1.1 	A bill for an act
1.2 	relating to estate taxation; allowing Minnesota qualified terminable interest 
1.3 	elections; amending Minnesota Statutes 2005 Supplement, section 291.03, 
1.4 	subdivision 1.
1.5 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.6 	Section 1. Minnesota Statutes 2005 Supplement, section 291.03, subdivision 1, is 
1.7 	amended to read:
1.8 		Subdivision 1.Tax amount. (a) The tax imposed shall be an amount equal to the 
1.9 	proportion of the maximum credit for state death taxes computed under section 2011 of 
1.10 	the Internal Revenue Code, as amended through December 31, 2000, but using Minnesota 
1.11 	adjusted taxable estate instead of federal adjusted taxable estate, as the Minnesota gross 
1.12 	estate bears to the value of the federal gross estate. The tax determined under this 
1.13 	paragraph shall not be greater than the amount computed by applying the rates and 
1.14 	brackets under section 2001(c) of the Internal Revenue Code to the Minnesota adjusted 
1.15 	gross estate and subtracting the federal credit allowed under section 2010 of the Internal 
1.16 	Revenue Code of 1986, as amended through December 31, 2000. For the purposes of 
1.17 	this section, expenses which are deducted for federal income tax purposes under section 
1.18 	642(g) of the Internal Revenue Code as amended through December 31, 2002, are not 
1.19 	allowable in computing the tax under this chapter.
1.20 	(b) For purposes of computing the tax under this chapter, the executor may make 
1.21 	a qualified terminable interest property election, as defined in section 2056(b)(7) of 
1.22 	the Internal Revenue Code, that differs from the amount elected for federal estate tax 
1.23 	purposes. The election may not exceed the federal election by more than the difference 
1.24 	between the applicable exclusion amount under section 2010(c) of the Internal Revenue 
2.1 	Code, as amended through December 31, 2005, and under section 2010(c) of the Internal 
2.2 	Revenue Code, as amended through December 31, 2000. The election must be made 
2.3 	on the tax return under this chapter and is irrevocable. All tax under this chapter must 
2.4 	be determined using the qualified terminable interest election made on the Minnesota 
2.5 	return. For purposes of applying sections 2044 and 2207A of the Internal Revenue Code 
2.6 	of the computation of the federal and Minnesota gross estates of the surviving spouse, 
2.7 	amounts for which a qualified terminable interest property election has been made under 
2.8 	this section must be treated as though a valid federal qualified terminable interest property 
2.9 	election under section 2056(b)(7) of the Internal Revenue Code has been made.

2.10 	EFFECTIVE DATE. This section is effective for estates of decedents dying after 
2.11 	December 31, 2005.