1.1.................... moves to amend H.F. No. 1231 as follows:
1.2Page 10, delete section 11, and insert:

1.3    "Sec. 11. Minnesota Statutes 2010, section 290.01, subdivision 19c, as amended by
1.4Laws 2011, chapter 8, section 4, is amended to read:
1.5    Subd. 19c. Corporations; additions to federal taxable income. For corporations,
1.6there shall be added to federal taxable income:
1.7    (1) the amount of any deduction taken for federal income tax purposes for income,
1.8excise, or franchise taxes based on net income or related minimum taxes, including but not
1.9limited to the tax imposed under section 290.0922, paid by the corporation to Minnesota,
1.10another state, a political subdivision of another state, the District of Columbia, or any
1.11foreign country or possession of the United States;
1.12    (2) interest not subject to federal tax upon obligations of: the United States, its
1.13possessions, its agencies, or its instrumentalities; the state of Minnesota or any other
1.14state, any of its political or governmental subdivisions, any of its municipalities, or any
1.15of its governmental agencies or instrumentalities; the District of Columbia; or Indian
1.16tribal governments;
1.17    (3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal
1.18Revenue Code;
1.19    (4) the amount of any net operating loss deduction taken for federal income tax
1.20purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss
1.21deduction under section 810 of the Internal Revenue Code;
1.22    (5) the amount of any special deductions taken for federal income tax purposes
1.23under sections 241 to 247 and 965 of the Internal Revenue Code;
1.24    (6) losses from the business of mining, as defined in section 290.05, subdivision 1,
1.25clause (a), that are not subject to Minnesota income tax;
1.26    (7) the amount of any capital losses deducted for federal income tax purposes under
1.27sections 1211 and 1212 of the Internal Revenue Code;
2.1    (8) the exempt foreign trade income of a foreign sales corporation under sections
2.2921(a) and 291 of the Internal Revenue Code;
2.3    (9) the amount of percentage depletion deducted under sections 611 through 614 and
2.4291 of the Internal Revenue Code;
2.5    (10) for certified pollution control facilities placed in service in a taxable year
2.6beginning before December 31, 1986, and for which amortization deductions were elected
2.7under section 169 of the Internal Revenue Code of 1954, as amended through December
2.831, 1985, the amount of the amortization deduction allowed in computing federal taxable
2.9income for those facilities;
2.10    (11) the amount of any deemed dividend from a foreign operating corporation
2.11determined pursuant to section 290.17, subdivision 4, paragraph (g). The deemed dividend
2.12shall be reduced by the amount of the addition to income required by clauses (20), (21),
2.13(22), and (23);
2.14    (12) (11) the amount of a partner's pro rata share of net income which does not flow
2.15through to the partner because the partnership elected to pay the tax on the income under
2.16section 6242(a)(2) of the Internal Revenue Code;
2.17    (13) (12) the amount of net income excluded under section 114 of the Internal
2.18Revenue Code;
2.19    (14) (13) any increase in subpart F income, as defined in section 952(a) of the
2.20Internal Revenue Code, for the taxable year when subpart F income is calculated without
2.21regard to the provisions of Division C, title III, section 303(b) of Public Law 110-343;
2.22    (15) (14) 80 percent of the depreciation deduction allowed under section
2.23168(k)(1)(A) and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if
2.24the taxpayer has an activity that in the taxable year generates a deduction for depreciation
2.25under section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable
2.26year that the taxpayer is not allowed to claim for the taxable year, "the depreciation
2.27allowed under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess
2.28of the depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A)
2.29over the amount of the loss from the activity that is not allowed in the taxable year. In
2.30succeeding taxable years when the losses not allowed in the taxable year are allowed, the
2.31depreciation under section 168(k)(1)(A) and (k)(4)(A) is allowed;
2.32    (16) (15) 80 percent of the amount by which the deduction allowed by section 179 of
2.33the Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
2.34Revenue Code of 1986, as amended through December 31, 2003;
2.35    (17) (16) to the extent deducted in computing federal taxable income, the amount of
2.36the deduction allowable under section 199 of the Internal Revenue Code;
3.1    (18) (17) the exclusion allowed under section 139A of the Internal Revenue Code
3.2for federal subsidies for prescription drug plans;
3.3    (19) (18) the amount of expenses disallowed under section 290.10, subdivision 2;
3.4    (20) an amount equal to the interest and intangible expenses, losses, and costs paid,
3.5accrued, or incurred by any member of the taxpayer's unitary group to or for the benefit
3.6of a corporation that is a member of the taxpayer's unitary business group that qualifies
3.7as a foreign operating corporation. For purposes of this clause, intangible expenses and
3.8costs include:
3.9    (i) expenses, losses, and costs for, or related to, the direct or indirect acquisition,
3.10use, maintenance or management, ownership, sale, exchange, or any other disposition of
3.11intangible property;
3.12    (ii) losses incurred, directly or indirectly, from factoring transactions or discounting
3.13transactions;
3.14    (iii) royalty, patent, technical, and copyright fees;
3.15    (iv) licensing fees; and
3.16    (v) other similar expenses and costs.
3.17For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
3.18applications, trade names, trademarks, service marks, copyrights, mask works, trade
3.19secrets, and similar types of intangible assets.
3.20This clause does not apply to any item of interest or intangible expenses or costs paid,
3.21accrued, or incurred, directly or indirectly, to a foreign operating corporation with respect
3.22to such item of income to the extent that the income to the foreign operating corporation
3.23is income from sources without the United States as defined in subtitle A, chapter 1,
3.24subchapter N, part 1, of the Internal Revenue Code;
3.25    (21) except as already included in the taxpayer's taxable income pursuant to clause
3.26(20), any interest income and income generated from intangible property received or
3.27accrued by a foreign operating corporation that is a member of the taxpayer's unitary
3.28group. For purposes of this clause, income generated from intangible property includes:
3.29    (i) income related to the direct or indirect acquisition, use, maintenance or
3.30management, ownership, sale, exchange, or any other disposition of intangible property;
3.31    (ii) income from factoring transactions or discounting transactions;
3.32    (iii) royalty, patent, technical, and copyright fees;
3.33    (iv) licensing fees; and
3.34    (v) other similar income.
4.1For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
4.2applications, trade names, trademarks, service marks, copyrights, mask works, trade
4.3secrets, and similar types of intangible assets.
4.4This clause does not apply to any item of interest or intangible income received or accrued
4.5by a foreign operating corporation with respect to such item of income to the extent that
4.6the income is income from sources without the United States as defined in subtitle A,
4.7chapter 1, subchapter N, part 1, of the Internal Revenue Code;
4.8    (22) the dividends attributable to the income of a foreign operating corporation that
4.9is a member of the taxpayer's unitary group in an amount that is equal to the dividends
4.10paid deduction of a real estate investment trust under section 561(a) of the Internal
4.11Revenue Code for amounts paid or accrued by the real estate investment trust to the
4.12foreign operating corporation;
4.13    (23) the income of a foreign operating corporation that is a member of the taxpayer's
4.14unitary group in an amount that is equal to gains derived from the sale of real or personal
4.15property located in the United States;
4.16    (24) (19) for taxable years beginning before January 1, 2010, and after December
4.1731, 2010, the additional amount allowed as a deduction for donation of computer
4.18technology and equipment under section 170(e)(6) of the Internal Revenue Code, to the
4.19extent deducted from taxable income; and
4.20(25) (20) discharge of indebtedness income resulting from reacquisition of business
4.21indebtedness and deferred under section 108(i) of the Internal Revenue Code.
4.22EFFECTIVE DATE.This section is effective for taxable years beginning after
4.23December 31, 2010."
4.24Page 34, line 33, delete "2010" and insert "2011"
4.25Page 35, line 21, delete "2010" and insert "2011"
4.26Page 38, delete lines 15 and 16 and insert:
4.27"EFFECTIVE DATE.This section is effective for taxable years beginning after
4.28December 31, 2010, except that the new language added to paragraph (f) and the new
4.29language added to the new paragraph (g) are effective for taxable years beginning after
4.30December 31, 2011."
4.31Page 44, delete lines 3 and 4 and insert:
4.32"EFFECTIVE DATE.The changes made to paragraph (a) are effective for taxable
4.33years beginning after December 31, 2010, and the changes made to paragraph (c) are
4.34effective for taxable years beginning after December 31, 2011."
4.35Page 51, delete lines 9 and 13
5.1Page 51, delete article 2 and insert:


5.4    Section 1. Minnesota Statutes 2010, section 289A.02, subdivision 7, as amended by
5.5Laws 2011, chapter 8, section 1, is amended to read:
5.6    Subd. 7. Internal Revenue Code. Unless specifically defined otherwise, for taxable
5.7years beginning before January 1, 2010, and after December 31, 2010, "Internal Revenue
5.8Code" means the Internal Revenue Code of 1986, as amended through March 18, 2010;
5.9and for taxable years beginning after December 31, 2009, and before January 1, 2011,
5.10"Internal Revenue Code" means the Internal Revenue Code of 1986, as amended through
5.11December 31, 2010.
5.12EFFECTIVE DATE.This section is effective the day following final enactment.

5.13    Sec. 2. Minnesota Statutes 2010, section 290.01, subdivision 19, as amended by Laws
5.142011, chapter 8, section 2, is amended to read:
5.15    Subd. 19. Net income. The term "net income" means the federal taxable income,
5.16as defined in section 63 of the Internal Revenue Code of 1986, as amended through the
5.17date named in this subdivision, incorporating the federal effective dates of changes to the
5.18Internal Revenue Code and any elections made by the taxpayer in accordance with the
5.19Internal Revenue Code in determining federal taxable income for federal income tax
5.20purposes, and with the modifications provided in subdivisions 19a to 19f.
5.21    In the case of a regulated investment company or a fund thereof, as defined in section
5.22851(a) or 851(g) of the Internal Revenue Code, federal taxable income means investment
5.23company taxable income as defined in section 852(b)(2) of the Internal Revenue Code,
5.24except that:
5.25    (1) the exclusion of net capital gain provided in section 852(b)(2)(A) of the Internal
5.26Revenue Code does not apply;
5.27    (2) the deduction for dividends paid under section 852(b)(2)(D) of the Internal
5.28Revenue Code must be applied by allowing a deduction for capital gain dividends and
5.29exempt-interest dividends as defined in sections 852(b)(3)(C) and 852(b)(5) of the Internal
5.30Revenue Code; and
5.31    (3) the deduction for dividends paid must also be applied in the amount of any
5.32undistributed capital gains which the regulated investment company elects to have treated
5.33as provided in section 852(b)(3)(D) of the Internal Revenue Code.
6.1    The net income of a real estate investment trust as defined and limited by section
6.2856(a), (b), and (c) of the Internal Revenue Code means the real estate investment trust
6.3taxable income as defined in section 857(b)(2) of the Internal Revenue Code.
6.4    The net income of a designated settlement fund as defined in section 468B(d) of
6.5the Internal Revenue Code means the gross income as defined in section 468B(b) of the
6.6Internal Revenue Code.
6.7    The Internal Revenue Code of 1986, as amended through March 18 December 31,
6.82010, shall be in effect for taxable years beginning after December 31, 1996, except
6.9that for taxable years beginning after December 31, 2009, and before January 1, 2011,
6.10"Internal Revenue Code" means the Internal Revenue Code of 1986, as amended through
6.11December 31, 2010. The provisions of the act of January 22, 2010, Public Law 111-126,
6.12to accelerate the benefits for charitable cash contributions for the relief of victims of the
6.13Haitian earthquake, are effective at the same time it became effective for federal purposes
6.14and apply to the subtraction under subdivision 19b, clause (6). The provisions of title II,
6.15section 2112, of the act of September 27, 2010, Public Law 111-240, rollovers from
6.16elective deferral plans to designated Roth accounts, are effective at the same time they
6.17became effective for federal purposes and taxable rollovers are included in net income at
6.18the same time they are included in gross income for federal purposes.
6.19    Except as otherwise provided, references to the Internal Revenue Code in
6.20subdivisions 19 to 19f mean the code in effect for purposes of determining net income for
6.21the applicable year.
6.22EFFECTIVE DATE.This section is effective the day following final enactment.

6.23    Sec. 3. Minnesota Statutes 2010, section 290.01, subdivision 19a, as amended by Laws
6.242011, chapter 8, section 3, is amended to read:
6.25    Subd. 19a. Additions to federal taxable income. For individuals, estates, and
6.26trusts, there shall be added to federal taxable income:
6.27    (1)(i) interest income on obligations of any state other than Minnesota or a political
6.28or governmental subdivision, municipality, or governmental agency or instrumentality
6.29of any state other than Minnesota exempt from federal income taxes under the Internal
6.30Revenue Code or any other federal statute; and
6.31    (ii) exempt-interest dividends as defined in section 852(b)(5) of the Internal Revenue
6.32Code, except:
6.33(A) the portion of the exempt-interest dividends exempt from state taxation under
6.34the laws of the United States; and
7.1(B) the portion of the exempt-interest dividends derived from interest income
7.2on obligations of the state of Minnesota or its political or governmental subdivisions,
7.3municipalities, governmental agencies or instrumentalities, but only if the portion of the
7.4exempt-interest dividends from such Minnesota sources paid to all shareholders represents
7.595 percent or more of the exempt-interest dividends, including any dividends exempt
7.6under subitem (A), that are paid by the regulated investment company as defined in section
7.7851(a) of the Internal Revenue Code, or the fund of the regulated investment company as
7.8defined in section 851(g) of the Internal Revenue Code, making the payment; and
7.9    (iii) for the purposes of items (i) and (ii), interest on obligations of an Indian tribal
7.10government described in section 7871(c) of the Internal Revenue Code shall be treated as
7.11interest income on obligations of the state in which the tribe is located;
7.12    (2) the amount of income, sales and use, motor vehicle sales, or excise taxes paid or
7.13accrued within the taxable year under this chapter and the amount of taxes based on net
7.14income paid, sales and use, motor vehicle sales, or excise taxes paid to any other state or
7.15to any province or territory of Canada, to the extent allowed as a deduction under section
7.1663(d) of the Internal Revenue Code minus any addition that would have been required
7.17under clause (20) if the taxpayer had claimed the standard deduction, but the addition may
7.18not be more than the amount by which the itemized deductions as allowed under section
7.1963(d) of the Internal Revenue Code exceeds the amount of the standard deduction as
7.20defined in section 63(c) of the Internal Revenue Code, disregarding the amounts allowed
7.21under sections 63(c)(1)(C) and 63(c)(1)(E) of the Internal Revenue Code. For the purpose
7.22of this paragraph, the disallowance of itemized deductions under section 68 of the Internal
7.23Revenue Code of 1986, income, sales and use, motor vehicle sales, or excise taxes are
7.24the last itemized deductions disallowed;
7.25    (3) the capital gain amount of a lump-sum distribution to which the special tax under
7.26section 1122(h)(3)(B)(ii) of the Tax Reform Act of 1986, Public Law 99-514, applies;
7.27    (4) the amount of income taxes paid or accrued within the taxable year under this
7.28chapter and taxes based on net income paid to any other state or any province or territory
7.29of Canada, to the extent allowed as a deduction in determining federal adjusted gross
7.30income. For the purpose of this paragraph, income taxes do not include the taxes imposed
7.31by sections 290.0922, subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729;
7.32    (5) the amount of expense, interest, or taxes disallowed pursuant to section 290.10
7.33other than expenses or interest used in computing net interest income for the subtraction
7.34allowed under subdivision 19b, clause (1);
8.1    (6) the amount of a partner's pro rata share of net income which does not flow
8.2through to the partner because the partnership elected to pay the tax on the income under
8.3section 6242(a)(2) of the Internal Revenue Code;
8.4    (7) 80 percent of the depreciation deduction allowed under section 168(k) of the
8.5Internal Revenue Code. For purposes of this clause, if the taxpayer has an activity that
8.6in the taxable year generates a deduction for depreciation under section 168(k) and the
8.7activity generates a loss for the taxable year that the taxpayer is not allowed to claim for
8.8the taxable year, "the depreciation allowed under section 168(k)" for the taxable year is
8.9limited to excess of the depreciation claimed by the activity under section 168(k) over the
8.10amount of the loss from the activity that is not allowed in the taxable year. In succeeding
8.11taxable years when the losses not allowed in the taxable year are allowed, the depreciation
8.12under section 168(k) is allowed;
8.13    (8) 80 percent of the amount by which the deduction allowed by section 179 of the
8.14Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
8.15Revenue Code of 1986, as amended through December 31, 2003;
8.16    (9) to the extent deducted in computing federal taxable income, the amount of the
8.17deduction allowable under section 199 of the Internal Revenue Code;
8.18    (10) for tax years beginning before January 1, 2013, the exclusion allowed under
8.19section 139A of the Internal Revenue Code for federal subsidies for prescription drug
8.20plans;
8.21(11) the amount of expenses disallowed under section 290.10, subdivision 2;
8.22    (12) for taxable years beginning before January 1, 2010, and after December 31,
8.232010, the amount deducted for qualified tuition and related expenses under section 222 of
8.24the Internal Revenue Code, to the extent deducted from gross income;
8.25    (13) for taxable years beginning before January 1, 2010, and after December 31,
8.262010, the amount deducted for certain expenses of elementary and secondary school
8.27teachers under section 62(a)(2)(D) of the Internal Revenue Code, to the extent deducted
8.28from gross income;
8.29(14) the additional standard deduction for property taxes payable that is allowable
8.30under section 63(c)(1)(C) of the Internal Revenue Code;
8.31(15) the additional standard deduction for qualified motor vehicle sales taxes
8.32allowable under section 63(c)(1)(E) of the Internal Revenue Code;
8.33(16) discharge of indebtedness income resulting from reacquisition of business
8.34indebtedness and deferred under section 108(i) of the Internal Revenue Code; and
8.35(17) the amount of unemployment compensation exempt from tax under section
8.3685(c) of the Internal Revenue Code.; and
9.1(18) to the extent included in the computation of federal taxable income in taxable
9.2years beginning after December 31, 2010, the amount of disallowed itemized deductions.
9.3(i) The amount of disallowed itemized deductions is equal to the lesser of:
9.4(A) three percent of the excess of the taxpayer's federal adjusted gross income
9.5over the applicable amount; or
9.6(B) 80 percent of the amount of the itemized deductions otherwise allowable to the
9.7taxpayer under the Internal Revenue Code for the taxable year.
9.8(ii) The term "applicable amount" means $100,000, or $50,000 in the case of a
9.9married individual filing a separate return. Each dollar amount shall be increased by
9.10an amount equal to:
9.11(A) such dollar amount, multiplied by
9.12(B) the cost-of-living adjustment determined under section 1(f)(3) of the Internal
9.13Revenue Code for the calendar year in which the taxable year begins, by substituting
9.14"calendar year 1990" for "calendar year 1992" in subparagraph (B) thereof.
9.15(iii) The term "itemized deductions" does not include:
9.16(A) the deduction for medical expenses under section 213 of the Internal Revenue
9.17Code;
9.18(B) any deduction for investment interest as defined in section 163(d) of the Internal
9.19Revenue Code; and
9.20(C) the deduction under section 165(a) of the Internal Revenue Code for casualty or
9.21theft losses described in paragraph (2) or (3) of section 165(c) of the Internal Revenue
9.22Code or for losses described in section 165(d) of the Internal Revenue Code;
9.23(19) to the extent included in federal taxable income in taxable years beginning after
9.24December 31, 2010, the amount of disallowed personal exemptions for taxpayers with
9.25federal adjusted gross income over the threshold amount.
9.26(i) The disallowed personal exemption amount is equal to the dollar amount of the
9.27personal exemptions claimed by the taxpayer in the computation of federal taxable income
9.28multiplied by the applicable percentage.
9.29(ii) "Applicable percentage" means two percentage points for each $2,500 (or
9.30fraction thereof) by which the taxpayer's federal adjusted gross income for the taxable
9.31year exceeds the threshold amount. In the case of a married individual filing a separate
9.32return, the preceding sentence shall be applied by substituting "$1,250" for "$2,500." In no
9.33event shall the applicable percentage exceed 100 percent.
9.34(iii) The term "threshold amount" means:
9.35(A) $150,000 in the case of a joint return or a surviving spouse;
9.36(B) $125,000 in the case of a head of a household;
10.1(C) $100,000 in the case of an individual who is not married and who is not a
10.2surviving spouse or head of a household; and
10.3(D) $75,000 in the case of a married individual filing a separate return.
10.4(iv) The thresholds shall be increased by an amount equal to:
10.5(A) such dollar amount, multiplied by
10.6(B) the cost-of-living adjustment determined under section 1(f)(3) of the Internal
10.7Revenue Code for the calendar year in which the taxable year begins, by substituting
10.8"calendar year 1990" for "calendar year 1992" in subparagraph (B) thereof; and
10.9(20) to the extent deducted in the computation of federal taxable income, for taxable
10.10years beginning after December 31, 2010, and before January 1, 2013, the difference
10.11between the standard deduction allowed under section 63(a) of the Internal Revenue Code
10.12and the standard deduction allowed for 2011 and 2012 under the Internal Revenue Code
10.13as amended through December 1, 2010.
10.14EFFECTIVE DATE.This section is effective the day following final enactment.

10.15    Sec. 4. Minnesota Statutes 2010, section 290.01, subdivision 19c, as amended by Laws
10.162011, chapter 8, section 4, is amended to read:
10.17    Subd. 19c. Corporations; additions to federal taxable income. For corporations,
10.18there shall be added to federal taxable income:
10.19    (1) the amount of any deduction taken for federal income tax purposes for income,
10.20excise, or franchise taxes based on net income or related minimum taxes, including but not
10.21limited to the tax imposed under section 290.0922, paid by the corporation to Minnesota,
10.22another state, a political subdivision of another state, the District of Columbia, or any
10.23foreign country or possession of the United States;
10.24    (2) interest not subject to federal tax upon obligations of: the United States, its
10.25possessions, its agencies, or its instrumentalities; the state of Minnesota or any other
10.26state, any of its political or governmental subdivisions, any of its municipalities, or any
10.27of its governmental agencies or instrumentalities; the District of Columbia; or Indian
10.28tribal governments;
10.29    (3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal
10.30Revenue Code;
10.31    (4) the amount of any net operating loss deduction taken for federal income tax
10.32purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss
10.33deduction under section 810 of the Internal Revenue Code;
10.34    (5) the amount of any special deductions taken for federal income tax purposes
10.35under sections 241 to 247 and 965 of the Internal Revenue Code;
11.1    (6) losses from the business of mining, as defined in section 290.05, subdivision 1,
11.2clause (a), that are not subject to Minnesota income tax;
11.3    (7) the amount of any capital losses deducted for federal income tax purposes under
11.4sections 1211 and 1212 of the Internal Revenue Code;
11.5    (8) the exempt foreign trade income of a foreign sales corporation under sections
11.6921(a) and 291 of the Internal Revenue Code;
11.7    (9) the amount of percentage depletion deducted under sections 611 through 614 and
11.8291 of the Internal Revenue Code;
11.9    (10) for certified pollution control facilities placed in service in a taxable year
11.10beginning before December 31, 1986, and for which amortization deductions were elected
11.11under section 169 of the Internal Revenue Code of 1954, as amended through December
11.1231, 1985, the amount of the amortization deduction allowed in computing federal taxable
11.13income for those facilities;
11.14    (11) the amount of any deemed dividend from a foreign operating corporation
11.15determined pursuant to section 290.17, subdivision 4, paragraph (g). The deemed dividend
11.16shall be reduced by the amount of the addition to income required by clauses (20), (21),
11.17(22), and (23);
11.18    (12) the amount of a partner's pro rata share of net income which does not flow
11.19through to the partner because the partnership elected to pay the tax on the income under
11.20section 6242(a)(2) of the Internal Revenue Code;
11.21    (13) the amount of net income excluded under section 114 of the Internal Revenue
11.22Code;
11.23    (14) any increase in subpart F income, as defined in section 952(a) of the Internal
11.24Revenue Code, for the taxable year when subpart F income is calculated without regard to
11.25the provisions of Division C, title III, section 303(b) of Public Law 110-343 section 750
11.26of Public Law 111-312;
11.27    (15) 80 percent of the depreciation deduction allowed under section 168(k)(1)(A)
11.28and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if the taxpayer
11.29has an activity that in the taxable year generates a deduction for depreciation under
11.30section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable year
11.31that the taxpayer is not allowed to claim for the taxable year, "the depreciation allowed
11.32under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess of the
11.33depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A) over the
11.34amount of the loss from the activity that is not allowed in the taxable year. In succeeding
11.35taxable years when the losses not allowed in the taxable year are allowed, the depreciation
11.36under section 168(k)(1)(A) and (k)(4)(A) is allowed;
12.1    (16) 80 percent of the amount by which the deduction allowed by section 179 of the
12.2Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
12.3Revenue Code of 1986, as amended through December 31, 2003;
12.4    (17) to the extent deducted in computing federal taxable income, the amount of the
12.5deduction allowable under section 199 of the Internal Revenue Code;
12.6    (18) for taxable years beginning before January 1, 2013, the exclusion allowed
12.7under section 139A of the Internal Revenue Code for federal subsidies for prescription
12.8drug plans;
12.9    (19) the amount of expenses disallowed under section 290.10, subdivision 2;
12.10    (20) an amount equal to the interest and intangible expenses, losses, and costs paid,
12.11accrued, or incurred by any member of the taxpayer's unitary group to or for the benefit
12.12of a corporation that is a member of the taxpayer's unitary business group that qualifies
12.13as a foreign operating corporation. For purposes of this clause, intangible expenses and
12.14costs include:
12.15    (i) expenses, losses, and costs for, or related to, the direct or indirect acquisition,
12.16use, maintenance or management, ownership, sale, exchange, or any other disposition of
12.17intangible property;
12.18    (ii) losses incurred, directly or indirectly, from factoring transactions or discounting
12.19transactions;
12.20    (iii) royalty, patent, technical, and copyright fees;
12.21    (iv) licensing fees; and
12.22    (v) other similar expenses and costs.
12.23For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
12.24applications, trade names, trademarks, service marks, copyrights, mask works, trade
12.25secrets, and similar types of intangible assets.
12.26This clause does not apply to any item of interest or intangible expenses or costs paid,
12.27accrued, or incurred, directly or indirectly, to a foreign operating corporation with respect
12.28to such item of income to the extent that the income to the foreign operating corporation
12.29is income from sources without the United States as defined in subtitle A, chapter 1,
12.30subchapter N, part 1, of the Internal Revenue Code;
12.31    (21) except as already included in the taxpayer's taxable income pursuant to clause
12.32(20), any interest income and income generated from intangible property received or
12.33accrued by a foreign operating corporation that is a member of the taxpayer's unitary
12.34group. For purposes of this clause, income generated from intangible property includes:
12.35    (i) income related to the direct or indirect acquisition, use, maintenance or
12.36management, ownership, sale, exchange, or any other disposition of intangible property;
13.1    (ii) income from factoring transactions or discounting transactions;
13.2    (iii) royalty, patent, technical, and copyright fees;
13.3    (iv) licensing fees; and
13.4    (v) other similar income.
13.5For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
13.6applications, trade names, trademarks, service marks, copyrights, mask works, trade
13.7secrets, and similar types of intangible assets.
13.8This clause does not apply to any item of interest or intangible income received or accrued
13.9by a foreign operating corporation with respect to such item of income to the extent that
13.10the income is income from sources without the United States as defined in subtitle A,
13.11chapter 1, subchapter N, part 1, of the Internal Revenue Code;
13.12    (22) the dividends attributable to the income of a foreign operating corporation that
13.13is a member of the taxpayer's unitary group in an amount that is equal to the dividends
13.14paid deduction of a real estate investment trust under section 561(a) of the Internal
13.15Revenue Code for amounts paid or accrued by the real estate investment trust to the
13.16foreign operating corporation;
13.17    (23) the income of a foreign operating corporation that is a member of the taxpayer's
13.18unitary group in an amount that is equal to gains derived from the sale of real or personal
13.19property located in the United States;
13.20    (24) for taxable years beginning before January 1, 2010, and after December 31,
13.212010, the additional amount allowed as a deduction for donation of computer technology
13.22and equipment under section 170(e)(6) of the Internal Revenue Code, to the extent
13.23deducted from taxable income; and
13.24(25) discharge of indebtedness income resulting from reacquisition of business
13.25indebtedness and deferred under section 108(i) of the Internal Revenue Code.
13.26EFFECTIVE DATE.The changes to clauses (14) and (24) are effective for taxable
13.27years beginning after December 31, 2009. The change to clause (18) is effective the
13.28day following final enactment.

13.29    Sec. 5. Minnesota Statutes 2010, section 290.01, subdivision 19d, is amended to read:
13.30    Subd. 19d. Corporations; modifications decreasing federal taxable income. For
13.31corporations, there shall be subtracted from federal taxable income after the increases
13.32provided in subdivision 19c:
13.33    (1) the amount of foreign dividend gross-up added to gross income for federal
13.34income tax purposes under section 78 of the Internal Revenue Code;
14.1    (2) the amount of salary expense not allowed for federal income tax purposes due to
14.2claiming the work opportunity credit under section 51 of the Internal Revenue Code;
14.3    (3) any dividend (not including any distribution in liquidation) paid within the
14.4taxable year by a national or state bank to the United States, or to any instrumentality of
14.5the United States exempt from federal income taxes, on the preferred stock of the bank
14.6owned by the United States or the instrumentality;
14.7    (4) amounts disallowed for intangible drilling costs due to differences between
14.8this chapter and the Internal Revenue Code in taxable years beginning before January
14.91, 1987, as follows:
14.10    (i) to the extent the disallowed costs are represented by physical property, an amount
14.11equal to the allowance for depreciation under Minnesota Statutes 1986, section 290.09,
14.12subdivision 7 , subject to the modifications contained in subdivision 19e; and
14.13    (ii) to the extent the disallowed costs are not represented by physical property, an
14.14amount equal to the allowance for cost depletion under Minnesota Statutes 1986, section
14.15290.09, subdivision 8 ;
14.16    (5) the deduction for capital losses pursuant to sections 1211 and 1212 of the
14.17Internal Revenue Code, except that:
14.18    (i) for capital losses incurred in taxable years beginning after December 31, 1986,
14.19capital loss carrybacks shall not be allowed;
14.20    (ii) for capital losses incurred in taxable years beginning after December 31, 1986,
14.21a capital loss carryover to each of the 15 taxable years succeeding the loss year shall be
14.22allowed;
14.23    (iii) for capital losses incurred in taxable years beginning before January 1, 1987, a
14.24capital loss carryback to each of the three taxable years preceding the loss year, subject to
14.25the provisions of Minnesota Statutes 1986, section 290.16, shall be allowed; and
14.26    (iv) for capital losses incurred in taxable years beginning before January 1, 1987,
14.27a capital loss carryover to each of the five taxable years succeeding the loss year to the
14.28extent such loss was not used in a prior taxable year and subject to the provisions of
14.29Minnesota Statutes 1986, section 290.16, shall be allowed;
14.30    (6) an amount for interest and expenses relating to income not taxable for federal
14.31income tax purposes, if (i) the income is taxable under this chapter and (ii) the interest and
14.32expenses were disallowed as deductions under the provisions of section 171(a)(2), 265 or
14.33291 of the Internal Revenue Code in computing federal taxable income;
14.34    (7) in the case of mines, oil and gas wells, other natural deposits, and timber for
14.35which percentage depletion was disallowed pursuant to subdivision 19c, clause (9), a
14.36reasonable allowance for depletion based on actual cost. In the case of leases the deduction
15.1must be apportioned between the lessor and lessee in accordance with rules prescribed
15.2by the commissioner. In the case of property held in trust, the allowable deduction must
15.3be apportioned between the income beneficiaries and the trustee in accordance with the
15.4pertinent provisions of the trust, or if there is no provision in the instrument, on the basis
15.5of the trust's income allocable to each;
15.6    (8) for certified pollution control facilities placed in service in a taxable year
15.7beginning before December 31, 1986, and for which amortization deductions were elected
15.8under section 169 of the Internal Revenue Code of 1954, as amended through December
15.931, 1985, an amount equal to the allowance for depreciation under Minnesota Statutes
15.101986, section 290.09, subdivision 7;
15.11    (9) amounts included in federal taxable income that are due to refunds of income,
15.12excise, or franchise taxes based on net income or related minimum taxes paid by the
15.13corporation to Minnesota, another state, a political subdivision of another state, the
15.14District of Columbia, or a foreign country or possession of the United States to the extent
15.15that the taxes were added to federal taxable income under section 290.01, subdivision 19c,
15.16clause (1), in a prior taxable year;
15.17    (10) 80 percent of royalties, fees, or other like income accrued or received from a
15.18foreign operating corporation or a foreign corporation which is part of the same unitary
15.19business as the receiving corporation, unless the income resulting from such payments or
15.20accruals is income from sources within the United States as defined in subtitle A, chapter
15.211, subchapter N, part 1, of the Internal Revenue Code;
15.22    (11) income or gains from the business of mining as defined in section 290.05,
15.23subdivision 1 , clause (a), that are not subject to Minnesota franchise tax;
15.24    (12) the amount of disability access expenditures in the taxable year which are not
15.25allowed to be deducted or capitalized under section 44(d)(7) of the Internal Revenue Code;
15.26    (13) the amount of qualified research expenses not allowed for federal income tax
15.27purposes under section 280C(c) of the Internal Revenue Code, but only to the extent that
15.28the amount exceeds the amount of the credit allowed under section 290.068;
15.29    (14) the amount of salary expenses not allowed for federal income tax purposes due
15.30to claiming the Indian employment credit under section 45A(a) of the Internal Revenue
15.31Code;
15.32    (15) for a corporation whose foreign sales corporation, as defined in section 922
15.33of the Internal Revenue Code, constituted a foreign operating corporation during any
15.34taxable year ending before January 1, 1995, and a return was filed by August 15, 1996,
15.35claiming the deduction under section 290.21, subdivision 4, for income received from
15.36the foreign operating corporation, an amount equal to 1.23 multiplied by the amount of
16.1income excluded under section 114 of the Internal Revenue Code, provided the income is
16.2not income of a foreign operating company;
16.3    (16) any decrease in subpart F income, as defined in section 952(a) of the Internal
16.4Revenue Code, for the taxable year when subpart F income is calculated without regard to
16.5the provisions of Division C, title III, section 303(b) of Public Law 110-343 section 750
16.6of Public Law 111-312;
16.7    (17) in each of the five tax years immediately following the tax year in which an
16.8addition is required under subdivision 19c, clause (15), an amount equal to one-fifth of
16.9the delayed depreciation. For purposes of this clause, "delayed depreciation" means the
16.10amount of the addition made by the taxpayer under subdivision 19c, clause (15). The
16.11resulting delayed depreciation cannot be less than zero;
16.12    (18) in each of the five tax years immediately following the tax year in which an
16.13addition is required under subdivision 19c, clause (16), an amount equal to one-fifth of
16.14the amount of the addition; and
16.15(19) to the extent included in federal taxable income, discharge of indebtedness
16.16income resulting from reacquisition of business indebtedness included in federal taxable
16.17income under section 108(i) of the Internal Revenue Code. This subtraction applies only
16.18to the extent that the income was included in net income in a prior year as a result of the
16.19addition under section 290.01, subdivision 19c, clause (25).
16.20EFFECTIVE DATE.This section is effective for taxable years beginning after
16.21December 31, 2009.

16.22    Sec. 6. Minnesota Statutes 2010, section 290.01, subdivision 31, as amended by Laws
16.232011, chapter 8, section 5, is amended to read:
16.24    Subd. 31. Internal Revenue Code. Unless specifically defined otherwise, for
16.25taxable years beginning before January 1, 2010, and after December 31, 2010, "Internal
16.26Revenue Code" means the Internal Revenue Code of 1986, as amended through March 18,
16.272010; and for taxable years beginning after December 31, 2009, and before January 1,
16.282011, "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended
16.29through December 31, 2010. Internal Revenue Code also includes any uncodified
16.30provision in federal law that relates to provisions of the Internal Revenue Code that are
16.31incorporated into Minnesota law. When used in this chapter, the reference to "subtitle A,
16.32chapter 1, subchapter N, part 1, of the Internal Revenue Code" is to the Internal Revenue
16.33Code as amended through March 18, 2010.
17.1EFFECTIVE DATE.This section is effective the day following final enactment
17.2except that the changes incorporated by federal changes are effective at the same time as
17.3the changes were effective for federal purposes.

17.4    Sec. 7. Minnesota Statutes 2010, section 290.0671, subdivision 1, is amended to read:
17.5    Subdivision 1. Credit allowed. (a) An individual is allowed a credit against the tax
17.6imposed by this chapter equal to a percentage of earned income. To receive a credit, a
17.7taxpayer must be eligible for a credit under section 32 of the Internal Revenue Code.
17.8(b) For individuals with no qualifying children, the credit equals 1.9125 percent of
17.9the first $4,620 of earned income. The credit is reduced by 1.9125 percent of earned
17.10income or adjusted gross income, whichever is greater, in excess of $5,770, but in no
17.11case is the credit less than zero.
17.12(c) For individuals with one qualifying child, the credit equals 8.5 percent of the first
17.13$6,920 of earned income and 8.5 percent of earned income over $12,080 but less than
17.14$13,450. The credit is reduced by 5.73 percent of earned income or adjusted gross income,
17.15whichever is greater, in excess of $15,080, but in no case is the credit less than zero.
17.16(d) For individuals with two or more qualifying children, the credit equals ten
17.17percent of the first $9,720 of earned income and 20 percent of earned income over
17.18$14,860 but less than $16,800. The credit is reduced by 10.3 percent of earned income
17.19or adjusted gross income, whichever is greater, in excess of $17,890, but in no case is
17.20the credit less than zero.
17.21(e) For a nonresident or part-year resident, the credit must be allocated based on the
17.22percentage calculated under section 290.06, subdivision 2c, paragraph (e).
17.23(f) For a person who was a resident for the entire tax year and has earned income
17.24not subject to tax under this chapter, including income excluded under section 290.01,
17.25subdivision 19b , clause (9) or (15), the credit must be allocated based on the ratio of
17.26federal adjusted gross income reduced by the earned income not subject to tax under
17.27this chapter over federal adjusted gross income. For purposes of this paragraph, the
17.28subtractions for military pay under section 290.01, subdivision 19b, clauses (10) and (11),
17.29are not considered "earned income not subject to tax under this chapter."
17.30For the purposes of this paragraph, the exclusion of combat pay under section 112
17.31of the Internal Revenue Code is not considered "earned income not subject to tax under
17.32this chapter."
17.33(g) For tax years beginning after December 31, 2007, and before December 31,
17.342010, the $5,770 in paragraph (b), the $15,080 in paragraph (c), and the $17,890 in
17.35paragraph (d), after being adjusted for inflation under subdivision 7, are each increased by
18.1$3,000 for married taxpayers filing joint returns. For tax years beginning after December
18.231, 2008, the commissioner shall annually adjust the $3,000 by the percentage determined
18.3pursuant to the provisions of section 1(f) of the Internal Revenue Code, except that in
18.4section 1(f)(3)(B), the word "2007" shall be substituted for the word "1992." For 2009,
18.5the commissioner shall then determine the percent change from the 12 months ending on
18.6August 31, 2007, to the 12 months ending on August 31, 2008, and in each subsequent
18.7year, from the 12 months ending on August 31, 2007, to the 12 months ending on August
18.831 of the year preceding the taxable year. The earned income thresholds as adjusted
18.9for inflation must be rounded to the nearest $10. If the amount ends in $5, the amount
18.10is rounded up to the nearest $10. The determination of the commissioner under this
18.11subdivision is not a rule under the Administrative Procedure Act.
18.12(h) For tax years beginning after December 31, 2010, and before January 1, 2013,
18.13the $5,770 in paragraph (b), the $15,800 in paragraph (c), and the $17,890 in paragraph
18.14(d), after being adjusted for inflation under subdivision 7, are each increased by $5,000
18.15for married taxpayers filing joint returns. For tax years beginning after December 31,
18.162010, the commissioner shall annually adjust the $5,000 by the percentage determined
18.17pursuant to the provisions of section 1(f) of the Internal Revenue Code, except that in
18.18section 1(f)(3)(B), the word "2008" shall be substituted for the word "1992." For 2011,
18.19the commissioner shall then determine the percent change from the 12 months ending on
18.20August 31, 2008, to the 12 months ending on August 31, 2010, and in each subsequent
18.21year, from the 12 months ending on August 31, 2008, to the 12 months ending on August
18.2231 of the year preceding the taxable year. The earned income thresholds as adjusted
18.23for inflation must be rounded to the nearest $10. If the amount ends in $5, the amount
18.24is rounded up to the nearest $10. The determination of the commissioner under this
18.25subdivision is not a rule under the Administrative Procedure Act.
18.26(h) (i) The commissioner shall construct tables showing the amount of the credit
18.27at various income levels and make them available to taxpayers. The tables shall follow
18.28the schedule contained in this subdivision, except that the commissioner may graduate
18.29the transition between income brackets.
18.30EFFECTIVE DATE.This section is effective for taxable years beginning after
18.31December 31, 2010.

18.32    Sec. 8. Minnesota Statutes 2010, section 290.0675, subdivision 1, is amended to read:
18.33    Subdivision 1. Definitions. (a) For purposes of this section the following terms
18.34have the meanings given.
19.1(b) "Earned income" means the sum of the following, to the extent included in
19.2Minnesota taxable income:
19.3(1) earned income as defined in section 32(c)(2) of the Internal Revenue Code;
19.4(2) income received from a retirement pension, profit-sharing, stock bonus, or
19.5annuity plan; and
19.6(3) Social Security benefits as defined in section 86(d)(1) of the Internal Revenue
19.7Code.
19.8(c) "Taxable income" means net income as defined in section 290.01, subdivision 19.
19.9(d) "Earned income of lesser-earning spouse" means the earned income of the
19.10spouse with the lesser amount of earned income as defined in paragraph (b) for the taxable
19.11year minus the sum of (i) the amount for one exemption under section 151(d) of the
19.12Internal Revenue Code and (ii) one-half the amount of the standard deduction under
19.13section 63(c)(2)(A) and (4) of the Internal Revenue Code minus one-half of any addition
19.14required under section 290.01, subdivision 19a, clause (20), and one-half of the addition
19.15that would have been required under section 290.01, subdivision 19a, clause (20), if the
19.16taxpayer had claimed the standard deduction.
19.17EFFECTIVE DATE.This section is effective for taxable years beginning after
19.18December 31, 2010.

19.19    Sec. 9. Minnesota Statutes 2010, section 290A.03, subdivision 15, as amended by
19.20Laws 2011, chapter 8, section 6, is amended to read:
19.21    Subd. 15. Internal Revenue Code. For taxable years beginning before January 1,
19.222010, and after December 31, 2010, "Internal Revenue Code" means the Internal Revenue
19.23Code of 1986, as amended through March 18, 2010; and for taxable years beginning after
19.24December 31, 2009, and before January 1, 2011, "Internal Revenue Code" means the
19.25Internal Revenue Code of 1986, as amended through December 31, 2010.
19.26EFFECTIVE DATE.This section is effective for property tax refunds based on
19.27property taxes payable after December 31, 2010, and rent paid after December 31, 2009.

19.28    Sec. 10. Minnesota Statutes 2010, section 291.005, subdivision 1, is amended to read:
19.29    Subdivision 1. Scope. Unless the context otherwise clearly requires, the following
19.30terms used in this chapter shall have the following meanings:
19.31    (1) "Commissioner" means the commissioner of revenue or any person to whom the
19.32commissioner has delegated functions under this chapter.
20.1    (2) "Federal gross estate" means the gross estate of a decedent as required to be
20.2valued and otherwise determined for federal estate tax purposes under the Internal
20.3Revenue Code.
20.4    (3) "Internal Revenue Code" means the United States Internal Revenue Code of
20.51986, as amended through March 18 December 31, 2010, but without regard to the
20.6provisions of sections 501 and 901 of Public Law 107-16, as amended by Public Law
20.7111-312, and section 301(c) of Public Law 111-312.
20.8    (4) "Minnesota adjusted taxable estate" means federal adjusted taxable estate as
20.9defined by section 2011(b)(3) of the Internal Revenue Code, increased by the amount of
20.10deduction for state death taxes allowed under section 2058 of the Internal Revenue Code.
20.11    (5) "Minnesota gross estate" means the federal gross estate of a decedent after (a)
20.12excluding therefrom any property included therein which has its situs outside Minnesota,
20.13and (b) including therein any property omitted from the federal gross estate which is
20.14includable therein, has its situs in Minnesota, and was not disclosed to federal taxing
20.15authorities.
20.16    (6) "Nonresident decedent" means an individual whose domicile at the time of
20.17death was not in Minnesota.
20.18    (7) "Personal representative" means the executor, administrator or other person
20.19appointed by the court to administer and dispose of the property of the decedent. If there
20.20is no executor, administrator or other person appointed, qualified, and acting within this
20.21state, then any person in actual or constructive possession of any property having a situs in
20.22this state which is included in the federal gross estate of the decedent shall be deemed
20.23to be a personal representative to the extent of the property and the Minnesota estate tax
20.24due with respect to the property.
20.25    (8) "Resident decedent" means an individual whose domicile at the time of death
20.26was in Minnesota.
20.27    (9) "Situs of property" means, with respect to real property, the state or country in
20.28which it is located; with respect to tangible personal property, the state or country in which
20.29it was normally kept or located at the time of the decedent's death; and with respect to
20.30intangible personal property, the state or country in which the decedent was domiciled
20.31at death.
20.32EFFECTIVE DATE.This section is effective the day following final enactment."