1.1    .................... moves to amend H. F. No. 300, the first committee engrossment,
1.2as follows:
1.3Page 2, delete section 2 and insert:

1.4    "Sec. 2. Minnesota Statutes 2006, section 290.01, subdivision 19b, is amended to read:
1.5    Subd. 19b. Subtractions from federal taxable income. For individuals, estates,
1.6and trusts, there shall be subtracted from federal taxable income:
1.7    (1) net interest income on obligations of any authority, commission, or
1.8instrumentality of the United States to the extent includable in taxable income for federal
1.9income tax purposes but exempt from state income tax under the laws of the United States;
1.10    (2) if included in federal taxable income, the amount of any overpayment of income
1.11tax to Minnesota or to any other state, for any previous taxable year, whether the amount
1.12is received as a refund or as a credit to another taxable year's income tax liability;
1.13    (3) the amount paid to others, less the amount used to claim the credit allowed under
1.14section 290.0674, not to exceed $1,625 for each qualifying child in grades kindergarten
1.15to 6 and $2,500 for each qualifying child in grades 7 to 12, for tuition, textbooks, and
1.16transportation of each qualifying child in attending an elementary or secondary school
1.17situated in Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, wherein a
1.18resident of this state may legally fulfill the state's compulsory attendance laws, which
1.19is not operated for profit, and which adheres to the provisions of the Civil Rights Act
1.20of 1964 and chapter 363A. For the purposes of this clause, "tuition" includes fees or
1.21tuition as defined in section 290.0674, subdivision 1, clause (1). As used in this clause,
1.22"textbooks" includes books and other instructional materials and equipment purchased
1.23or leased for use in elementary and secondary schools in teaching only those subjects
1.24legally and commonly taught in public elementary and secondary schools in this state.
1.25Equipment expenses qualifying for deduction includes expenses as defined and limited in
1.26section 290.0674, subdivision 1, clause (3). "Textbooks" does not include instructional
1.27books and materials used in the teaching of religious tenets, doctrines, or worship, the
2.1purpose of which is to instill such tenets, doctrines, or worship, nor does it include books
2.2or materials for, or transportation to, extracurricular activities including sporting events,
2.3musical or dramatic events, speech activities, driver's education, or similar programs. For
2.4purposes of the subtraction provided by this clause, "qualifying child" has the meaning
2.5given in section 32(c)(3) of the Internal Revenue Code;
2.6    (4) income as provided under section 290.0802;
2.7    (5) to the extent included in federal adjusted gross income, income realized on
2.8disposition of property exempt from tax under section 290.491;
2.9    (6) to the extent not deducted in determining federal taxable income by an individual
2.10who does not itemize deductions for federal income tax purposes for the taxable year, an
2.11amount equal to 50 percent of the excess of charitable contributions over $500 allowable
2.12as a deduction for the taxable year under section 170(a) of the Internal Revenue Code and
2.13under the provisions of Public Law 109-1;
2.14    (7) for taxable years beginning before January 1, 2008, the amount of the federal
2.15small ethanol producer credit allowed under section 40(a)(3) of the Internal Revenue Code
2.16which is included in gross income under section 87 of the Internal Revenue Code;
2.17    (8) for individuals who are allowed a federal foreign tax credit for taxes that do not
2.18qualify for a credit under section 290.06, subdivision 22, an amount equal to the carryover
2.19of subnational foreign taxes for the taxable year, but not to exceed the total subnational
2.20foreign taxes reported in claiming the foreign tax credit. For purposes of this clause,
2.21"federal foreign tax credit" means the credit allowed under section 27 of the Internal
2.22Revenue Code, and "carryover of subnational foreign taxes" equals the carryover allowed
2.23under section 904(c) of the Internal Revenue Code minus national level foreign taxes to
2.24the extent they exceed the federal foreign tax credit;
2.25    (9) in each of the five tax years immediately following the tax year in which an
2.26addition is required under subdivision 19a, clause (7), or 19c, clause (15), in the case
2.27of a shareholder of a corporation that is an S corporation, an amount equal to one-fifth
2.28of the delayed depreciation. For purposes of this clause, "delayed depreciation" means
2.29the amount of the addition made by the taxpayer under subdivision 19a, clause (7), or
2.30subdivision 19c, clause (15), in the case of a shareholder of an S corporation, minus the
2.31positive value of any net operating loss under section 172 of the Internal Revenue Code
2.32generated for the tax year of the addition. The resulting delayed depreciation cannot be
2.33less than zero;
2.34    (10) job opportunity building zone income as provided under section 469.316;
2.35    (11) to the extent included in federal adjusted gross income, the amount of
2.36compensation paid to members of the Minnesota National Guard or other active and
3.1reserve components of the United States military armed forces, including the Minnesota
3.2National Guard, for active service performed in Minnesota, excluding compensation for
3.3services performed under the Active Guard Reserve (AGR) program. For purposes of
3.4this clause, "active service" means (i) state active service as defined in section 190.05,
3.5subdivision 5a , clause (1); (ii) federally funded state active service as defined in section
3.6190.05, subdivision 5b ; or (iii) federal active service as defined in section 190.05,
3.7subdivision 5c , but "active service" excludes services performed exclusively for purposes
3.8of basic combat training, advanced individual training, annual training, and periodic
3.9inactive duty training; special training periodically made available to reserve members;
3.10and service performed in accordance with section 190.08, subdivision 3. The maximum
3.11subtraction allowed under this clause is the maximum basic pay allowed during the taxable
3.12year for an individual at the rank of E9 with 10 years of qualifying military experience;
3.13    (12) the amount of compensation paid to Minnesota residents who are members of
3.14the armed forces of the United States or United Nations for active duty performed outside
3.15Minnesota under United States Code, title 10, section 101(d); United States Code, title 32,
3.16section 101(12); or the authority of the United Nations;
3.17    (13) an amount, not to exceed $10,000, equal to qualified expenses related to a
3.18qualified donor's donation, while living, of one or more of the qualified donor's organs
3.19to another person for human organ transplantation. For purposes of this clause, "organ"
3.20means all or part of an individual's liver, pancreas, kidney, intestine, lung, or bone marrow;
3.21"human organ transplantation" means the medical procedure by which transfer of a human
3.22organ is made from the body of one person to the body of another person; "qualified
3.23expenses" means unreimbursed expenses for both the individual and the qualified donor
3.24for (i) travel, (ii) lodging, and (iii) lost wages net of sick pay, except that such expenses
3.25may be subtracted under this clause only once; and "qualified donor" means the individual
3.26or the individual's dependent, as defined in section 152 of the Internal Revenue Code. An
3.27individual may claim the subtraction in this clause for each instance of organ donation for
3.28transplantation during the taxable year in which the qualified expenses occur;
3.29    (14) in each of the five tax years immediately following the tax year in which an
3.30addition is required under subdivision 19a, clause (8), or 19c, clause (16), in the case of a
3.31shareholder of a corporation that is an S corporation, an amount equal to one-fifth of the
3.32addition made by the taxpayer under subdivision 19a, clause (8), or 19c, clause (16), in the
3.33case of a shareholder of a corporation that is an S corporation, minus the positive value of
3.34any net operating loss under section 172 of the Internal Revenue Code generated for the
3.35tax year of the addition. If the net operating loss exceeds the addition for the tax year, a
3.36subtraction is not allowed under this clause;
4.1    (15) to the extent included in federal taxable income, compensation paid to a
4.2nonresident who is a service member as defined in United States Code, title 10, section
4.3101(a)(5), for military service as defined in the Service Member Civil Relief Act, Public
4.4Law 108-189, section 101(2); and
4.5    (16) international economic development zone income as provided under section
4.6469.325 ; and
4.7    (17) to the extent included in federal taxable income, a percentage of compensation,
4.8up to a maximum amount, received from a pension or other retirement pay from the
4.9federal government for service in the military, as computed under United States Code
4.10Title 10, sections 1401 to 1412, 1447 to 1455, and 12733, as follows: (i) for taxable
4.11years beginning after December 31, 2006, and before January 1, 2008, the percentage is
4.1225 percent, and the maximum amount is $7,500; (ii) for taxable years beginning after
4.13December 31, 2007, and before January 1, 2009, the percentage is 50 percent, and the
4.14maximum amount is $15,000; (iii) for taxable years beginning after December 31, 2008,
4.15and before January 1, 2010, the percentage is 75 percent, and the maximum amount is
4.16$22,500; and (iv) for taxable years beginning after December 31, 2009, the percentage is
4.17100 percent, and there is no maximum amount.
4.18EFFECTIVE DATE.This section is effective for taxable years beginning after
4.19December 31, 2006, except that: (1) the changes in clause (12) are retroactive to taxable
4.20years beginning after December 31, 2004, and (2) the changes in clause (11) are phased in
4.21as follows. For tax years beginning after December 31, 2006, and before January 1, 2008,
4.2225 percent of the compensation affected by the changes is an allowable subtraction. For
4.23the tax year beginning after December 31, 2007, and before January 1, 2009, 50 percent
4.24is allowed. For the tax year beginning after December 31, 2008, and before January
4.251, 2010, 75 percent is allowed. For tax years beginning after December 31, 2009, 100
4.26percent is allowed.

4.27    Sec. 3. Minnesota Statutes 2006, section 290.091, subdivision 2, is amended to read:
4.28    Subd. 2. Definitions. For purposes of the tax imposed by this section, the following
4.29terms have the meanings given:
4.30    (a) "Alternative minimum taxable income" means the sum of the following for
4.31the taxable year:
4.32    (1) the taxpayer's federal alternative minimum taxable income as defined in section
4.3355(b)(2) of the Internal Revenue Code;
4.34    (2) the taxpayer's itemized deductions allowed in computing federal alternative
4.35minimum taxable income, but excluding:
5.1    (i) the charitable contribution deduction under section 170 of the Internal Revenue
5.2Code:
5.3    (A) for taxable years beginning before January 1, 2006, to the extent that the
5.4deduction exceeds 1.0 percent of adjusted gross income;
5.5    (B) for taxable years beginning after December 31, 2005, to the full extent of the
5.6deduction.
5.7    For purposes of this clause, "adjusted gross income" has the meaning given in
5.8section 62 of the Internal Revenue Code;
5.9    (ii) the medical expense deduction;
5.10    (iii) the casualty, theft, and disaster loss deduction; and
5.11    (iv) the impairment-related work expenses of a disabled person;
5.12    (3) for depletion allowances computed under section 613A(c) of the Internal
5.13Revenue Code, with respect to each property (as defined in section 614 of the Internal
5.14Revenue Code), to the extent not included in federal alternative minimum taxable income,
5.15the excess of the deduction for depletion allowable under section 611 of the Internal
5.16Revenue Code for the taxable year over the adjusted basis of the property at the end of the
5.17taxable year (determined without regard to the depletion deduction for the taxable year);
5.18    (4) to the extent not included in federal alternative minimum taxable income, the
5.19amount of the tax preference for intangible drilling cost under section 57(a)(2) of the
5.20Internal Revenue Code determined without regard to subparagraph (E);
5.21    (5) to the extent not included in federal alternative minimum taxable income, the
5.22amount of interest income as provided by section 290.01, subdivision 19a, clause (1); and
5.23    (6) the amount of addition required by section 290.01, subdivision 19a, clauses
5.24(7), (8), and (9);
5.25    less the sum of the amounts determined under the following:
5.26    (1) interest income as defined in section 290.01, subdivision 19b, clause (1);
5.27    (2) an overpayment of state income tax as provided by section 290.01, subdivision
5.2819b , clause (2), to the extent included in federal alternative minimum taxable income;
5.29    (3) the amount of investment interest paid or accrued within the taxable year on
5.30indebtedness to the extent that the amount does not exceed net investment income, as
5.31defined in section 163(d)(4) of the Internal Revenue Code. Interest does not include
5.32amounts deducted in computing federal adjusted gross income; and
5.33    (4) amounts subtracted from federal taxable income as provided by section 290.01,
5.34subdivision 19b , clauses (9) to (16) (17).
5.35    In the case of an estate or trust, alternative minimum taxable income must be
5.36computed as provided in section 59(c) of the Internal Revenue Code.
6.1    (b) "Investment interest" means investment interest as defined in section 163(d)(3)
6.2of the Internal Revenue Code.
6.3    (c) "Tentative minimum tax" equals 6.4 percent of alternative minimum taxable
6.4income after subtracting the exemption amount determined under subdivision 3.
6.5    (d) "Regular tax" means the tax that would be imposed under this chapter (without
6.6regard to this section and section 290.032), reduced by the sum of the nonrefundable
6.7credits allowed under this chapter.
6.8    (e) "Net minimum tax" means the minimum tax imposed by this section.
6.9EFFECTIVE DATE.This section is effective for tax years beginning after
6.10December 31, 2006."