1.1.................... moves to amend H.F. No. 481, the delete everything amendment
1.2(A11-0139), as follows:
1.3Pages 32 to 34, delete sections 4 to 8
1.4Page 35, delete section 10
1.5Page 36, delete section 12
1.6Page 47, delete section 31
1.7Page 48, after line 32, insert:


1.10    Section 1. Minnesota Statutes 2010, section 289A.08, subdivision 3, is amended to
1.11read:
1.12    Subd. 3. Corporations. (a) A corporation that is subject to the state's jurisdiction to
1.13tax under section 290.014, subdivision 5, must file a return, except that a foreign operating
1.14corporation as defined in section 290.01, subdivision 6b, is not required to file a return.
1.15(b) Members of a unitary business that are required to file a combined report on one
1.16return must designate a member of the unitary business to be responsible for tax matters,
1.17including the filing of returns, the payment of taxes, additions to tax, penalties, interest,
1.18or any other payment, and for the receipt of refunds of taxes or interest paid in excess of
1.19taxes lawfully due. The designated member must be a member of the unitary business that
1.20is filing the single combined report and either:
1.21(1) a corporation that is subject to the taxes imposed by chapter 290; or
1.22(2) a corporation that is not subject to the taxes imposed by chapter 290:
1.23(i) Such corporation consents by filing the return as a designated member under this
1.24clause to remit taxes, penalties, interest, or additions to tax due from the members of the
1.25unitary business subject to tax, and receive refunds or other payments on behalf of other
1.26members of the unitary business. The member designated under this clause is a "taxpayer"
2.1for the purposes of this chapter and chapter 270C, and is liable for any liability imposed
2.2on the unitary business under this chapter and chapter 290.
2.3(ii) If the state does not otherwise have the jurisdiction to tax the member designated
2.4under this clause, consenting to be the designated member does not create the jurisdiction
2.5to impose tax on the designated member, other than as described in item (i).
2.6(iii) The member designated under this clause must apply for a business tax account
2.7identification number.
2.8(c) The commissioner shall adopt rules for the filing of one return on behalf of the
2.9members of an affiliated group of corporations that are required to file a combined report.
2.10All members of an affiliated group that are required to file a combined report must file one
2.11return on behalf of the members of the group under rules adopted by the commissioner.
2.12(d) If a corporation claims on a return that it has paid tax in excess of the amount of
2.13taxes lawfully due, that corporation must include on that return information necessary for
2.14payment of the tax in excess of the amount lawfully due by electronic means.
2.15EFFECTIVE DATE.This section is effective for taxable years beginning after
2.16December 31, 2010.

2.17    Sec. 2. Minnesota Statutes 2010, section 290.01, subdivision 19c, is amended to read:
2.18    Subd. 19c. Corporations; additions to federal taxable income. For corporations,
2.19there shall be added to federal taxable income:
2.20    (1) the amount of any deduction taken for federal income tax purposes for income,
2.21excise, or franchise taxes based on net income or related minimum taxes, including but not
2.22limited to the tax imposed under section 290.0922, paid by the corporation to Minnesota,
2.23another state, a political subdivision of another state, the District of Columbia, or any
2.24foreign country or possession of the United States;
2.25    (2) interest not subject to federal tax upon obligations of: the United States, its
2.26possessions, its agencies, or its instrumentalities; the state of Minnesota or any other
2.27state, any of its political or governmental subdivisions, any of its municipalities, or any
2.28of its governmental agencies or instrumentalities; the District of Columbia; or Indian
2.29tribal governments;
2.30    (3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal
2.31Revenue Code;
2.32    (4) the amount of any net operating loss deduction taken for federal income tax
2.33purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss
2.34deduction under section 810 of the Internal Revenue Code;
3.1    (5) the amount of any special deductions taken for federal income tax purposes
3.2under sections 241 to 247 and 965 of the Internal Revenue Code;
3.3    (6) losses from the business of mining, as defined in section 290.05, subdivision 1,
3.4clause (a), that are not subject to Minnesota income tax;
3.5    (7) the amount of any capital losses deducted for federal income tax purposes under
3.6sections 1211 and 1212 of the Internal Revenue Code;
3.7    (8) the exempt foreign trade income of a foreign sales corporation under sections
3.8921(a) and 291 of the Internal Revenue Code;
3.9    (9) the amount of percentage depletion deducted under sections 611 through 614 and
3.10291 of the Internal Revenue Code;
3.11    (10) for certified pollution control facilities placed in service in a taxable year
3.12beginning before December 31, 1986, and for which amortization deductions were elected
3.13under section 169 of the Internal Revenue Code of 1954, as amended through December
3.1431, 1985, the amount of the amortization deduction allowed in computing federal taxable
3.15income for those facilities;
3.16    (11) for taxable years beginning before January 1, 2011, the amount of any deemed
3.17dividend from a foreign operating corporation determined pursuant to section 290.17,
3.18subdivision 4 , paragraph (g). The deemed dividend shall be reduced by the amount of the
3.19addition to income required by clauses (20), (21), (22), and (23);
3.20    (12) the amount of a partner's pro rata share of net income which does not flow
3.21through to the partner because the partnership elected to pay the tax on the income under
3.22section 6242(a)(2) of the Internal Revenue Code;
3.23    (13) the amount of net income excluded under section 114 of the Internal Revenue
3.24Code;
3.25    (14) any increase in subpart F income, as defined in section 952(a) of the Internal
3.26Revenue Code, for the taxable year when subpart F income is calculated without regard to
3.27the provisions of Division C, title III, section 303(b) of Public Law 110-343;
3.28    (15) 80 percent of the depreciation deduction allowed under section 168(k)(1)(A)
3.29and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if the taxpayer
3.30has an activity that in the taxable year generates a deduction for depreciation under
3.31section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable year
3.32that the taxpayer is not allowed to claim for the taxable year, "the depreciation allowed
3.33under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess of the
3.34depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A) over the
3.35amount of the loss from the activity that is not allowed in the taxable year. In succeeding
4.1taxable years when the losses not allowed in the taxable year are allowed, the depreciation
4.2under section 168(k)(1)(A) and (k)(4)(A) is allowed;
4.3    (16) 80 percent of the amount by which the deduction allowed by section 179 of the
4.4Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
4.5Revenue Code of 1986, as amended through December 31, 2003;
4.6    (17) to the extent deducted in computing federal taxable income, the amount of the
4.7deduction allowable under section 199 of the Internal Revenue Code;
4.8    (18) the exclusion allowed under section 139A of the Internal Revenue Code for
4.9federal subsidies for prescription drug plans;
4.10    (19) the amount of expenses disallowed under section 290.10, subdivision 2;
4.11    (20) for taxable years beginning before January 1, 2011, an amount equal to the
4.12interest and intangible expenses, losses, and costs paid, accrued, or incurred by any
4.13member of the taxpayer's unitary group to or for the benefit of a corporation that is a
4.14member of the taxpayer's unitary business group that qualifies as a foreign operating
4.15corporation. For purposes of this clause, intangible expenses and costs include:
4.16    (i) expenses, losses, and costs for, or related to, the direct or indirect acquisition,
4.17use, maintenance or management, ownership, sale, exchange, or any other disposition of
4.18intangible property;
4.19    (ii) losses incurred, directly or indirectly, from factoring transactions or discounting
4.20transactions;
4.21    (iii) royalty, patent, technical, and copyright fees;
4.22    (iv) licensing fees; and
4.23    (v) other similar expenses and costs.
4.24For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
4.25applications, trade names, trademarks, service marks, copyrights, mask works, trade
4.26secrets, and similar types of intangible assets.
4.27This clause does not apply to any item of interest or intangible expenses or costs paid,
4.28accrued, or incurred, directly or indirectly, to a foreign operating corporation with respect
4.29to such item of income to the extent that the income to the foreign operating corporation
4.30is income from sources without the United States as defined in subtitle A, chapter 1,
4.31subchapter N, part 1, of the Internal Revenue Code;
4.32    (21) for taxable years beginning before January 1, 2011, except as already included
4.33in the taxpayer's taxable income pursuant to clause (20), any interest income and income
4.34generated from intangible property received or accrued by a foreign operating corporation
4.35that is a member of the taxpayer's unitary group. For purposes of this clause, income
4.36generated from intangible property includes:
5.1    (i) income related to the direct or indirect acquisition, use, maintenance or
5.2management, ownership, sale, exchange, or any other disposition of intangible property;
5.3    (ii) income from factoring transactions or discounting transactions;
5.4    (iii) royalty, patent, technical, and copyright fees;
5.5    (iv) licensing fees; and
5.6    (v) other similar income.
5.7For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
5.8applications, trade names, trademarks, service marks, copyrights, mask works, trade
5.9secrets, and similar types of intangible assets.
5.10This clause does not apply to any item of interest or intangible income received or accrued
5.11by a foreign operating corporation with respect to such item of income to the extent that
5.12the income is income from sources without the United States as defined in subtitle A,
5.13chapter 1, subchapter N, part 1, of the Internal Revenue Code;
5.14    (22) for taxable years beginning before January 1, 2011, the dividends attributable to
5.15the income of a foreign operating corporation that is a member of the taxpayer's unitary
5.16group in an amount that is equal to the dividends paid deduction of a real estate investment
5.17trust under section 561(a) of the Internal Revenue Code for amounts paid or accrued by
5.18the real estate investment trust to the foreign operating corporation;
5.19    (23) for taxable years beginning before January 1, 2011, the income of a foreign
5.20operating corporation that is a member of the taxpayer's unitary group in an amount that
5.21is equal to gains derived from the sale of real or personal property located in the United
5.22States;
5.23    (24) the additional amount allowed as a deduction for donation of computer
5.24technology and equipment under section 170(e)(6) of the Internal Revenue Code, to the
5.25extent deducted from taxable income; and
5.26(25) discharge of indebtedness income resulting from reacquisition of business
5.27indebtedness and deferred under section 108(i) of the Internal Revenue Code.
5.28EFFECTIVE DATE.This section is effective for taxable years beginning after
5.29December 31, 2010.

5.30    Sec. 3. Minnesota Statutes 2010, section 290.01, subdivision 19d, is amended to read:
5.31    Subd. 19d. Corporations; modifications decreasing federal taxable income. For
5.32corporations, there shall be subtracted from federal taxable income after the increases
5.33provided in subdivision 19c:
5.34    (1) the amount of foreign dividend gross-up added to gross income for federal
5.35income tax purposes under section 78 of the Internal Revenue Code;
6.1    (2) the amount of salary expense not allowed for federal income tax purposes due to
6.2claiming the work opportunity credit under section 51 of the Internal Revenue Code;
6.3    (3) any dividend (not including any distribution in liquidation) paid within the
6.4taxable year by a national or state bank to the United States, or to any instrumentality of
6.5the United States exempt from federal income taxes, on the preferred stock of the bank
6.6owned by the United States or the instrumentality;
6.7    (4) amounts disallowed for intangible drilling costs due to differences between
6.8this chapter and the Internal Revenue Code in taxable years beginning before January
6.91, 1987, as follows:
6.10    (i) to the extent the disallowed costs are represented by physical property, an amount
6.11equal to the allowance for depreciation under Minnesota Statutes 1986, section 290.09,
6.12subdivision 7 , subject to the modifications contained in subdivision 19e; and
6.13    (ii) to the extent the disallowed costs are not represented by physical property, an
6.14amount equal to the allowance for cost depletion under Minnesota Statutes 1986, section
6.15290.09, subdivision 8 ;
6.16    (5) the deduction for capital losses pursuant to sections 1211 and 1212 of the
6.17Internal Revenue Code, except that:
6.18    (i) for capital losses incurred in taxable years beginning after December 31, 1986,
6.19capital loss carrybacks shall not be allowed;
6.20    (ii) for capital losses incurred in taxable years beginning after December 31, 1986,
6.21a capital loss carryover to each of the 15 taxable years succeeding the loss year shall be
6.22allowed;
6.23    (iii) for capital losses incurred in taxable years beginning before January 1, 1987, a
6.24capital loss carryback to each of the three taxable years preceding the loss year, subject to
6.25the provisions of Minnesota Statutes 1986, section 290.16, shall be allowed; and
6.26    (iv) for capital losses incurred in taxable years beginning before January 1, 1987,
6.27a capital loss carryover to each of the five taxable years succeeding the loss year to the
6.28extent such loss was not used in a prior taxable year and subject to the provisions of
6.29Minnesota Statutes 1986, section 290.16, shall be allowed;
6.30    (6) an amount for interest and expenses relating to income not taxable for federal
6.31income tax purposes, if (i) the income is taxable under this chapter and (ii) the interest and
6.32expenses were disallowed as deductions under the provisions of section 171(a)(2), 265 or
6.33291 of the Internal Revenue Code in computing federal taxable income;
6.34    (7) in the case of mines, oil and gas wells, other natural deposits, and timber for
6.35which percentage depletion was disallowed pursuant to subdivision 19c, clause (9), a
6.36reasonable allowance for depletion based on actual cost. In the case of leases the deduction
7.1must be apportioned between the lessor and lessee in accordance with rules prescribed
7.2by the commissioner. In the case of property held in trust, the allowable deduction must
7.3be apportioned between the income beneficiaries and the trustee in accordance with the
7.4pertinent provisions of the trust, or if there is no provision in the instrument, on the basis
7.5of the trust's income allocable to each;
7.6    (8) for certified pollution control facilities placed in service in a taxable year
7.7beginning before December 31, 1986, and for which amortization deductions were elected
7.8under section 169 of the Internal Revenue Code of 1954, as amended through December
7.931, 1985, an amount equal to the allowance for depreciation under Minnesota Statutes
7.101986, section 290.09, subdivision 7;
7.11    (9) amounts included in federal taxable income that are due to refunds of income,
7.12excise, or franchise taxes based on net income or related minimum taxes paid by the
7.13corporation to Minnesota, another state, a political subdivision of another state, the
7.14District of Columbia, or a foreign country or possession of the United States to the extent
7.15that the taxes were added to federal taxable income under section 290.01, subdivision 19c,
7.16clause (1), in a prior taxable year;
7.17    (10) for taxable years beginning before January 1, 2011, 80 percent of royalties,
7.18fees, or other like income accrued or received from a foreign operating corporation
7.19or a foreign corporation which is part of the same unitary business as the receiving
7.20corporation, unless the income resulting from such payments or accruals is income from
7.21sources within the United States as defined in subtitle A, chapter 1, subchapter N, part
7.221, of the Internal Revenue Code;
7.23    (11) income or gains from the business of mining as defined in section 290.05,
7.24subdivision 1 , clause (a), that are not subject to Minnesota franchise tax;
7.25    (12) the amount of disability access expenditures in the taxable year which are not
7.26allowed to be deducted or capitalized under section 44(d)(7) of the Internal Revenue Code;
7.27    (13) the amount of qualified research expenses not allowed for federal income tax
7.28purposes under section 280C(c) of the Internal Revenue Code, but only to the extent that
7.29the amount exceeds the amount of the credit allowed under section 290.068;
7.30    (14) the amount of salary expenses not allowed for federal income tax purposes due
7.31to claiming the Indian employment credit under section 45A(a) of the Internal Revenue
7.32Code;
7.33    (15) for a corporation whose foreign sales corporation, as defined in section 922
7.34of the Internal Revenue Code, constituted a foreign operating corporation during any
7.35taxable year ending before January 1, 1995, and a return was filed by August 15, 1996,
7.36claiming the deduction under section 290.21, subdivision 4, for income received from
8.1the foreign operating corporation, an amount equal to 1.23 multiplied by the amount of
8.2income excluded under section 114 of the Internal Revenue Code, provided the income is
8.3not income of a foreign operating company;
8.4    (16) any decrease in subpart F income, as defined in section 952(a) of the Internal
8.5Revenue Code, for the taxable year when subpart F income is calculated without regard to
8.6the provisions of Division C, title III, section 303(b) of Public Law 110-343;
8.7    (17) in each of the five tax years immediately following the tax year in which an
8.8addition is required under subdivision 19c, clause (15), an amount equal to one-fifth of
8.9the delayed depreciation. For purposes of this clause, "delayed depreciation" means the
8.10amount of the addition made by the taxpayer under subdivision 19c, clause (15). The
8.11resulting delayed depreciation cannot be less than zero;
8.12    (18) in each of the five tax years immediately following the tax year in which an
8.13addition is required under subdivision 19c, clause (16), an amount equal to one-fifth of
8.14the amount of the addition; and
8.15(19) to the extent included in federal taxable income, discharge of indebtedness
8.16income resulting from reacquisition of business indebtedness included in federal taxable
8.17income under section 108(i) of the Internal Revenue Code. This subtraction applies only
8.18to the extent that the income was included in net income in a prior year as a result of the
8.19addition under section 290.01, subdivision 19c, clause (25).
8.20EFFECTIVE DATE.This section is effective for taxable years beginning after
8.21December 31, 2010.

8.22    Sec. 4. Minnesota Statutes 2010, section 290.17, subdivision 4, is amended to read:
8.23    Subd. 4. Unitary business principle. (a) If a trade or business conducted wholly
8.24within this state or partly within and partly without this state is part of a unitary business,
8.25the entire income of the unitary business is subject to apportionment pursuant to section
8.26290.191 . Notwithstanding subdivision 2, paragraph (c), none of the income of a unitary
8.27business is considered to be derived from any particular source and none may be allocated
8.28to a particular place except as provided by the applicable apportionment formula. The
8.29provisions of this subdivision do not apply to business income subject to subdivision 5,
8.30income of an insurance company, or income of an investment company determined under
8.31section 290.36.
8.32(b) The term "unitary business" means business activities or operations which
8.33result in a flow of value between them. The term may be applied within a single legal
8.34entity or between multiple entities and without regard to whether each entity is a sole
8.35proprietorship, a corporation, a partnership or a trust.
9.1(c) Unity is presumed whenever there is unity of ownership, operation, and use,
9.2evidenced by centralized management or executive force, centralized purchasing,
9.3advertising, accounting, or other controlled interaction, but the absence of these
9.4centralized activities will not necessarily evidence a nonunitary business. Unity is also
9.5presumed when business activities or operations are of mutual benefit, dependent upon or
9.6contributory to one another, either individually or as a group.
9.7(d) Where a business operation conducted in Minnesota is owned by a business
9.8entity that carries on business activity outside the state different in kind from that
9.9conducted within this state, and the other business is conducted entirely outside the state, it
9.10is presumed that the two business operations are unitary in nature, interrelated, connected,
9.11and interdependent unless it can be shown to the contrary.
9.12(e) Unity of ownership is not deemed to exist when a corporation is involved unless
9.13that corporation is a member of a group of two or more business entities and more than 50
9.14percent of the voting stock of each member of the group is directly or indirectly owned
9.15by a common owner or by common owners, either corporate or noncorporate, or by one
9.16or more of the member corporations of the group. For this purpose, the term "voting
9.17stock" shall include membership interests of mutual insurance holding companies formed
9.18under section 66A.40.
9.19(f) The net income and apportionment factors under section 290.191 or 290.20 of
9.20foreign corporations and other foreign entities which are part of a unitary business shall
9.21not be included in the net income or the apportionment factors of the unitary business.
9.22A foreign corporation or other foreign entity which is required to file a return under this
9.23chapter shall file on a separate return basis. The net income and apportionment factors
9.24under section 290.191 or 290.20 of foreign operating corporations shall not be included in
9.25the net income or the apportionment factors of the unitary business except as provided in
9.26paragraph (g).
9.27(g) The adjusted net income of a foreign operating corporation shall be deemed to
9.28be paid as a dividend on the last day of its taxable year to each shareholder thereof, in
9.29proportion to each shareholder's ownership, with which such corporation is engaged in
9.30a unitary business. Such deemed dividend shall be treated as a dividend under section
9.31290.21, subdivision 4.
9.32Dividends actually paid by a foreign operating corporation to a corporate shareholder
9.33which is a member of the same unitary business as the foreign operating corporation shall
9.34be eliminated from the net income of the unitary business in preparing a combined report
9.35for the unitary business. The adjusted net income of a foreign operating corporation
9.36shall be its net income adjusted as follows:
10.1(1) any taxes paid or accrued to a foreign country, the commonwealth of Puerto
10.2Rico, or a United States possession or political subdivision of any of the foregoing shall
10.3be a deduction; and
10.4(2) the subtraction from federal taxable income for payments received from foreign
10.5corporations or foreign operating corporations under section 290.01, subdivision 19d,
10.6clause (10), shall not be allowed.
10.7If a foreign operating corporation incurs a net loss, neither income nor deduction
10.8from that corporation shall be included in determining the net income of the unitary
10.9business.
10.10(h) For purposes of determining the net income of a unitary business and the factors
10.11to be used in the apportionment of net income pursuant to section 290.191 or 290.20, there
10.12must be included only the income and apportionment factors of domestic corporations or
10.13other domestic entities other than foreign operating corporations that are determined to
10.14be part of the unitary business pursuant to this subdivision, notwithstanding that foreign
10.15corporations or other foreign entities might be included in the unitary business.
10.16(i) (h) Deductions for expenses, interest, or taxes otherwise allowable under
10.17this chapter that are connected with or allocable against dividends, deemed dividends
10.18described in paragraph (g), or royalties, fees, or other like income described in section
10.19290.01, subdivision 19d, clause (10), shall not be disallowed.
10.20(j) (i) Each corporation or other entity, except a sole proprietorship, that is part of
10.21a unitary business must file combined reports as the commissioner determines. On the
10.22reports, all intercompany transactions between entities included pursuant to paragraph
10.23(h) (g) must be eliminated and the entire net income of the unitary business determined in
10.24accordance with this subdivision is apportioned among the entities by using each entity's
10.25Minnesota factors for apportionment purposes in the numerators of the apportionment
10.26formula and the total factors for apportionment purposes of all entities included pursuant
10.27to paragraph (h) (g) in the denominators of the apportionment formula. The Minnesota
10.28sales, as defined in section 290.191, of a corporation that is part of a unitary business and
10.29that is not subject to the jurisdiction to tax under section 290.015 must be assigned, as
10.30prescribed by the commissioner, to the numerator of another entity that is part of the
10.31unitary business and that is subject to tax under this chapter.
10.32(k) (j) If a corporation has been divested from a unitary business and is included in a
10.33combined report for a fractional part of the common accounting period of the combined
10.34report:
10.35(1) its income includable in the combined report is its income incurred for that part
10.36of the year determined by proration or separate accounting; and
11.1(2) its sales, property, and payroll included in the apportionment formula must
11.2be prorated or accounted for separately.
11.3EFFECTIVE DATE.This section is effective for taxable years beginning after
11.4December 31, 2010.

11.5    Sec. 5. REPEALER.
11.6Minnesota Statutes 2010, sections 290.01, subdivision 6b; and 290.0921, subdivision
11.77, are repealed.
11.8EFFECTIVE DATE.This section is effective for taxable years beginning after
11.9December 31, 2010."
11.10Renumber the sections in sequence and correct the internal references
11.11Amend the title accordingly