1.1 	A bill for an act
1.2 	relating to taxation; providing a small business tax credit; providing a partial 
1.3 	exemption from the state general levy on business properties; modifying the 
1.4 	treatment of certain income from foreign operations; amending Minnesota 
1.5 	Statutes 2004, sections 273.1384, by adding a subdivision; 275.025, subdivision 
1.6 	2; 290.34, subdivision 1; Minnesota Statutes 2005 Supplement, sections 275.025, 
1.7 	subdivisions 1, 4; 289A.38, subdivision 6; 290.01, subdivisions 6b, 19c, 19d.
1.8 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.9 	Section 1. Minnesota Statutes 2004, section 273.1384, is amended by adding a 
1.10 	subdivision to read:
1.11 		Subd. 2a.Small business market value credit. Commercial-industrial property 
1.12 	classified as class 3a or 3b is eligible for a small business market value credit. The credit 
1.13 	is equal to 0.4 percent of the first $150,000 of the market value of the property. The credit 
1.14 	under this subdivision is limited to $600 for each parcel of commercial-industrial property. 
1.15 	Utility property is not eligible for the credit under this subdivision.

1.16 	EFFECTIVE DATE. This section is effective for taxes levied in 2006, payable 
1.17 	in 2007, and thereafter.

1.18 	Sec. 2. Minnesota Statutes 2005 Supplement, section 275.025, subdivision 1, is 
1.19 	amended to read:
1.20 		Subdivision 1.Levy amount. The state general levy is levied against 
1.21 	commercial-industrial property and seasonal residential recreational property, as defined 
1.22 	in this section. The state general levy base amount is $592,000,000 $600,046,800 for 
1.23 	commercial-industrial tax capacity and $33,967,300 for seasonal residential recreational 
1.24 	tax capacity for taxes payable in 2002 2007. For taxes payable in subsequent years, 
2.1 	the levy base amount is increased each year by multiplying the levy base amount for 
2.2 	the prior year by the sum of one plus the rate of increase, if any, in the implicit price 
2.3 	deflator for government consumption expenditures and gross investment for state and 
2.4 	local governments prepared by the Bureau of Economic Analysts of the United States 
2.5 	Department of Commerce for the 12-month period ending March 31 of the year prior to the 
2.6 	year the taxes are payable. The tax under this section is not treated as a local tax rate under 
2.7 	section 469.177 and is not the levy of a governmental unit under chapters 276A and 473F.
2.8 	The commissioner shall increase or decrease the preliminary or final rate for a year 
2.9 	as necessary to account for errors and tax base changes that affected a preliminary or final 
2.10 	rate for either of the two preceding years. Adjustments are allowed to the extent that the 
2.11 	necessary information is available to the commissioner at the time the rates for a year must 
2.12 	be certified, and for the following reasons:
2.13 	(1) an erroneous report of taxable value by a local official;
2.14 	(2) an erroneous calculation by the commissioner; and
2.15 	(3) an increase or decrease in taxable value for commercial-industrial or seasonal 
2.16 	residential recreational property reported on the abstracts of tax lists submitted under 
2.17 	section 275.29 that was not reported on the abstracts of assessment submitted under 
2.18 	section 270C.89 for the same year.
2.19 	The commissioner may, but need not, make adjustments if the total difference in the tax 
2.20 	levied for the year would be less than $100,000.

2.21 	Sec. 3. Minnesota Statutes 2004, section 275.025, subdivision 2, is amended to read:
2.22 		Subd. 2.Commercial-industrial tax capacity. For the purposes of this section, 
2.23 	"commercial-industrial tax capacity" means the tax capacity of all taxable property 
2.24 	classified as class 3 or class 5(1) under section  273.13, except for electric generation 
2.25 	attached machinery under class 3 and property described in section  473.625. The first 
2.26 	$150,000 of market value of each commercial-industrial property other than railroad or 
2.27 	utility property has a tax capacity for this purpose equal to 40 percent of its tax capacity 
2.28 	under section 273.13. County commercial-industrial tax capacity amounts are not adjusted 
2.29 	for the captured net tax capacity of a tax increment financing district under section  
2.30 	469.177, subdivision 2, the net tax capacity of transmission lines deducted from a local 
2.31 	government's total net tax capacity under section  273.425, or fiscal disparities contribution 
2.32 	and distribution net tax capacities under chapter 276A or 473F. 

2.33 	Sec. 4. Minnesota Statutes 2005 Supplement, section 275.025, subdivision 4, is 
2.34 	amended to read:
3.1 		Subd. 4.Apportionment and levy of state general tax. Ninety-five percent of the 
3.2 	state general tax must be levied by applying a uniform rate to all commercial-industrial tax 
3.3 	capacity and five percent of the state general tax must be levied by applying a uniform 
3.4 	rate to all seasonal residential recreational tax capacity. On or before October 1 each year, 
3.5 	the commissioner of revenue shall certify the preliminary state general levy rates to each 
3.6 	county auditor that must be used to prepare the notices of proposed property taxes for taxes 
3.7 	payable in the following year. By January 1 of each year, the commissioner shall certify 
3.8 	the final state general levy rate to each county auditor that shall be used in spreading taxes.

3.9 	Sec. 5. Minnesota Statutes 2005 Supplement, section 289A.38, subdivision 6, is 
3.10 	amended to read:
3.11 		Subd. 6.Omission in excess of 25 percent. Additional taxes may be assessed 
3.12 	within 6-1/2 years after the due date of the return or the date the return was filed, 
3.13 	whichever is later, if:
3.14 	(1) the taxpayer omits from grosstaxable income an amount properly includable 
3.15 	in it that is in excess of 25 percent of the amount of grosstaxable income stated in the 
3.16 	return that would have been reported but for the omission;
3.17 	(2) the taxpayer omits from a sales, use, or withholding tax return an amount of taxes 
3.18 	in excess of 25 percent of the taxes reported in the return; or
3.19 	(3) the taxpayer omits from the gross estate assets in excess of 25 percent of the 
3.20 	gross estate reported in the return.

3.21 	EFFECTIVE DATE. This section is effective the day following final enactment.

3.22 	Sec. 6. Minnesota Statutes 2005 Supplement, section 290.01, subdivision 6b, is 
3.23 	amended to read:
3.24 		Subd. 6b.Foreign operating corporation. The term "foreign operating 
3.25 	corporation," when applied to a corporation, means a domestic corporation with the 
3.26 	following characteristics:
3.27 	(1) it is part of a unitary business at least one member of which is taxable in this state;
3.28 	(2) it is not a foreign sales corporation under section 922 of the Internal Revenue 
3.29 	Code, as amended through December 31, 1999, for the taxable year;
3.30 	(3) either (i) the average of the percentages of its property and payrolls, including 
3.31 	the pro rata share of its unitary partnerships' property and payrolls, assigned to locations 
3.32 	outside the United States, where the United States includes the District of Columbia and 
3.33 	excludes the commonwealth of Puerto Rico and possessions of the United States, as 
3.34 	determined under section 290.191 or 290.20, is 80 percent or more; or (ii) it has in effect a 
4.1 	valid election under section 936 of the Internal Revenue Code; or (ii) at least 80 percent 
4.2 	of the gross income from all sources of the corporation in the tax year is active foreign 
4.3 	business income; and
4.4 	(4) it has $1,000,000 of payroll and $2,000,000 of property, as determined under 
4.5 	section 290.191 or 290.20, that are located outside the United States. If the domestic 
4.6 	corporation does not have payroll as determined under section 290.191 or 290.20, but it 
4.7 	or its partnerships have paid $1,000,000 for work, performed directly for the domestic 
4.8 	corporation or the partnerships, outside the United States, then paragraph (3)(i) shall not 
4.9 	require payrolls to be included in the average calculation for purposes of this subdivision, 
4.10 	active foreign business income means gross income that is (i) derived from sources 
4.11 	without the United States, as defined in subtitle A, chapter 1, subchapter N, part 1, of the 
4.12 	Internal Revenue Code; and (ii) attributable to the active conduct of a trade or business in 
4.13 	a foreign country.

4.14 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
4.15 	December 31, 2005.

4.16 	Sec. 7. Minnesota Statutes 2005 Supplement, section 290.01, subdivision 19c, is 
4.17 	amended to read:
4.18 		Subd. 19c.Corporations; additions to federal taxable income. For corporations, 
4.19 	there shall be added to federal taxable income:
4.20 	(1) the amount of any deduction taken for federal income tax purposes for income, 
4.21 	excise, or franchise taxes based on net income or related minimum taxes, including but not 
4.22 	limited to the tax imposed under section 290.0922, paid by the corporation to Minnesota, 
4.23 	another state, a political subdivision of another state, the District of Columbia, or any 
4.24 	foreign country or possession of the United States;
4.25 	(2) interest not subject to federal tax upon obligations of: the United States, its 
4.26 	possessions, its agencies, or its instrumentalities; the state of Minnesota or any other 
4.27 	state, any of its political or governmental subdivisions, any of its municipalities, or any 
4.28 	of its governmental agencies or instrumentalities; the District of Columbia; or Indian 
4.29 	tribal governments;
4.30 	(3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal 
4.31 	Revenue Code;
4.32 	(4) the amount of any net operating loss deduction taken for federal income tax 
4.33 	purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss 
4.34 	deduction under section 810 of the Internal Revenue Code;
5.1 	(5) the amount of any special deductions taken for federal income tax purposes 
5.2 	under sections 241 to 247 of the Internal Revenue Code;
5.3 	(6) losses from the business of mining, as defined in section 290.05, subdivision 1, 
5.4 	clause (a), that are not subject to Minnesota income tax;
5.5 	(7) the amount of any capital losses deducted for federal income tax purposes under 
5.6 	sections 1211 and 1212 of the Internal Revenue Code;
5.7 	(8) the exempt foreign trade income of a foreign sales corporation under sections 
5.8 	921(a) and 291 of the Internal Revenue Code;
5.9 	(9) the amount of percentage depletion deducted under sections 611 through 614 and 
5.10 	291 of the Internal Revenue Code;
5.11 	(10) for certified pollution control facilities placed in service in a taxable year 
5.12 	beginning before December 31, 1986, and for which amortization deductions were elected 
5.13 	under section 169 of the Internal Revenue Code of 1954, as amended through December 
5.14 	31, 1985, the amount of the amortization deduction allowed in computing federal taxable 
5.15 	income for those facilities;
5.16 	(11) the amount of any deemed dividend from a foreign operating corporation 
5.17 	determined pursuant to section 290.17, subdivision 4, paragraph (g). The deemed dividend 
5.18 	shall be reduced by the amount of the addition to income required by clauses (19), (20), 
5.19 	(21), and (22);
5.20 	(12) the amount of a partner's pro rata share of net income which does not flow 
5.21 	through to the partner because the partnership elected to pay the tax on the income under 
5.22 	section 6242(a)(2) of the Internal Revenue Code;
5.23 	(13) the amount of net income excluded under section 114 of the Internal Revenue 
5.24 	Code;
5.25 	(14) any increase in subpart F income, as defined in section 952(a) of the Internal 
5.26 	Revenue Code, for the taxable year when subpart F income is calculated without regard 
5.27 	to the provisions of section 614 of Public Law 107-147;
5.28 	(15) 80 percent of the depreciation deduction allowed under section 168(k)(1)(A) 
5.29 	and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if the taxpayer 
5.30 	has an activity that in the taxable year generates a deduction for depreciation under 
5.31 	section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable year 
5.32 	that the taxpayer is not allowed to claim for the taxable year, "the depreciation allowed 
5.33 	under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess of the 
5.34 	depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A) over the 
5.35 	amount of the loss from the activity that is not allowed in the taxable year. In succeeding 
6.1 	taxable years when the losses not allowed in the taxable year are allowed, the depreciation 
6.2 	under section 168(k)(1)(A) and (k)(4)(A) is allowed;
6.3 	(16) 80 percent of the amount by which the deduction allowed by section 179 of the 
6.4 	Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal 
6.5 	Revenue Code of 1986, as amended through December 31, 2003;
6.6 	(17) to the extent deducted in computing federal taxable income, the amount of the 
6.7 	deduction allowable under section 199 of the Internal Revenue Code; and
6.8 	(18) the exclusion allowed under section 139A of the Internal Revenue Code for 
6.9 	federal subsidies for prescription drug plans.
6.10 	(19) an amount equal to the interest and intangible expenses, losses, and costs paid, 
6.11 	accrued, or incurred by any member of the taxpayer's unitary group to or for the benefit 
6.12 	of a corporation that is a member of the taxpayer's unitary business group that qualifies 
6.13 	as a foreign operating corporation. For purposes of this clause, intangible expenses and 
6.14 	costs include:
6.15 	(i) expenses, losses, and costs for, or related to, the direct or indirect acquisition, 
6.16 	use, maintenance or management, ownership, sale, exchange, or any other disposition of 
6.17 	intangible property;
6.18 	(ii) losses incurred, directly or indirectly, from factoring transactions or discounting 
6.19 	transactions;
6.20 	(iii) royalty, patent, technical, and copyright fees;
6.21 	(iv) licensing fees; and
6.22 	(v) other similar expenses and costs..
6.23 	For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent 
6.24 	applications, trade names, trademarks, service marks, copyrights, mask works, trade 
6.25 	secrets, and similar types of intangible assets.
6.26 	This clause does not apply to any item of interest or intangible expenses or costs paid, 
6.27 	accrued, or incurred, directly or indirectly, to a foreign operating corporation with respect 
6.28 	to such item of income to the extent that the income to the foreign operating corporation 
6.29 	is income from sources without the United States as defined in subtitle A, chapter 1, 
6.30 	subchapter N, part 1, of the Internal Revenue Code;
6.31 	(20) except as already included in the taxpayer's taxable income pursuant to clause 
6.32 	(19), any interest income and income generated from intangible property received or 
6.33 	accrued by a foreign operating corporation that is a member of the taxpayer's unitary 
6.34 	group. For purposes of this clause, income generated from intangible property includes:
6.35 	(i) income related to the direct or indirect acquisition, use, maintenance or 
6.36 	management, ownership, sale, exchange, or any other disposition of intangible property;
7.1 	(ii) income from factoring transactions or discounting transactions;
7.2 	(iii) royalty, patent, technical, and copyright fees;
7.3 	(iv) licensing fees; and
7.4 	(v) other similar income.
7.5 	For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent 
7.6 	applications, trade names, trademarks, service marks, copyrights, mask works, trade 
7.7 	secrets, and similar types of intangible assets. 
7.8 	This clause does not apply to any item of interest or intangible income received or accrued 
7.9 	by a foreign operating corporation with respect to such item of income to the extent that 
7.10 	the income is income from sources without the United States as defined in subtitle A, 
7.11 	chapter 1, subchapter N, part 1, of the Internal Revenue Code;
7.12 	(21) the dividends attributable to the income of a foreign operating corporation that 
7.13 	is a member of the taxpayer's unitary group in an amount that is equal to the dividends 
7.14 	paid deduction of a real estate investment trust under section 561(a) of the Internal 
7.15 	Revenue Code for amounts paid or accrued by the real estate investment trust to the 
7.16 	foreign operating corporation; and
7.17 	(22) the income of a foreign operating corporation that is a member of the taxpayer's 
7.18 	unitary group in an amount that is equal to gains derived from the sale of real or personal 
7.19 	property located in the United States.

7.20 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
7.21 	December 31, 2005.

7.22 	Sec. 8. Minnesota Statutes 2005 Supplement, section 290.01, subdivision 19d, is 
7.23 	amended to read:
7.24 		Subd. 19d.Corporations; modifications decreasing federal taxable income. For 
7.25 	corporations, there shall be subtracted from federal taxable income after the increases 
7.26 	provided in subdivision 19c:
7.27 	(1) the amount of foreign dividend gross-up added to gross income for federal 
7.28 	income tax purposes under section 78 of the Internal Revenue Code;
7.29 	(2) the amount of salary expense not allowed for federal income tax purposes due to 
7.30 	claiming the federal jobs credit under section 51 of the Internal Revenue Code;
7.31 	(3) any dividend (not including any distribution in liquidation) paid within the 
7.32 	taxable year by a national or state bank to the United States, or to any instrumentality of 
7.33 	the United States exempt from federal income taxes, on the preferred stock of the bank 
7.34 	owned by the United States or the instrumentality;
8.1 	(4) amounts disallowed for intangible drilling costs due to differences between 
8.2 	this chapter and the Internal Revenue Code in taxable years beginning before January 
8.3 	1, 1987, as follows:
8.4 	(i) to the extent the disallowed costs are represented by physical property, an amount 
8.5 	equal to the allowance for depreciation under Minnesota Statutes 1986, section 290.09, 
8.6 	subdivision 7, subject to the modifications contained in subdivision 19e; and
8.7 	(ii) to the extent the disallowed costs are not represented by physical property, an 
8.8 	amount equal to the allowance for cost depletion under Minnesota Statutes 1986, section 
8.9 	290.09, subdivision 8;
8.10 	(5) the deduction for capital losses pursuant to sections 1211 and 1212 of the 
8.11 	Internal Revenue Code, except that:
8.12 	(i) for capital losses incurred in taxable years beginning after December 31, 1986, 
8.13 	capital loss carrybacks shall not be allowed;
8.14 	(ii) for capital losses incurred in taxable years beginning after December 31, 1986, 
8.15 	a capital loss carryover to each of the 15 taxable years succeeding the loss year shall be 
8.16 	allowed;
8.17 	(iii) for capital losses incurred in taxable years beginning before January 1, 1987, a 
8.18 	capital loss carryback to each of the three taxable years preceding the loss year, subject to 
8.19 	the provisions of Minnesota Statutes 1986, section 290.16, shall be allowed; and
8.20 	(iv) for capital losses incurred in taxable years beginning before January 1, 1987, 
8.21 	a capital loss carryover to each of the five taxable years succeeding the loss year to the 
8.22 	extent such loss was not used in a prior taxable year and subject to the provisions of 
8.23 	Minnesota Statutes 1986, section 290.16, shall be allowed;
8.24 	(6) an amount for interest and expenses relating to income not taxable for federal 
8.25 	income tax purposes, if (i) the income is taxable under this chapter and (ii) the interest and 
8.26 	expenses were disallowed as deductions under the provisions of section 171(a)(2), 265 or 
8.27 	291 of the Internal Revenue Code in computing federal taxable income;
8.28 	(7) in the case of mines, oil and gas wells, other natural deposits, and timber for 
8.29 	which percentage depletion was disallowed pursuant to subdivision 19c, clause (11), a 
8.30 	reasonable allowance for depletion based on actual cost. In the case of leases the deduction 
8.31 	must be apportioned between the lessor and lessee in accordance with rules prescribed 
8.32 	by the commissioner. In the case of property held in trust, the allowable deduction must 
8.33 	be apportioned between the income beneficiaries and the trustee in accordance with the 
8.34 	pertinent provisions of the trust, or if there is no provision in the instrument, on the basis 
8.35 	of the trust's income allocable to each;
9.1 	(8) for certified pollution control facilities placed in service in a taxable year 
9.2 	beginning before December 31, 1986, and for which amortization deductions were elected 
9.3 	under section 169 of the Internal Revenue Code of 1954, as amended through December 
9.4 	31, 1985, an amount equal to the allowance for depreciation under Minnesota Statutes 
9.5 	1986, section 290.09, subdivision 7;
9.6 	(9) amounts included in federal taxable income that are due to refunds of income, 
9.7 	excise, or franchise taxes based on net income or related minimum taxes paid by the 
9.8 	corporation to Minnesota, another state, a political subdivision of another state, the 
9.9 	District of Columbia, or a foreign country or possession of the United States to the extent 
9.10 	that the taxes were added to federal taxable income under section 290.01, subdivision 19c, 
9.11 	clause (1), in a prior taxable year;
9.12 	(10) 80 percent of royalties, fees, or other like income accrued or received from a 
9.13 	foreign operating corporation or a foreign corporation which is part of the same unitary 
9.14 	business as the receiving corporation, unless the income resulting from such payments or 
9.15 	accruals is income from sources within the United States as defined in subtitle A, chapter 
9.16 	1, subchapter N, part 1, of the Internal Revenue Code;
9.17 	(11) income or gains from the business of mining as defined in section 290.05, 
9.18 	subdivision 1, clause (a), that are not subject to Minnesota franchise tax;
9.19 	(12) the amount of handicap access expenditures in the taxable year which are not 
9.20 	allowed to be deducted or capitalized under section 44(d)(7) of the Internal Revenue Code;
9.21 	(13) the amount of qualified research expenses not allowed for federal income tax 
9.22 	purposes under section 280C(c) of the Internal Revenue Code, but only to the extent that 
9.23 	the amount exceeds the amount of the credit allowed under section 290.068;
9.24 	(14) the amount of salary expenses not allowed for federal income tax purposes due 
9.25 	to claiming the Indian employment credit under section 45A(a) of the Internal Revenue 
9.26 	Code;
9.27 	(15) the amount of any refund of environmental taxes paid under section 59A of the 
9.28 	Internal Revenue Code;
9.29 	(16) for taxable years beginning before January 1, 2008, the amount of the federal 
9.30 	small ethanol producer credit allowed under section 40(a)(3) of the Internal Revenue Code 
9.31 	which is included in gross income under section 87 of the Internal Revenue Code;
9.32 	(17) for a corporation whose foreign sales corporation, as defined in section 922 
9.33 	of the Internal Revenue Code, constituted a foreign operating corporation during any 
9.34 	taxable year ending before January 1, 1995, and a return was filed by August 15, 1996, 
9.35 	claiming the deduction under section 290.21, subdivision 4, for income received from 
9.36 	the foreign operating corporation, an amount equal to 1.23 multiplied by the amount of 
10.1 	income excluded under section 114 of the Internal Revenue Code, provided the income is 
10.2 	not income of a foreign operating company;
10.3 	(18) any decrease in subpart F income, as defined in section 952(a) of the Internal 
10.4 	Revenue Code, for the taxable year when subpart F income is calculated without regard 
10.5 	to the provisions of section 614 of Public Law 107-147;
10.6 	(19) in each of the five tax years immediately following the tax year in which an 
10.7 	addition is required under subdivision 19c, clause (15), an amount equal to one-fifth of 
10.8 	the delayed depreciation. For purposes of this clause, "delayed depreciation" means the 
10.9 	amount of the addition made by the taxpayer under subdivision 19c, clause (15). The 
10.10 	resulting delayed depreciation cannot be less than zero; and
10.11 	(20) in each of the five tax years immediately following the tax year in which an 
10.12 	addition is required under subdivision 19c, clause (16), an amount equal to one-fifth of the 
10.13 	amount of the addition.

10.14 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
10.15 	December 31, 2005.

10.16 	Sec. 9. Minnesota Statutes 2004, section 290.34, subdivision 1, is amended to read:
10.17 		Subdivision 1.Business conducted in such a way as to create losses or improper 
10.18 	taxable net income. (a) When any corporation liable to taxation under this chapter 
10.19 	conducts its business in such a manner as, directly or indirectly, to benefit its members 
10.20 	or stockholders or any person or corporation interested in such business or to reduce the 
10.21 	income attributable to this state by selling the commodities or services in which it deals 
10.22 	at less than the fair price which might be obtained therefor, or buying such commodities 
10.23 	or services at more than the fair price for which they might have been obtained, or when 
10.24 	any corporation, a substantial portion of whose shares is owned directly or indirectly by 
10.25 	another corporation, deals in the commodities or services of the latter corporation in such 
10.26 	a manner as to create a loss or improper net income or to reduce the taxable net income 
10.27 	attributable to this state, the commissioner of revenue may determine the amount of its 
10.28 	income so as to reflect what would have been its reasonable taxable net income but for the 
10.29 	arrangements causing the understatement of its taxable net income or the overstatement of 
10.30 	its losses, having regard to the fair profits which, but for any agreement, arrangement, or 
10.31 	understanding, might have been or could have been obtained from such business.
10.32 	(b) When any corporation engages in a transaction or series of transactions whose 
10.33 	primary business purpose is the avoidance of tax, or engages in a transaction or series of 
10.34 	transactions without economic substance, that transaction or series of transactions shall be 
11.1 	disregarded and the commissioner shall determine taxable net income without regard for 
11.2 	any such transaction or series of transactions.

11.3 	Sec. 10. INTENT OF LEGISLATURE.
 11.4 	Section 9 does not change Minnesota law, but merely clarifies the legislature's 
11.5 	intention with respect to transactions without economic substance or business purpose.