or receipt
of gross income assignable to other states or countries and so
far as not entering into the computation of the net income
assignable to this state under section 290.19, shall be allowed
which the taxpayer's gross income from sources within this
state, as determined under section 290.17, subdivision 2,
clauses (1), (2), (3), and (6), bears to his gross income from
all sources, including that entering into the computations
provided for by section 290.19; provided that taxes of the kind
deductible under section 290.09, subdivision 4, shall, so far as
within the description of deductions deductible under this
clause, be deductible in their entirety if paid to the state of
Minnesota, or any of its subdivisions authorized to impose such
taxes, and thereupon be excluded in making the computation of
deductions, as in this clause provided.
Sec. 26. Minnesota Statutes 1982, section 290.311,
subdivision 1, is amended to read:
Subdivision 1. [RESIDENT PARTNERS.] (a) Partner's
modifications. In determining gross income and Minnesota
taxable income of a resident partner, any modification described
in section 290.01, subdivisions 20 to 20f, which relates to an
item of partnership income, gain, loss or deduction shall be
made in accordance with the partner's distributive share, for
federal income tax purposes, of the item to which the
modification relates.
(b) Character of items. Each item of partnership income,
gain, loss, or deduction shall have the same character for a
partner under this section which it has for federal income tax
purposes. Where an item is not characterized for federal income
tax purposes, it shall have the same character for a partner as
if realized directly from the source from which realized by the
partnership, or incurred in the same manner as incurred by the
partnership.
(c) Minnesota tax avoidance or evasion. Where a partner's
distributive share of an item of partnership income, gain, loss
or deduction is determined for federal income tax purposes by
special provision in the partnership agreement with respect to
such item, and where the effect of such provision is the
avoidance or evasion of tax under this section, the partner's
distributive share of such item, and any modifications required
with respect thereto shall be determined as if the partnership
agreement made no special provision with respect to such item.
Sec. 27. Minnesota Statutes 1983 Supplement, section
290.37, subdivision 1, is amended to read:
Subdivision 1. [PERSONS MAKING RETURNS.] (a) The
commissioner of revenue shall annually determine the gross
income levels at which individuals, trusts, and estates shall be
required to file a return for each taxable year. An individual
who is not a Minnesota resident for any part of the year is not
required to file a Minnesota income tax return if the
individual's Minnesota gross income computed under section
290.06, subdivision 2c, clause (c)(1) is less than the filing
requirements for an individual who is a full year resident of
Minnesota with the same marital status and number of personal
credits.
The decedent's final income tax return, and all other
income tax returns for prior years where the decedent had gross
income in excess of the minimum amount at which an individual is
required to file and did not file, shall be filed by his or her
personal representative, if any. If there is no personal
representative, the return or returns shall be filed by the
transferees as defined in section 290.29, subdivision 3, who
receive any property of the decedent.
The trustee or other fiduciary of property held in trust
shall file a return with respect to the taxable net income of
such trust if that exceeds an amount on which a tax at the rates
herein provided would exceed the specific credits allowed, or if
the gross income of such trust exceeds $750, determined by the
commissioner if in either case such trust belongs to the class
of taxable persons.
Every corporation shall file a return. The return in this
case shall be signed by an officer of the corporation.
The receivers, trustees in bankruptcy, or assignees
operating the business or property of a taxpayer shall file a
return with respect to the taxable net income of such taxpayer
if that exceeds an amount on which a tax at the rates herein
provided would exceed the specific credits allowed.
(b) Such return shall (1) be verified or contain a written
declaration that it is made under the penalties of criminal
liability for willfully making a false return, and (2) shall
contain a confession of judgment for the amount of the tax shown
due thereon to the extent not timely paid.
(c) For purposes of this subdivision the term "gross income"
shall mean gross income as defined in section 61 of the Internal
Revenue Code of 1954, as amended through December 31, 1981,
modified and adjusted in accordance with the provisions of
sections 290.01, subdivision 20b, clauses (1), (6), and (10),
290.08, and 290.17.
Sec. 28. Minnesota Statutes 1983 Supplement, section
290.431, is amended to read:
290.431 [NONGAME WILDLIFE CHECKOFF.]
Every individual who files an income tax return or property
tax refund claim form may designate on their original return
that $1 or more shall be added to the tax or deducted from the
refund that would otherwise be payable by or to that individual
and paid into an account to be established for the management of
nongame wildlife. The commissioner of revenue shall, on the
first page of the income tax return and the property tax refund
claim form, notify filers of their right to designate that a
portion of their tax or refund shall be paid into the nongame
wildlife management account. The sum of the amounts so
designated to be paid shall be credited to the nongame wildlife
management account for use by the nongame section of the
division of wildlife in the department of natural resources.
The commissioner of natural resources shall submit a work
program for each fiscal year and semi-annual progress reports to
the legislative commission on Minnesota resources in the form
determined by the commission. None of the money provided in
this section may be expended unless the commission has approved
the work program.
The state pledges and agrees with all contributors to the
nongame wildlife management account to use the funds contributed
solely for the management of nongame wildlife projects and
further agrees that it will not impose additional conditions or
restrictions that will limit or otherwise restrict the ability
of the commissioner of natural resources to use the available
funds for the most efficient and effective management of nongame
wildlife.
Sec. 29. Minnesota Statutes 1983 Supplement, section
290.45, subdivision 1, is amended to read:
Subdivision 1. [DATE DUE, INSTALLMENTS.] The tax imposed
by this chapter shall be paid to the commissioner of revenue at
the time fixed for filing the return on which the tax is based,
except that at the election of estates and trusts the balance of
tax due after applying any tax credit may be paid in two equal
installments.
The first shall be paid at the time fixed for filing the
return, and the second on or before six months thereafter.
If any installment is not paid on or before the date fixed
for its payment the whole amount of the tax unpaid shall become
due and payable. They shall be paid to the commissioner or to
the local officers designated by the commissioner with whom the
return is filed as hereinbefore provided.
Sec. 30. Minnesota Statutes 1983 Supplement, section
290.46, is amended to read:
290.46 [EXAMINATION OF RETURNS; ASSESSMENTS, REFUNDS.]
The commissioner shall, as soon as practicable after the
return is filed, examine the same and make any investigation or
examination of the taxpayer's records and accounts that he may
deem necessary for determining the correctness of the return.
The tax computed by him on the basis of such examination and
investigation shall be the tax to be paid by such taxpayer. If
the tax found due shall be greater than the amount reported as
due on the taxpayer's return, the commissioner shall assess a
tax in the amount of such excess and the whole amount of such
excess shall be paid to the commissioner within 60 days after
notice of the amount and demand for its payment shall have been
mailed to the taxpayer by the commissioner. If the
understatement of the tax on the return was false and fraudulent
with intent to evade the tax, the installments of the tax shown
by the taxpayer on his return which have not yet been paid shall
be paid to the commissioner within 60 days after notice of the
amount thereof and demand for payment shall have been mailed to
the taxpayer by the commissioner. If the amount of the tax
found due by the commissioner shall be less than that reported
as due on the taxpayer's return, the excess shall be refunded to
the taxpayer in the manner provided by section 290.50 (except
that no demand therefor shall be necessary), if he has already
paid the whole of such tax, or credited against any unpaid
installment thereof; provided, that no refundment shall be made
except as provided in section 290.50.
If the commissioner examines returns of a taxpayer for more
than one year, he may issue one order covering the several years
under consideration reflecting the aggregate refund or
additional tax due.
The notices and demands provided for by sections 290.46 to
290.48 shall be in such form as the commissioner may determine
(including a statement) and shall contain a brief explanation of
the computation of the tax and shall be sent by mail to the
taxpayer at the address given in his return, or to his last
known address.
In cases where there has been an overpayment of a
self-assessed liability as shown on the return filed by the
taxpayer, the commissioner may refund such overpayment to the
taxpayer and no demand therefor shall be necessary; further,
written findings by the commissioner, notice by mail to the
taxpayer and certificate for refundment by the commissioner
shall not be necessary and the provisions of section 270.10, in
such case, shall not be applicable.
In the case of an individual, estate or trust, the
commissioner may audit and adjust the taxpayer's computation of
federal adjusted gross income (or federal taxable income for
estates or trusts) to make it properly conform with the
provisions of section 290.01, subdivision 20, or the items of
federal tax preferences or federal credit amounts to make them
properly conform with the provisions of this chapter. In the
case of an individual, the commissioner may audit and adjust the
taxpayer's computation of itemized deductions to make them
properly conform with the provisions of section 290.089.
Sec. 31. Minnesota Statutes 1982, section 290.931,
subdivision 1, is amended to read:
Subdivision 1. [REQUIREMENTS OF DECLARATION.] Every
corporation subject to taxation under this chapter (excluding
sections 290.091 and section 290.92) shall make a declaration of
estimated tax for the taxable year if its tax liability so
computed can reasonably be expected to exceed $1,000.
Sec. 32. Minnesota Statutes 1983 Supplement, section
290A.03, subdivision 3, is amended to read:
Subd. 3. [INCOME.] (1) "Income" means the sum of the
following:
(a) federal adjusted gross income as defined in the
Internal Revenue Code of 1954 as amended through March 12, 1982;
and
(b) the sum of the following amounts to the extent not
included in clause (a):
(i) additions to federal adjusted gross income as provided
in Minnesota Statutes, section 290.01, subdivision 20a, clauses
(1), (2), (6), (11), (12) (4), (9), (10), and (16) (14);
(ii) all nontaxable income;
(iii) recognized net long term capital gains;
(iv) dividends and interest excluded from federal adjusted
gross income under sections 116 or 128 of the Internal Revenue
Code of 1954;
(v) cash public assistance and relief;
(vi) any pension or annuity (including railroad retirement
benefits, all payments received under the federal social
security act, supplemental security income, and veterans
benefits), which was not exclusively funded by the claimant or
spouse, or which was funded exclusively by the claimant or
spouse and which funding payments were excluded from federal
adjusted gross income in the years when the payments were made;
(vii) nontaxable interest received from the state or
federal government or any instrumentality or political
subdivision thereof;
(viii) workers' compensation;
(ix) unemployment benefits;
(x) nontaxable strike benefits; and
(xi) the gross amounts of payments received in the nature
of disability income or sick pay as a result of accident,
sickness, or other disability, whether funded through insurance
or otherwise. In the case of an individual who files an income
tax return on a fiscal year basis, the term "federal adjusted
gross income" shall mean federal adjusted gross income reflected
in the fiscal year ending in the calendar year. Federal
adjusted gross income shall not be reduced by the amount of a
net operating loss carryback.
(2) "Income" does not include
(a) amounts excluded pursuant to the Internal Revenue Code,
Sections 101(a), 102, 117, and 121;
(b) amounts of any pension or annuity which was exclusively
funded by the claimant or spouse and which funding payments were
not excluded from federal adjusted gross income in the years
when the payments were made;
(c) surplus food or other relief in kind supplied by a
governmental agency;
(d) relief granted under sections 290A.01 to 290A.20;
(e) child support payments received under a temporary or
final decree of dissolution or legal separation; or
(f) federal adjusted gross income shall be reduced by wage
or salary expense, or expense of work incentive programs which
are is not allowed as a deduction under provisions of section
280C of the Internal Revenue Code of 1954; or
(g) federal adjusted gross income shall be reduced by the
amount of the penalty on the early withdrawal of an all-savers
certificate as provided in section 128(e) of the Internal
Revenue Code of 1954.
Sec. 33. Minnesota Statutes 1983 Supplement, section
290A.03, subdivision 12, is amended to read:
Subd. 12. [GROSS RENT.] "Gross rent" means rental paid
solely for the right of occupancy, at arms-length, of a
homestead, exclusive of charges for any utilities, medical
services, furniture, or furnishings furnished by the landlord as
a part of the rental agreement, whether expressly set out in the
rental agreement or not. If the landlord and tenant have not
dealt with each other at arms-length and the commissioner
determines that the gross rent charged was excessive, he may
adjust the gross rent to a reasonable amount for purposes of
sections 290A.01 to 290A.20.
If the landlord does not supply the charges for any
utilities, furniture, or furnishings furnished by him, or if the
charges appear to be incorrect the commissioner may apply a
percentage determined from samples of similar gross rents paid
solely for the right of occupancy.
Any amount paid by a claimant residing in property assessed
pursuant to section 273.133 for occupancy in that property shall
be excluded from gross rent for purposes of this chapter.
However, property taxes imputed to the homestead of the claimant
or the dwelling unit occupied by the claimant that qualifies for
homestead treatment pursuant to section 273.133 shall be
included within the term "property taxes payable" as defined in
subdivision 13, notwithstanding the fact that ownership is not
in the name of the claimant.
Sec. 34. Minnesota Statutes 1983 Supplement, section
296.18, subdivision 1, is amended to read:
Subdivision 1. [GASOLINE OR SPECIAL FUEL USED IN OTHER
THAN MOTOR VEHICLES.] Any person who shall buy and use gasoline
for any a qualifying purpose other than use in motor vehicles,
snowmobiles, or motorboats, or special fuel for any a qualifying
purpose other than use in licensed motor vehicles, and who shall
have paid the excise tax directly or indirectly through the
amount of the tax being included in the price of the gasoline or
special fuel, or otherwise, shall be eligible to receive the
credit provided in section 290.06, subdivision 13, in the amount
of the tax paid by him. The taxpayer claiming this credit shall
include with his income tax return information including the
total amount of the gasoline so purchased and used by him other
than in motor vehicles, or special fuel so purchased and used by
him other than in licensed motor vehicles, and shall state when
and for what purpose it was used. The words "gasoline" or
"special fuel" as used in this subdivision do not include
aviation gasoline or special fuel for aircraft. The words
"qualifying purpose" have the same meaning given them in section
290.06, subdivision 13.
Sec. 35. [CHILD CARE CREDIT TABLE; LEGISLATIVE APPROVAL.]
The child care credit table used by the commissioner of
revenue in the 1983 individual income tax instructions to limit
the maximum amount of the child care credit is hereby approved
by the legislature as a proper interpretation of the schedule
provided in Minnesota Statutes 1983 Supplement, section 290.067,
subdivision 2.
Sec. 36. [REPEALER.]
Minnesota Statutes 1982, sections 290.011; and 290.311,
subdivision 2; are repealed.
Sec. 37. [EFFECTIVE DATE.]
Sections 1, 8, and 35 are effective the day after final
enactment. Sections 2 to 7, 9 to 18, 21 to 31, 34, and 36 are
effective for taxable years beginning after December 31, 1983.
Section 19 is effective for taxable years beginning after
December 31, 1983, except that the amendment in clause (a),
relating to horses, is effective for taxable years beginning
after December 31, 1982, and is intended to confirm the intent
of the legislature that for the purposes of section 290.09,
subdivision 29, the word "livestock" always has included
horses. Section 20 is effective for taxable years beginning
after December 31, 1983, except that the provision adjusting the
regular tax is effective for taxable years beginning after
December 31, 1982. Section 32 is effective for claims based on
rent paid in 1984 and thereafter and for property taxes payable
in 1985 and thereafter. Section 33 is effective for claims
based on rent paid in 1985 and thereafter.
ARTICLE 3
ADMINISTRATIVE
Section 1. Minnesota Statutes 1982, section 171.31, is
amended to read:
171.31 [PERSONS RECEIVING BENEFITS FOR BLINDNESS, DISCOVERY
OF INFORMATION.]
The commissioner of public safety, in order to promote
highway safety by restricting driving privileges to those
persons meeting accepted visual acuity standards, may request
and shall receive information concerning the identity and
whereabouts of any person who has applied for or received any
type of tax, welfare, licensing or other benefits or exemptions
for the blind or nearly blind, from the records of all
departments, boards, bureaus or other agencies of this state
except the department of revenue, and they shall provide such
information notwithstanding the provisions of section 268.12,
subdivision 12, section 290.61, or any other existing law or
regulation to the contrary, except that section 290.61 prohibits
disclosure of information by the commissioner of revenue.
Sec. 2. Minnesota Statutes 1983 Supplement, section
176.186, is amended to read:
176.186 [RECORDS FROM OTHER STATE AGENCIES.]
Notwithstanding any other state law to the contrary except
section 290.61, the commissioner may obtain from the department
of revenue, department of economic security, and office of the
secretary of state, or any other state agency, upon request,
names or lists of employers doing business in the state. This
information shall be treated by the commissioner in the manner
provided by chapter 13 and shall be used only for insurance
verification by the commissioner.
Sec. 3. Minnesota Statutes 1982, section 271.19, is
amended to read:
271.19 [COSTS AND DISBURSEMENTS.]
Upon the determination of any appeal under this chapter
before the tax court, or of any review hereunder by the supreme
court, the costs and disbursements may be taxed and allowed in
favor of the prevailing party and against the losing party as in
civil actions. In any case where a person liable for a tax or
other obligation has lost an appeal or review instituted by him,
and the tax court or court shall determine that he instituted
the same merely for the purposes of delay, or that the
taxpayer's position in the proceedings is frivolous, additional
costs, commensurate with the expense incurred and services
performed by the agencies of the state in connection with the
appeal, but not exceeding $500 $5,000 in any case, may be
allowed against him, in the discretion of the tax court or
court. Costs and disbursements allowed against any such person
shall be added to the tax or other obligation determined to be
due, and shall be payable therewith. Costs and disbursements
allowed against the state or other public agencies shall be paid
out of funds received from taxes or other obligations of the
kind involved in the proceeding, or other funds of the agency
concerned appropriated and available therefor. Witnesses in
proceedings under this chapter shall receive like fees as in the
district court, to be paid in the first instance by the parties
by whom the witnesses were called, and to be taxed and allowed
as herein provided.
Sec. 4. Minnesota Statutes 1983 Supplement, section
290.174, is amended to read:
290.174 [INTERSTATE AUDITS.]
Article VIII of the multistate tax compact relating to
interstate audits shall be in force in and with respect to the
state of Minnesota. For purposes of sections 290.61 and
297A.43, the Multistate Tax Commission will be considered to be
a state for purposes of auditing corporate sales, excise, and
income tax returns.
Sec. 5. Minnesota Statutes 1983 Supplement, section
290.175, is amended to read:
290.175 [OPTIONAL APPORTIONMENT.]
Notwithstanding the provisions of section 290.171, the
taxpayer may elect to apportion his income to Minnesota pursuant
to this chapter, without regard to section 290.171, article IV.
The provisions of section 290.171, article IV, are effective for
taxable years beginning after December 31, 1982 and allow
combined reporting only to the extent allowed under section
290.34, subdivision 2.
Sec. 6. Minnesota Statutes 1982, section 290.41,
subdivision 2, is amended to read:
Subd. 2. [BY PERSONS, CORPORATIONS, COOPERATIVES,
GOVERNMENTAL ENTITIES OR SCHOOL DISTRICTS.] Every person,
corporation, or cooperative, the state of Minnesota and its
political subdivisions, and every city, county and school
district in Minnesota, making payments in the regular course of
a trade or business during the taxable year to any person or
corporation of $600 or more on account of rents or royalties, or
of $10 or more on account of interest, or $10 or more on account
of dividends or patronage dividends, or $600 or more on account
of either wages, salaries, commissions, fees, prizes, awards,
pensions, annuities, or any other fixed or determinable gains,
profits or income, not otherwise reportable under section
290.92, subdivision 7, or on account of earnings of $10 or more
distributed to its members by savings, building and loan
associations or credit unions chartered under the laws of this
state or the United States, (a) shall make a return (except in
cases where a valid agreement to participate in the combined
federal and state information reporting system has been entered
into, and such return is therefore filed only with the
commissioner of internal revenue pursuant to the applicable
filing and informational reporting requirements of the Internal
Revenue Code of 1954 as amended through December 31, 1981) in
respect to such payments in excess of the amounts specified,
giving the names and addresses of the persons to whom such
payments were made, the amounts paid to each, and (b) shall make
a return in respect to the total number of such payments and
total amount of such payments, for each category of income
specified, which were in excess of the amounts specified. This
subdivision shall not apply to the payment of interest or
dividends to a person who was a nonresident of Minnesota for the
entire year.
Upon request from the commissioner, any public pension plan
as defined in section 356.61 in which the employer picks up the
employee contributions under section 356.62 shall furnish the
commissioner, on magnetic media to the extent possible, with the
name, address, and social security number of each employee who
participated in the plan during that calendar year for which
picked up contributions were made.
Sec. 7. Minnesota Statutes 1982, section 290.61, is
amended to read:
290.61 [PUBLICITY OF RETURNS, INFORMATION.]
It shall be unlawful for the commissioner or any other
public official or employee to divulge or otherwise make known
in any manner any particulars set forth or disclosed in any
report or return required by this chapter, or any information
concerning, the taxpayer's affairs acquired from his or its
records, officers, or employees while examining or auditing any
taxpayer's liability for taxes imposed hereunder, except in
connection with a proceeding involving taxes due under this
chapter from the taxpayer making such return or to comply with
the provisions of sections 256.978, 268.12, subdivision 12,
270A.11, 273.1314, subdivision 16, 290.612 and 302A.821. The
commissioner may furnish a copy of any taxpayer's return,
including audit documents and information, to any official of
the United States or of any state having duties to perform in
respect to the assessment or collection of any tax imposed upon
or measured by income, if such taxpayer is required by the laws
of the United States or of such state to make a return therein.
The commissioner may disclose information from withholding tax
returns received from the taxpayer to the Minnesota department
of economic security for purposes of auditing unemployment tax.
Prior to the release of any information to any official of the
United States or any other state or the department of economic
security under the provisions of this section, the person to
whom the information is to be released shall sign an agreement
which provides that he will protect the confidentiality of the
returns and information revealed thereby to the extent that it
is protected under the laws of the state of Minnesota. The
commissioner and all other public officials and employees shall
keep and maintain the same secrecy in respect to any information
furnished by any department, commission, or official of the
United States or of any other state in respect to the income of
any person as is required by this section in respect to
information concerning the affairs of taxpayers under this
chapter. Nothing herein contained shall be construed to
prohibit the commissioner from publishing statistics so
classified as not to disclose the identity of particular returns
or reports and the items thereof. Upon request of a majority of
the members of the senate tax committee or of the house tax
committee or the tax study commission, the commissioner shall
furnish abstracted financial information to those committees for
research purposes from returns or reports filed pursuant to this
chapter, provided that he shall not disclose the name, address,
social security number, business identification number or any
other item of information associated with any return or report
which the commissioner believes is likely to identify the
taxpayer. The commissioner shall not furnish the actual return,
or a portion thereof, or a reproduction or copy of any return or
portion thereof. "Abstracted financial information" means only
the dollar amounts set forth on each line on the form including
the filing status.
Any person violating the provisions of this section shall
be guilty of a gross misdemeanor.
In order to locate the named payee on state warrants issued
pursuant to this chapter or chapter 290A and undeliverable by
the United States postal service, the commissioner may publish
in any English language newspaper of general circulation in this
state or make available to radio or television stations a list
of the name and last known address of the payee as shown on the
reports or returns filed with the commissioner. The
commissioner may exclude the names of payees whose refunds are
in an amount which is less than a minimal amount to be
determined by the commissioner. The published list shall not
contain any particulars set forth on any report or return. The
publication or announcement shall include instructions on
claiming the warrants.
An employee of the department of revenue may, in connection
with his official duties relating to any audit, collection
activity, or civil or criminal tax investigation or any other
offense under this chapter, disclose return information to the
extent that such disclosure is necessary in obtaining
information, which is not not otherwise reasonably available,
with respect to the correct determination of tax, liability for
tax, or the amount to be collected or with respect to the
enforcement of any other provision of this chapter.
In order to facilitate processing of returns and payments
of taxes required by this chapter, or to facilitate the
development, implementation, and use of computer programs and
automated procedures for purposes of administering this chapter
or chapter 290A, the commissioner may contract with outside
vendors and may disclose private and nonpublic data to the
vendor. The data disclosed will be administered by the vendor
consistent with this section, and the vendor must agree to
subject himself and his employees to the civil and criminal
penalties provided by law for unlawful disclosure.
Sec. 8. Minnesota Statutes 1983 Supplement, section
290A.03, subdivision 11, is amended to read:
Subd. 11. [RENT CONSTITUTING PROPERTY TAXES.] "Rent
constituting property taxes" means the amount of gross rent
actually paid in cash, or its equivalent, which is attributable
(a) to the property tax paid on the unit or (b) to the amount
paid in lieu of property taxes, in any calendar year by a
claimant solely for the right of occupancy of his Minnesota
homestead in the calendar year, and which rent constitutes the
basis, in the succeeding calendar year of a claim for relief
under sections 290A.01 to 290A.20 by the claimant. The amount
of rent attributable to property taxes paid or payments in lieu
made on the unit shall be determined by multiplying the net tax
on the property where the unit is located by a fraction, the
numerator of which is the gross rent paid by the claimant for
the calendar year for the unit and the denominator of which is
the gross rent paid for the calendar year for the property in
which the unit is located. In no case may the rent constituting
property taxes exceed 50 percent of the gross rent paid by the
claimant during that calendar year. In the case of a claimant
who resides in a unit for which a rent subsidy is paid pursuant
to section 8 of the United States Housing Act of 1937, as
amended, or under another state or federal program providing
rent supplements or reduced rent for low and moderate income
families, 20 percent of gross rent actually paid in cash or its
equivalent shall be the claimant's "rent constituting property
taxes paid."
Sec. 9. Minnesota Statutes 1982, section 290A.07,
subdivision 2a, is amended to read:
Subd. 2a. A claimant who is a renter shall receive full
payment after August 1 and prior to August 15 or 60 days after
receipt of the application, whichever is later. Interest shall
be added at six percent per annum from August 15 or 60 days
after receipt of the application whichever is later.
Sec. 10. Minnesota Statutes 1983 Supplement, section
290A.07, subdivision 3, is amended to read:
Subd. 3. Any claimant not included in subdivision 2a shall
receive full payment after August 31 September 15 and prior to
September 15 30. Interest shall be added at six percent per
annum from September 15 30 or 60 days after receipt of the
application if the application is filed after August 31,
whichever is later. Interest will be computed until the date
the claim is paid.
Sec. 11. [EFFECTIVE DATE.]
Sections 1, 2, 3, 4, 5, 6, and 7 are effective the day
after final enactment. Sections 8, 9, and 10 are effective for
claims based on rent paid in 1983 and thereafter and property
taxes payable in 1984 and thereafter.
ARTICLE 4
TECHNICAL
Section 1. Minnesota Statutes 1983 Supplement, section
290.032, subdivision 2, is amended to read:
Subd. 2. The amount of tax imposed by subdivision 1 shall
be computed in the same way as the tax imposed under section
402(e) of the Internal Revenue Code of 1954, as amended through
December 31, 1981, except that the initial separate tax shall be
an amount equal to ten times the tax which would be imposed by
section 290.03 if the recipient was an individual referred to in
such section and the taxable net income, excluding the credits
allowed in section 290.06, subdivision 3f, was an amount equal
to one-tenth of the excess of
(i) the total taxable amount of the lump sum distribution
for the year, over
(ii) the minimum distribution allowance, and except that
references in section 402(e) of the Internal Revenue Code of
1954, as amended through December 31, 1981, to paragraph (1)(A)
thereof shall instead be references to subdivision 1 of this
section.
The amount of any distribution from a qualified pension or
profit sharing plan which is received as a lump sum distribution
shall be reduced to the extent of any contribution:
(1) not previously allowed as a deduction by reason of a
change in federal law which was not adopted by Minnesota for a
taxable year beginning in 1974 or thereafter; or
(2) designated as an employee contribution but which the
employing unit picks up and which is treated as an employer
contribution and which was taxed on the Minnesota return but not
the federal return in the year the contribution was made.
Sec. 2. Minnesota Statutes 1983 Supplement, section
290.077, subdivision 4, is amended to read:
Subd. 4. [DEDUCTION FOR FEDERAL ESTATE TAX AND MINNESOTA
INHERITANCE OR ESTATE TAX.] (1) [ALLOWANCE OF DEDUCTION; FEDERAL
ESTATE TAX.] A person who includes an amount in gross income
under this section, shall be allowed a deduction for the federal
estate tax computed in the same manner and in accordance with
the method as provided in section 691(c)(1), (2), and (4) of the
Internal Revenue Code of 1954, as amended through December 31,
1982.
(2) [ALLOWANCE OF DEDUCTION; MINNESOTA INHERITANCE OR
ESTATE TAX.] (A) [GENERAL RULE.] A person who includes an amount
in gross income under this section, shall be allowed, for the
same taxable year, as a deduction an amount which bears the same
ratio to the inheritance or estate tax attributable to the net
value for inheritance or estate tax purposes of all the items
described in subdivision 1, as the value for inheritance or
estate tax purposes of the items of gross income or portions
thereof in respect of which such person included the amount in
gross income (or the amount included in gross income, whichever
is lower) bears to the value for inheritance or estate tax
purposes of all the items described in subdivision 1.
(B) [ESTATES AND TRUSTS.] In the case of an estate or
trust, the amount allowed as a deduction under subparagraph (A)
of this subdivision shall be computed by excluding from the
gross income of the estate or trust the portion (if any) of the
items described in subdivision 1, which is properly paid,
credited, or to be distributed to the beneficiaries during the
taxable year.
(3) [METHOD OF COMPUTING DEDUCTION.] For purposes of
paragraph (2) of this subdivision
(A) (i) The term "inheritance tax" means the tax imposed by
Minnesota on the estates of decedents dying before January 1,
1980, reduced by the credits against such tax; (ii) The term
"estate tax" means the tax imposed by Minnesota on the estates
of decedents dying on or after January 1, 1980, reduced by the
credits against the tax; (iii) The terms "inheritance tax" or
"estate tax" also include the tax imposed by other states on the
estates of decedents reduced by the credits against the tax.
(B) The net value for inheritance or estate tax purposes of
all the items described in subdivision 1, shall be the excess of
the value for inheritance or estate tax purposes of all the
items described in subdivision 1, over the deductions from the
gross inheritance or gross estate in respect of claims which
represent the deductions described in subdivision 2 section
691(b) of the Internal Revenue Code of 1954, as amended through
December 31, 1983.
(C) (i) The inheritance tax attributable to such net value
shall be an amount equal to the excess of the inheritance tax
over the inheritance tax computed without including in the gross
inheritance such net value; (ii) The estate tax attributable to
such net value shall be an amount equal to the excess of the
estate tax over the estate tax computed without including in the
gross estate the net value.
(4) [LUMP SUM DISTRIBUTION ADJUSTMENT.] For purposes of
section 290.032 (other than the minimum distribution allowance),
the total taxable amount of any lump sum distribution shall be
reduced by the amount of the deduction allowable under paragraph
(1) of this subdivision which is attributable to the total
taxable amount (determined without regard to this paragraph).
Sec. 3. Minnesota Statutes 1983 Supplement, section
290.09, subdivision 5, is amended to read:
Subd. 5. [LOSSES.] (a) [GENERAL RULE.] There shall be
allowed as a deduction any loss sustained during the taxable
year and not compensated for by insurance or otherwise.
(b) [AMOUNT OF DEDUCTION.] For purposes of paragraph (a),
the basis for determining the amount of the deduction for any
loss shall be the adjusted basis provided in this chapter for
determining the loss from the sale or other disposition of
property.
(c) [WAGERING LOSSES.] Losses from wagering transactions
shall be allowed only to the extent of the gains from such
transactions. No loss from pari-mutuel betting shall be allowed
except to the extent of verified receipts and the sworn
testimony of as least one witness other than the taxpayer or his
spouse.
(d) [THEFT LOSSES.] For purposes of paragraph (a), any loss
arising from theft shall be treated as sustained during the
taxable year in which the taxpayer discovers such loss.
(e) (d) [CAPITAL LOSSES.] Losses from sales or exchanges of
capital assets shall be allowed only to the extent allowed in
section 290.16.
(f) (e) [WORTHLESS SECURITIES.] If any security which is a
capital asset becomes worthless during the taxable year, the
loss resulting therefrom shall, for purposes of this chapter, be
treated as a loss from the sale or exchange, on the last day of
the taxable year, of a capital asset.
The definitions contained in section 165(g) of the Internal
Revenue Code of 1954, as amended through January 15, 1983, shall
apply. No deduction shall be allowed for any loss sustained on
any registration-required obligation as defined in and except as
provided in section 165(j) of the Internal Revenue Code of 1954,
as amended through January 15, 1983.
(g) (f) [DISASTER LOSSES.] Notwithstanding the provisions
of (a), any loss attributable to a disaster occurring in an area
subsequently determined by the President of the United States to
warrant assistance by the Federal Government under the
provisions of the Federal Disaster Relief Act of 1974 shall be
deducted for the taxable year immediately preceding the taxable
year in which the disaster occurred. This provision shall apply
only if an election has been made under the provisions of
Section 165(i) of the Internal Revenue Code of 1954, as amended
through January 15, 1983 for federal income tax purposes. Such
deduction allowed in the preceding taxable year shall not exceed
the uncompensated amount determined on the basis of the facts
existing at the date the taxpayer claims the loss. If an
election is made, the casualty resulting in the loss will be
deemed to have occurred in the taxable year for which the
deduction is claimed.
Sec. 4. Minnesota Statutes 1983 Supplement, section
290.21, subdivision 3, is amended to read:
Subd. 3. An amount for contribution or gifts made within
the taxable year:
(a) to or for the use of the state of Minnesota, or any of
its political subdivisions for exclusively public purposes,
(b) to or for the use of any community chest, corporation,
organization, trust, fund, association, or foundation located in
and carrying on substantially all of its activities within this
state, organized and operating exclusively for religious,
charitable, public cemetery, scientific, literary, artistic, or
educational purposes, or for the prevention of cruelty to
children or animals, no part of the net earnings of which inures
to the benefit of any private stockholder or individual,
(c) to a fraternal society, order, or association,
operating under the lodge system located in and carrying on
substantially all of their activities within this state if such
contributions or gifts are to be used exclusively for the
purposes specified in subdivision 3(b), or for or to posts or
organizations of war veterans or auxiliary units or societies of
such posts or organizations, if they are within the state and no
part of their net income inures to the benefit of any private
shareholder or individual,
(d) to or for the use of the United States of America for
exclusively public purposes, and to or for the use of any
community chest, corporation, trust, fund, association, or
foundation, organized and operated exclusively for any of the
purposes specified in subdivision 3(b) and (c) no part of the
net earnings of which inures to the benefit of any private
shareholder or individual, but not carrying on substantially all
of their activities within this state, in an amount equal to the
ratio of Minnesota taxable net income to total net income,
(e) the total deduction hereunder shall not exceed 15
percent of the taxpayer's taxable net income less the deductions
allowable under this section other than those for contributions
or gifts,
(f) in the case of a corporation reporting its taxable
income on the accrual basis, if: (A) the board of directors
authorizes a charitable contribution during any taxable year,
and (B) payment of such contribution is made after the close of
such taxable year and on or before the fifteenth day of the
third month following the close of such taxable year; then the
taxpayer may elect to treat such contribution as paid during
such taxable year. The election may be made only at the time of
the filing of the return for such taxable year, and shall be
signified in such manner as the commissioner shall by
regulations prescribe;
(g) in the case of a contribution or property placed in
trust as described in section 170(f)(2) of the Internal Revenue
Code of 1954, as amended through December 31, 1981, a deduction
shall be allowed under this subdivision to the extent that a
deduction is allowable for federal income tax purposes.
Sec. 5. Minnesota Statutes 1982, section 290.23,
subdivision 3, is amended to read:
Subd. 3. [UNUSED LOSS CARRYOVERS AND EXCESS DEDUCTIONS ON
TERMINATION AVAILABLE TO BENEFICIARIES.] If on the termination
of an estate or trust, the estate or trust has
(1) a net operating loss carryover under section 290.095 or
, a capital loss carryover under section 290.01, subdivisions 20
to 20f or any other loss or credit carryover allowed under this
chapter; or
(2) for the last taxable year of the estate or trust
deductions (other than the charitable deduction) in excess of
gross income for such year,
then such carryover or such excess shall be allowed as a
deduction, in accordance with regulations rules prescribed by
the commissioner, to the beneficiaries succeeding to the
property of the estate or trust.
Sec. 6. Minnesota Statutes 1982, section 290.56,
subdivision 4, is amended to read:
Subd. 4. [REPORT MADE OF CHANGE OR CORRECTION OF FEDERAL
RETURN.] If a taxpayer is required to report a change or
correction or renegotiation by the Commissioner of Internal
Revenue or other officer of the United States or other competent
authority or to file an amended return as required by
subdivision 2 and does report such change or files a copy of
such amended return within 90 days, the commissioner may
recompute and reassess the tax due under this chapter, including
a refundment thereof (a) within one year after such report or
amended return is filed with the commissioner, notwithstanding
any period of limitations to the contrary or (b) within the
period set forth in section 290.49, whichever period is greater.
The period provided for the carryback of any amount of loss or
credit is also extended as provided in this subdivision,
notwithstanding any other law to the contrary.
Sec. 7. Minnesota Statutes 1982, section 290.56,
subdivision 5, is amended to read:
Subd. 5. [EXTENSIONS OF TIME.] Any taxpayer who consents
to any extension of time for the assessment of federal income
taxes shall within 90 days of the execution of such consent
notify the commissioner and the period of time in which the
commissioner may recompute the tax is also extended,
notwithstanding any period of limitations to the contrary as
follows:
(a) For the periods provided in subdivisions 3 and 4; or
(b) For six months following the expiration of the extended
federal period of limitations where no change is made by the
federal authority.
The period provided for the carryback of any amount of loss
or credit is also extended as provided in this subdivision,
notwithstanding any other law to the contrary.
Sec. 8. Minnesota Statutes 1983 Supplement, section
290.93, subdivision 10, is amended to read:
Subd. 10. [UNDERPAYMENT OF ESTIMATED TAX.] (1) In the case
of any underpayment of estimated tax by an individual, except as
provided in paragraph (4) or (5), there may be added to and
become a part of the taxes imposed by this chapter, for the
taxable year an amount determined at the rate specified in
section 270.75 upon the amount of the underpayment for the
period of the underpayment.
(2) For purposes of the preceding paragraph, the amount of
underpayment shall be the excess of
(a) The amount of the installment which would be required
to be paid if the estimated tax were equal to 80 percent (66 2/3
percent in the case of farmers referred to in subdivision 5(2)
of this section) of the taxes shown on the return for the
taxable year or the taxes for such year if no return was filed,
over
(b) The amount, if any, of the installment paid on or
before the last day prescribed for such payment.
(3) The period of the underpayment shall run from the date
the installment was required to be paid to whichever of the
following dates is the earlier
(a) The 15th day of the fourth month following the close of
the taxable year.
(b) With respect to any portion of the underpayment, the
date on which such portion is paid. For purposes of this
subparagraph, a payment of estimated tax on any installment date
shall be considered a payment of any previous underpayment only
to the extent such payment exceeds the amount of the installment
determined under paragraph (2) (a) for such installment date.
(4) The addition to the tax with respect to any
underpayment of any installment shall not be imposed if the
total amount of all payments of estimated tax made on or before
the last date prescribed for the payment of such installment
equals or exceeds the amount which would have been required to
be paid on or before such date if the estimated tax were
whichever of the following is the lesser
(a) The total tax liability shown on the return of the
individual for the preceding taxable year (if a return showing a
liability for such taxes was filed by the individual for the
preceding taxable year of 12 months), or
(b) An amount equal to the tax computed, at the rates
applicable to the taxable year, on the basis of the taxpayer's
status with respect to the personal credits for the taxable
year, but otherwise on the basis of the facts shown on his
return for, and the law applicable to the preceding taxable
year, or
(c) An amount equal to 80 percent (66 2/3 percent in the
case of farmers referred to in subdivision 5(2) of this section)
of the tax for the taxable year (after deducting personal
credits) computed by placing on an annualized basis the taxable
income for the months in the taxable year ending before the
month in which the installment is required to be paid. For
purposes of this subparagraph, the taxable income shall be
placed on an annualized basis by
(i) Multiplying by 12 (or in the case of a taxable year of
less than 12 months, the number of months in the taxable year)
the taxable income computed for the months in the taxable year
ending before the month in which the installment is required to
be paid.
(ii) Dividing the resulting amount by the number of months
in the taxable year ending before the month in which such
installment date falls, or
(d) An amount equal to 90 percent of the tax computed, at
the rates applicable to the taxable year, on the basis of the
actual taxable income for the months in the taxable year ending
before the month in which the installment is required to be paid.
(5) No addition to the tax shall be imposed under this
subdivision for any taxable year if:
(a) the individual did not have any liability for tax for
the preceding taxable year,
(b) the preceding taxable year was a taxable year of 12
months, and
(c) the individual was a resident of Minnesota throughout
the preceding taxable year.
(6) For the purposes of applying this subdivision, the
estimated tax shall be computed without any reduction for the
amount which the individual estimates as his credit under
section 290.92, subdivision 12 (relating to tax withheld at
source on wages), and the refundable credits contained in
sections 290.06, subdivision 13, 290.067, and 290.501, any other
refundable credits which are allowed against income tax
liability, and the amount of such credits for the taxable year
shall be deemed a payment of estimated tax, and an equal part of
such amounts shall be deemed paid on each installment date
(determined under subdivisions 6 and 7 of this section) for such
taxable year, unless the taxpayer establishes the dates on which
all amounts were actually withheld, in which case the amounts so
withheld shall be deemed payments of estimated tax on the dates
on which such amounts were actually withheld.
Sec. 9. Minnesota Statutes 1983 Supplement, section
290.9726, subdivision 5, is amended to read:
Subd. 5. [CREDIT ALLOWANCES.] The credits provided in
sections section 290.06 and 290.501 any other income tax credits
to which the corporation is entitled shall be allocated to the
shareholders as provided in sections 1366 and 1377 of the
Internal Revenue Code of 1954, as amended through December 31,
1982. The limitations set forth in the computation of the
credit shall be applied to the shareholders.
Sec. 10. Minnesota Statutes 1983 Supplement, section
290A.03, subdivision 6, is amended to read:
Subd. 6. [HOMESTEAD.] "Homestead" means the dwelling
occupied by a claimant as his principal residence and so much of
the land surrounding it, not exceeding ten acres, as is
reasonably necessary for use of the dwelling as a home and any
other property used for purposes of a homestead as defined in
section 273.13, subdivision 7, except for agricultural land
assessed as part of a homestead pursuant to section 273.13,
subdivision 6, "homestead" is limited to 320 acres or, where the
farm homestead is rented, one acre. The homestead may be owned
or rented and may be a part of a multi-dwelling or multi-purpose
building and the land on which it is built. A manufactured
home, as defined in section 168.011, subdivision 8, assessed as
personal property may be a dwelling for purposes of this
subdivision.
Sec. 11. Minnesota Statutes 1983 Supplement, section
290A.03, subdivision 14, is amended to read:
Subd. 14. [NET TAX.] "Net tax" means
(a) the property tax, exclusive of special assessments,
interest, and penalties, and after reduction for any state paid
property tax credits as required in subdivision 13 except for
the reduction pursuant to section 273.13, subdivisions 6, 7, and
14a, or
(b) the payments made in lieu of ad valorem taxes,
including payments of special assessments imposed in lieu of ad
valorem taxes,
for the calendar year in which the rent was paid. If a
portion of the property is occupied as a homestead or is used
for other than rental purposes, the net tax shall be the amount
of tax after reductions pursuant to section 273.13, subdivisions
6, 7, and 14a, reduced by the percentage that the nonrental use
comprises of the total square footage of the building. If a
portion of the property is used for purposes other than for
residential rental and none of the property is occupied as a
homestead, the net tax shall be the amount of the tax of the
parcel multiplied by a fraction, the numerator of which is the
assessed value of the residential rental portion and the
denominator of which is the total assessed value of the parcel.
If a portion of the property is used for other than rental
residential purposes, the county treasurer shall list on the
property tax statement the amount of net tax pertaining to the
rental residential portion of the property.
The amount of the net tax shall not be reduced by an
abatement or a court ordered reduction in the property tax on
the property made after the certificate of rent constituting
property tax has been provided to the renter.
Sec. 12. Minnesota Statutes 1983 Supplement, section
290A.04, subdivision 1, is amended to read:
Subdivision 1. A credit shall be allowed each claimant in
the amount that property taxes payable or rent constituting
property taxes exceed the percentage of the household income of
the claimant specified in subdivision 2 in the year for which
the taxes were levied or in the year in which the rent was paid.
If the amount of property taxes payable or rent constituting
property taxes is equal to or less than the percentage of the
household income of the claimant specified in subdivision 2 in
the year for which the taxes were levied or in the year in which
the rent was paid, the claimant shall not be eligible for a
state refund pursuant to this section. For purposes of claiming
this credit, a claimant who owns his own homestead part of the
year and rents part of the year may add his rent constituting
property taxes to the qualifying tax on his homestead.
Sec. 13. Minnesota Statutes 1983 Supplement, section
290A.04, subdivision 2, is amended to read:
Subd. 2. A claimant whose property taxes payable or rent
constituting property taxes are in excess of the percentage of
the household income stated below shall pay an amount equal to
the amount percent of income shown for the appropriate household
income level and the state refund will be equal to an amount up
to the state refund amount shown below.
Percent Claimant State
Household Income of Income Pays Refund
Net loss and
up to $2,999 0.5 percent $13 $13
3,000 to 3,499 0.6 percent $15 $15
3,500 to 3,999 0.6 percent $18 $18
4,000 to 4,499 0.7 percent $20 $20
4,500 to 4,999 0.7 percent $23 $23
5,000 to 5,999 0.8 percent $40 $40
6,000 to 6,999 0.9 percent $54 $54
7,000 to 7,999 1.0 percent $70 $70
8,000 to 8,999 1.1 percent $88 $88
9,000 to 9,999 1.2 percent $108 $108
10,000 to 10,999 1.3 percent $130 $130
11,000 to 11,999 1.4 percent $154 $154
12,000 to 12,999 1.5 percent $180 $180
13,000 to 13,999 1.5 percent $195 $195
14,000 to 14,999 1.5 percent $210 $210
15,000 to 15,999 1.5 percent $225 $225
16,000 to 16,999 1.5 percent $240 $240
17,000 to 17,999 1.5 percent $255 $255
18,000 to 18,999 1.5 percent $270 $270
19,000 to 19,999 1.5 percent $285 $285
20,000 to 20,999 1.6 percent $320 $320
21,000 to 21,999 1.6 percent $336 $336
22,000 to 22,999 1.6 percent $352 $352
23,000 to 23,999 1.8 percent $414 $414
24,000 to 24,999 1.8 percent $432 $432
25,000 to 25,999 1.8 percent $450 $450
26,000 to 26,999 26,499 2.0 percent $520 $520
26,500 to 26,999 2.0 percent $530
27,000 to 27,999 27,499 2.0 percent $540 $540
27,500 to 27,999 2.0 percent $550
28,000 to 28,999 28,499 2.0 percent $560 $560
28,500 to 28,999 2.0 percent $570
29,000 to 29,999 29,499 2.0 percent $580 $580
29,500 to 29,999 2.0 percent $590
30,000 to 30,999 30,499 2.0 percent $600 $600
30,500 to 30,999 2.0 percent $610
31,000 to 31,999 31,499 2.2 percent $620 $620
31,500 to 31,999 2.2 percent $630
32,000 to 32,999 32,499 2.2 percent $640 $640
32,500 to 32,999 2.2 percent $650
33,000 to 33,999 2.2 percent $726 $700
34,000 to 34,999 2.2 percent $748 $600
35,000 to 35,999 2.2 percent $770 $500
36,000 to 36,999 2.4 percent $792 $400
37,000 to 37,999 2.4 percent $814 $300
38,000 to 38,999 2.4 percent $912 $200
39,000 to 39,999 2.4 percent $936 $100
The payment made to a claimant shall be the amount of the
state refund calculated pursuant to this subdivision, less the
homestead credit given pursuant to section 273.13, subdivisions
6, 7 and 14a.
Sec. 14. Minnesota Statutes 1982, section 600.21, is
amended to read:
600.21 [COPIES OF RECORD OF DEATH; RECORDATION.]
In all cases of joint tenancy in lands, and in all cases
where any estate, title interest in, or lien upon, lands, has
been or may be created, which estate, title interest, or lien
was, or is, to continue only during the life of any person named
or described in the instrument by which such estate, title,
interest, or lien was created, a copy of the record of the death
of any such joint tenant, or of the person upon whose life such
estate, title, interest, or lien was, or is, limited, duly
certified by any officer who is required by the law of the state
or country in which such record is made, to keep a record of the
death of persons occurring within the jurisdiction of such
officer, may be recorded in the office of the county recorder of
the county in which such lands are situated, and such certified
copy or such record thereof in such office, or a duly certified
copy of such last mentioned record, shall be prima facie
evidence of the death of such person and the termination of such
joint tenancy and of all such estate, title, interest, and lien
as was, or is, limited upon the life of such person. When a
certified copy of such death certificate is attached to an
affidavit of survivorship which, for decedents dying prior to
January 1, 1980, has been duly certified by the commissioner of
revenue, or an affidavit of survivorship for exempt homestead
property in compliance with the provisions of section 291.14,
subdivision 2, clause (4), for decedents dying prior to January
1, 1980, the same shall, prior to recordation in the office of
the county recorder or registrar of titles, be presented to the
county auditor of the county wherein such estate, title,
interest, or lien is situated and such county auditor shall note
the transfer on his books and shall inscribe upon the instrument
over his official signature the words "Transfer entered." Until
so presented and indication made thereon, said instrument shall
not be entitled to record in the office of the county recorder
or registrar of titles of said county.
Sec. 15. Laws 1980, chapter 439, section 36, is amended to
read:
Sec. 36. [EFFECTIVE DATE.] Section 26 is effective the day
after final enactment. Section 34 is effective on and after
December 31, 1983. The remainder of this act is effective for
estates of decedents dying after December 31, 1979.
Sec. 16.
Duties imposed upon a spouse or children of a decedent, the
personal representative, or the county recorder or registrar of
titles under Minnesota Statutes 1978, section 291.14,
subdivision 2, clause (4) or subdivision 4 are abolished on and
after December 31, 1983.
Sec. 17. [INSTRUCTIONS TO REVISOR.]
In the next edition of Minnesota Statutes, the revisor of
statutes shall substitute the phrase "this chapter" for the
words "sections 290A.01 to 290A.20" or for the words "sections
290A.01 to 290A.23" wherever those words occur in chapter 290A.
Sec. 18. [REPEALER.]
(a) Minnesota Statutes 1983 Supplement, section 290A.16 is
repealed.
(b) Laws 1983, chapter 207, section 6 is repealed.
Sec. 19. [EFFECTIVE DATE.]
Sections 1, 3, 4, 5, 8, 9, and 18, clause (a), are
effective for taxable years beginning after December 31, 1983.
Sections 2 and 18, clause (b), are effective for taxable years
beginning after December 31, 1982. Sections 6, 7, and 17 are
effective the day after final enactment. Sections 10, 11, 12,
and 13 are effective for claims based on rent paid in 1983 and
thereafter and property taxes payable in 1984 and thereafter.
Sections 14 to 16 are effective on and after December 31, 1983.
ARTICLE 5
CHILD SUPPORT WITHHOLDING
Section 1. Minnesota Statutes 1982, section 290.50,
subdivision 6, is amended to read:
Subd. 6. [WITHHOLDING OF REFUNDS FROM CHILD SUPPORT
DEBTORS.] Upon a finding by a court of this state that a person
obligated to pay child support is delinquent in making payments,
the amount of child support unpaid and owing including attorneys
fees and costs incurred in ascertaining or collecting child
support shall be withheld from a refund due the person under
this section. The public agency responsible for child support
enforcement or the parent or guardian of a child for whom the
support is, attorneys fees and costs are owed may petition the
district or county court for an order providing for the
withholding of the amount of child support, attorneys fees and
costs unpaid and owing as determined by court order. The person
from whom the refund may be withheld shall be notified of the
petition pursuant to the rules of civil procedure prior to the
issuance of an order pursuant to this subdivision. The order
may be granted on a showing to the court that required support
payments, attorneys fees and costs have not been made when they
were due.
On order of the court, the support money shall be withheld
by the commissioner from the refund due to the person obligated
to pay the support and the amount withheld shall be remitted to
the public agency responsible for child support enforcement or
to the parent or guardian petitioning on behalf of the child,
provided that any delinquent tax obligations of the taxpayer
owed to the revenue department shall be satisfied first. Any
amount received by the responsible public agency or the
petitioning parent or guardian in excess of the amount of public
assistance expended for the benefit of the child to be
supported, or the amount of any support, attorneys fees and
costs that had been the subject of the claim pursuant to this
subdivision which has been paid by the taxpayer prior to the
diversion of the refund, shall be remitted to the person
entitled to the money. If the refund is based on a joint or
combined return, the portion of the refund that shall be
remitted to the petitioner shall be the proportion of the total
refund that equals the proportion of the total federal adjusted
gross income of the spouses that is the federal adjusted gross
income of the spouse who is delinquent in making the child
support payments. A petition filed pursuant to this subdivision
shall be in effect with respect to any refunds due under this
section during a period of one year from the date when the
petition was filed until the support money, attorneys fees and
costs have been paid in full or the court orders the
commissioner to discontinue withholding the money from the
refund due the person obligated to pay the support, attorneys
fees and costs. If a petition is filed pursuant to this
subdivision and a claim is made pursuant to chapter 270A with
respect to the same individual's refund and notices of both are
received prior to the time when payment of the refund is made on
either claim, the commissioner shall transmit the claims to the
court that issued the order under this subdivision. The court
shall order that the claim relating to the liability that
accrued first in time shall be paid first; any amount of the
refund remaining shall then be applied to the other claim. The
provisions of section 290.61 shall not prohibit the exchange of
information among the department, the petitioner, and the court
to the extent necessary to accomplish the intent of this
subdivision. Not later than five days after the court has
notified the department of its withholding order, the department
shall send a written notification of the order to the person to
whom the refund would otherwise be paid.
Sec. 2. Laws 1982, chapter 523, article 4, section 2, is
amended to read:
This article is effective the day following final enactment
and shall terminate June 30, 1984.
Sec. 3. [EFFECTIVE DATE.]
Section 1 is effective for court orders issued after May
31, 1984. Section 2 is effective the day after final enactment.
Approved April 25, 1984
Official Publication of the State of Minnesota
Revisor of Statutes