1.1.................... moves to amend H.F. No. 1914 as follows:
1.2Delete the H1914A12 and H1914A13 amendments
1.3Page 1, delete sections 1 to 4, and insert:

1.4    "Section 1. Minnesota Statutes 2010, section 289A.08, subdivision 3, is amended to
1.5read:
1.6    Subd. 3. Corporations. (a) A corporation that is subject to the state's jurisdiction to
1.7tax under section 290.014, subdivision 5, must file a return, except that a foreign operating
1.8corporation as defined in section 290.01, subdivision 6b, is not required to file a return.
1.9(b) Members of a unitary business that are required to file a combined report on one
1.10return must designate a member of the unitary business to be responsible for tax matters,
1.11including the filing of returns, the payment of taxes, additions to tax, penalties, interest,
1.12or any other payment, and for the receipt of refunds of taxes or interest paid in excess of
1.13taxes lawfully due. The designated member must be a member of the unitary business that
1.14is filing the single combined report and either:
1.15(1) a corporation that is subject to the taxes imposed by chapter 290; or
1.16(2) a corporation that is not subject to the taxes imposed by chapter 290:
1.17(i) Such corporation consents by filing the return as a designated member under this
1.18clause to remit taxes, penalties, interest, or additions to tax due from the members of the
1.19unitary business subject to tax, and receive refunds or other payments on behalf of other
1.20members of the unitary business. The member designated under this clause is a "taxpayer"
1.21for the purposes of this chapter and chapter 270C, and is liable for any liability imposed
1.22on the unitary business under this chapter and chapter 290.
1.23(ii) If the state does not otherwise have the jurisdiction to tax the member designated
1.24under this clause, consenting to be the designated member does not create the jurisdiction
1.25to impose tax on the designated member, other than as described in item (i).
1.26(iii) The member designated under this clause must apply for a business tax account
1.27identification number.
2.1(c) The commissioner shall adopt rules for the filing of one return on behalf of the
2.2members of an affiliated group of corporations that are required to file a combined report.
2.3All members of an affiliated group that are required to file a combined report must file one
2.4return on behalf of the members of the group under rules adopted by the commissioner.
2.5(d) If a corporation claims on a return that it has paid tax in excess of the amount of
2.6taxes lawfully due, that corporation must include on that return information necessary for
2.7payment of the tax in excess of the amount lawfully due by electronic means.
2.8EFFECTIVE DATE.This section is effective for returns filed for taxable years
2.9beginning after December 31, 2011.

2.10    Sec. 2. Minnesota Statutes 2010, section 290.01, subdivision 5, is amended to read:
2.11    Subd. 5. Domestic corporation. The term "domestic" when applied to a corporation
2.12means a corporation:
2.13(1) created or organized in the United States, or under the laws of the United States
2.14or of any state, the District of Columbia, or any political subdivision of any of the
2.15foregoing but not including the Commonwealth of Puerto Rico, or any possession of
2.16the United States;
2.17(2) which qualifies as a DISC, as defined in section 992(a) of the Internal Revenue
2.18Code; or
2.19(3) which qualifies as a FSC, as defined in section 922 of the Internal Revenue Code.;
2.20    (4) which is incorporated in a tax haven;
2.21    (5) which is engaged in activity in a tax haven sufficient for the tax haven to impose
2.22a net income tax under United States constitutional standards and section 290.015, and
2.23which reports that 20 percent or more of its income is attributable to business in the tax
2.24haven; or
2.25    (6) which has the average of its property, payroll, and sales factors, as defined under
2.26section 290.191, within the 50 states of the United States and the District of Columbia, of
2.2720 percent or more.
2.28EFFECTIVE DATE.This section is effective for returns filed for taxable years
2.29beginning after December 31, 2011.

2.30    Sec. 3. Minnesota Statutes 2010, section 290.01, is amended by adding a subdivision
2.31to read:
2.32    Subd. 5c. Tax haven. (a) "Tax haven" means the following foreign jurisdictions,
2.33unless the listing of the jurisdiction does not apply under paragraph (b):
3.1(1) Andorra;
3.2(2) Anguilla;
3.3(3) Antigua and Barbuda;
3.4(4) Aruba;
3.5(5) Bahamas;
3.6(6) Bahrain;
3.7(7) Belize;
3.8(8) British Virgin Islands;
3.9(9) Cayman Islands;
3.10(10) Cook Islands;
3.11(11) Costa Rica;
3.12(12) Dominica;
3.13(13) Gibraltar;
3.14(14) Grenada;
3.15(15) Guernsey-Sark-Alderney;
3.16(16) Jersey;
3.17(17) Jordan;
3.18(18) Lebanon;
3.19(19) Liberia;
3.20(20) Liechtenstein;
3.21(21) Maldives;
3.22(22) Marshall Islands;
3.23(23) Monaco;
3.24(24) Montserrat;
3.25(25) Nauru;
3.26(26) Netherlands Antilles;
3.27(27) Niue;
3.28(28) Panama;
3.29(29) St. Kitts and Nevis;
3.30(30) St. Lucia;
3.31(31) St. Vincent and Grenadines;
3.32(32) Tonga;
3.33(33) Turks and Caicos; and
3.34(34) Vanuatu.
3.35(b) A foreign jurisdiction's listing under paragraph (a) does not apply to the first
3.36taxable year after the United States enters into a tax treaty or other agreement with the
4.1foreign jurisdiction that provides for prompt, obligatory, and automatic exchange of
4.2information with the United States government relevant to enforcing the provisions of
4.3federal tax laws and the treaty or other agreement was in effect for the taxable year.
4.4EFFECTIVE DATE.This section is effective for returns filed for taxable years
4.5beginning after December 31, 2011.

4.6    Sec. 4. Minnesota Statutes 2011 Supplement, section 290.01, subdivision 19c, is
4.7amended to read:
4.8    Subd. 19c. Corporations; additions to federal taxable income. For corporations,
4.9there shall be added to federal taxable income:
4.10    (1) the amount of any deduction taken for federal income tax purposes for income,
4.11excise, or franchise taxes based on net income or related minimum taxes, including but not
4.12limited to the tax imposed under section 290.0922, paid by the corporation to Minnesota,
4.13another state, a political subdivision of another state, the District of Columbia, or any
4.14foreign country or possession of the United States;
4.15    (2) interest not subject to federal tax upon obligations of: the United States, its
4.16possessions, its agencies, or its instrumentalities; the state of Minnesota or any other
4.17state, any of its political or governmental subdivisions, any of its municipalities, or any
4.18of its governmental agencies or instrumentalities; the District of Columbia; or Indian
4.19tribal governments;
4.20    (3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal
4.21Revenue Code;
4.22    (4) the amount of any net operating loss deduction taken for federal income tax
4.23purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss
4.24deduction under section 810 of the Internal Revenue Code;
4.25    (5) the amount of any special deductions taken for federal income tax purposes
4.26under sections 241 to 247 and 965 of the Internal Revenue Code;
4.27    (6) losses from the business of mining, as defined in section 290.05, subdivision 1,
4.28clause (a), that are not subject to Minnesota income tax;
4.29    (7) the amount of any capital losses deducted for federal income tax purposes under
4.30sections 1211 and 1212 of the Internal Revenue Code;
4.31    (8) the exempt foreign trade income of a foreign sales corporation under sections
4.32921(a) and 291 of the Internal Revenue Code;
4.33    (9) the amount of percentage depletion deducted under sections 611 through 614 and
4.34291 of the Internal Revenue Code;
5.1    (10) for certified pollution control facilities placed in service in a taxable year
5.2beginning before December 31, 1986, and for which amortization deductions were elected
5.3under section 169 of the Internal Revenue Code of 1954, as amended through December
5.431, 1985, the amount of the amortization deduction allowed in computing federal taxable
5.5income for those facilities;
5.6    (11) the amount of any deemed dividend from a foreign operating corporation
5.7determined pursuant to section 290.17, subdivision 4, paragraph (g). The deemed dividend
5.8shall be reduced by the amount of the addition to income required by clauses (20), (21),
5.9(22), and (23);
5.10    (12) (11) the amount of a partner's pro rata share of net income which does not flow
5.11through to the partner because the partnership elected to pay the tax on the income under
5.12section 6242(a)(2) of the Internal Revenue Code;
5.13    (13) (12) the amount of net income excluded under section 114 of the Internal
5.14Revenue Code;
5.15    (14) (13) any increase in subpart F income, as defined in section 952(a) of the
5.16Internal Revenue Code, for the taxable year when subpart F income is calculated without
5.17regard to the provisions of Division C, title III, section 303(b) of Public Law 110-343;
5.18    (15) (14) 80 percent of the depreciation deduction allowed under section
5.19168(k)(1)(A) and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if
5.20the taxpayer has an activity that in the taxable year generates a deduction for depreciation
5.21under section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable
5.22year that the taxpayer is not allowed to claim for the taxable year, "the depreciation
5.23allowed under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess
5.24of the depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A)
5.25over the amount of the loss from the activity that is not allowed in the taxable year. In
5.26succeeding taxable years when the losses not allowed in the taxable year are allowed, the
5.27depreciation under section 168(k)(1)(A) and (k)(4)(A) is allowed;
5.28    (16) (15) 80 percent of the amount by which the deduction allowed by section 179 of
5.29the Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
5.30Revenue Code of 1986, as amended through December 31, 2003;
5.31    (17) (16) to the extent deducted in computing federal taxable income, the amount of
5.32the deduction allowable under section 199 of the Internal Revenue Code;
5.33    (18) (17) for taxable years beginning before January 1, 2013, the exclusion allowed
5.34under section 139A of the Internal Revenue Code for federal subsidies for prescription
5.35drug plans;
5.36    (19) (18) the amount of expenses disallowed under section 290.10, subdivision 2;
6.1    (20) an amount equal to the interest and intangible expenses, losses, and costs paid,
6.2accrued, or incurred by any member of the taxpayer's unitary group to or for the benefit
6.3of a corporation that is a member of the taxpayer's unitary business group that qualifies
6.4as a foreign operating corporation. For purposes of this clause, intangible expenses and
6.5costs include:
6.6    (i) expenses, losses, and costs for, or related to, the direct or indirect acquisition,
6.7use, maintenance or management, ownership, sale, exchange, or any other disposition of
6.8intangible property;
6.9    (ii) losses incurred, directly or indirectly, from factoring transactions or discounting
6.10transactions;
6.11    (iii) royalty, patent, technical, and copyright fees;
6.12    (iv) licensing fees; and
6.13    (v) other similar expenses and costs.
6.14For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
6.15applications, trade names, trademarks, service marks, copyrights, mask works, trade
6.16secrets, and similar types of intangible assets.
6.17This clause does not apply to any item of interest or intangible expenses or costs paid,
6.18accrued, or incurred, directly or indirectly, to a foreign operating corporation with respect
6.19to such item of income to the extent that the income to the foreign operating corporation
6.20is income from sources without the United States as defined in subtitle A, chapter 1,
6.21subchapter N, part 1, of the Internal Revenue Code;
6.22    (21) except as already included in the taxpayer's taxable income pursuant to clause
6.23(20), any interest income and income generated from intangible property received or
6.24accrued by a foreign operating corporation that is a member of the taxpayer's unitary
6.25group. For purposes of this clause, income generated from intangible property includes:
6.26    (i) income related to the direct or indirect acquisition, use, maintenance or
6.27management, ownership, sale, exchange, or any other disposition of intangible property;
6.28    (ii) income from factoring transactions or discounting transactions;
6.29    (iii) royalty, patent, technical, and copyright fees;
6.30    (iv) licensing fees; and
6.31    (v) other similar income.
6.32For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
6.33applications, trade names, trademarks, service marks, copyrights, mask works, trade
6.34secrets, and similar types of intangible assets.
6.35This clause does not apply to any item of interest or intangible income received or accrued
6.36by a foreign operating corporation with respect to such item of income to the extent that
7.1the income is income from sources without the United States as defined in subtitle A,
7.2chapter 1, subchapter N, part 1, of the Internal Revenue Code;
7.3    (22) the dividends attributable to the income of a foreign operating corporation that
7.4is a member of the taxpayer's unitary group in an amount that is equal to the dividends
7.5paid deduction of a real estate investment trust under section 561(a) of the Internal
7.6Revenue Code for amounts paid or accrued by the real estate investment trust to the
7.7foreign operating corporation;
7.8    (23) the income of a foreign operating corporation that is a member of the taxpayer's
7.9unitary group in an amount that is equal to gains derived from the sale of real or personal
7.10property located in the United States;
7.11    (24) (19) for taxable years beginning before January 1, 2010, the additional amount
7.12allowed as a deduction for donation of computer technology and equipment under section
7.13170(e)(6) of the Internal Revenue Code, to the extent deducted from taxable income; and
7.14(25) (20) discharge of indebtedness income resulting from reacquisition of business
7.15indebtedness and deferred under section 108(i) of the Internal Revenue Code.
7.16EFFECTIVE DATE.This section is effective for taxable years beginning after
7.17December 31, 2011.

7.18    Sec. 5. Minnesota Statutes 2010, section 290.01, subdivision 19d, is amended to read:
7.19    Subd. 19d. Corporations; modifications decreasing federal taxable income. For
7.20corporations, there shall be subtracted from federal taxable income after the increases
7.21provided in subdivision 19c:
7.22    (1) the amount of foreign dividend gross-up added to gross income for federal
7.23income tax purposes under section 78 of the Internal Revenue Code;
7.24    (2) the amount of salary expense not allowed for federal income tax purposes due to
7.25claiming the work opportunity credit under section 51 of the Internal Revenue Code;
7.26    (3) any dividend (not including any distribution in liquidation) paid within the
7.27taxable year by a national or state bank to the United States, or to any instrumentality of
7.28the United States exempt from federal income taxes, on the preferred stock of the bank
7.29owned by the United States or the instrumentality;
7.30    (4) amounts disallowed for intangible drilling costs due to differences between
7.31this chapter and the Internal Revenue Code in taxable years beginning before January
7.321, 1987, as follows:
7.33    (i) to the extent the disallowed costs are represented by physical property, an amount
7.34equal to the allowance for depreciation under Minnesota Statutes 1986, section 290.09,
7.35subdivision 7 , subject to the modifications contained in subdivision 19e; and
8.1    (ii) to the extent the disallowed costs are not represented by physical property, an
8.2amount equal to the allowance for cost depletion under Minnesota Statutes 1986, section
8.3290.09, subdivision 8 ;
8.4    (5) the deduction for capital losses pursuant to sections 1211 and 1212 of the
8.5Internal Revenue Code, except that:
8.6    (i) for capital losses incurred in taxable years beginning after December 31, 1986,
8.7capital loss carrybacks shall not be allowed;
8.8    (ii) for capital losses incurred in taxable years beginning after December 31, 1986,
8.9a capital loss carryover to each of the 15 taxable years succeeding the loss year shall be
8.10allowed;
8.11    (iii) for capital losses incurred in taxable years beginning before January 1, 1987, a
8.12capital loss carryback to each of the three taxable years preceding the loss year, subject to
8.13the provisions of Minnesota Statutes 1986, section 290.16, shall be allowed; and
8.14    (iv) for capital losses incurred in taxable years beginning before January 1, 1987,
8.15a capital loss carryover to each of the five taxable years succeeding the loss year to the
8.16extent such loss was not used in a prior taxable year and subject to the provisions of
8.17Minnesota Statutes 1986, section 290.16, shall be allowed;
8.18    (6) an amount for interest and expenses relating to income not taxable for federal
8.19income tax purposes, if (i) the income is taxable under this chapter and (ii) the interest and
8.20expenses were disallowed as deductions under the provisions of section 171(a)(2), 265 or
8.21291 of the Internal Revenue Code in computing federal taxable income;
8.22    (7) in the case of mines, oil and gas wells, other natural deposits, and timber for
8.23which percentage depletion was disallowed pursuant to subdivision 19c, clause (9), a
8.24reasonable allowance for depletion based on actual cost. In the case of leases the deduction
8.25must be apportioned between the lessor and lessee in accordance with rules prescribed
8.26by the commissioner. In the case of property held in trust, the allowable deduction must
8.27be apportioned between the income beneficiaries and the trustee in accordance with the
8.28pertinent provisions of the trust, or if there is no provision in the instrument, on the basis
8.29of the trust's income allocable to each;
8.30    (8) for certified pollution control facilities placed in service in a taxable year
8.31beginning before December 31, 1986, and for which amortization deductions were elected
8.32under section 169 of the Internal Revenue Code of 1954, as amended through December
8.3331, 1985, an amount equal to the allowance for depreciation under Minnesota Statutes
8.341986, section 290.09, subdivision 7;
8.35    (9) amounts included in federal taxable income that are due to refunds of income,
8.36excise, or franchise taxes based on net income or related minimum taxes paid by the
9.1corporation to Minnesota, another state, a political subdivision of another state, the
9.2District of Columbia, or a foreign country or possession of the United States to the extent
9.3that the taxes were added to federal taxable income under section 290.01, subdivision 19c,
9.4clause (1), in a prior taxable year;
9.5    (10) 80 percent of royalties, fees, or other like income accrued or received from a
9.6foreign operating corporation or a foreign corporation which is part of the same unitary
9.7business as the receiving corporation, unless the income resulting from such payments or
9.8accruals is income from sources within the United States as defined in subtitle A, chapter
9.91, subchapter N, part 1, of the Internal Revenue Code;
9.10    (11) (10) income or gains from the business of mining as defined in section 290.05,
9.11subdivision 1 , clause (a), that are not subject to Minnesota franchise tax;
9.12    (12) (11) the amount of disability access expenditures in the taxable year which are
9.13not allowed to be deducted or capitalized under section 44(d)(7) of the Internal Revenue
9.14Code;
9.15    (13) (12) the amount of qualified research expenses not allowed for federal income
9.16tax purposes under section 280C(c) of the Internal Revenue Code, but only to the extent
9.17that the amount exceeds the amount of the credit allowed under section 290.068;
9.18    (14) (13) the amount of salary expenses not allowed for federal income tax purposes
9.19due to claiming the Indian employment credit under section 45A(a) of the Internal
9.20Revenue Code;
9.21    (15) (14) for a corporation whose foreign sales corporation, as defined in section
9.22922 of the Internal Revenue Code, constituted a foreign operating corporation during any
9.23taxable year ending before January 1, 1995, and a return was filed by August 15, 1996,
9.24claiming the deduction under section 290.21, subdivision 4, for income received from
9.25the foreign operating corporation, an amount equal to 1.23 multiplied by the amount of
9.26income excluded under section 114 of the Internal Revenue Code, provided the income is
9.27not income of a foreign operating company;
9.28    (16) (15) any decrease in subpart F income, as defined in section 952(a) of the
9.29Internal Revenue Code, for the taxable year when subpart F income is calculated without
9.30regard to the provisions of Division C, title III, section 303(b) of Public Law 110-343;
9.31    (17) (16) in each of the five tax years immediately following the tax year in which an
9.32addition is required under subdivision 19c, clause (15) (14), an amount equal to one-fifth
9.33of the delayed depreciation. For purposes of this clause, "delayed depreciation" means the
9.34amount of the addition made by the taxpayer under subdivision 19c, clause (15) (14). The
9.35resulting delayed depreciation cannot be less than zero;
10.1    (18) (17) in each of the five tax years immediately following the tax year in which an
10.2addition is required under subdivision 19c, clause (16) (15), an amount equal to one-fifth
10.3of the amount of the addition; and
10.4(19) (18) to the extent included in federal taxable income, discharge of indebtedness
10.5income resulting from reacquisition of business indebtedness included in federal taxable
10.6income under section 108(i) of the Internal Revenue Code. This subtraction applies only
10.7to the extent that the income was included in net income in a prior year as a result of the
10.8addition under section 290.01, subdivision 19c, clause (25) (20).
10.9EFFECTIVE DATE.This section is effective for taxable years beginning after
10.10December 31, 2011.

10.11    Sec. 6. Minnesota Statutes 2010, section 290.17, subdivision 4, is amended to read:
10.12    Subd. 4. Unitary business principle. (a) If a trade or business conducted wholly
10.13within this state or partly within and partly without this state is part of a unitary business,
10.14the entire income of the unitary business is subject to apportionment pursuant to section
10.15290.191 . Notwithstanding subdivision 2, paragraph (c), none of the income of a unitary
10.16business is considered to be derived from any particular source and none may be allocated
10.17to a particular place except as provided by the applicable apportionment formula. The
10.18provisions of this subdivision do not apply to business income subject to subdivision 5,
10.19income of an insurance company, or income of an investment company determined under
10.20section 290.36.
10.21(b) The term "unitary business" means business activities or operations which
10.22result in a flow of value between them. The term may be applied within a single legal
10.23entity or between multiple entities and without regard to whether each entity is a sole
10.24proprietorship, a corporation, a partnership or a trust.
10.25(c) Unity is presumed whenever there is unity of ownership, operation, and use,
10.26evidenced by centralized management or executive force, centralized purchasing,
10.27advertising, accounting, or other controlled interaction, but the absence of these
10.28centralized activities will not necessarily evidence a nonunitary business. Unity is also
10.29presumed when business activities or operations are of mutual benefit, dependent upon or
10.30contributory to one another, either individually or as a group.
10.31(d) Where a business operation conducted in Minnesota is owned by a business
10.32entity that carries on business activity outside the state different in kind from that
10.33conducted within this state, and the other business is conducted entirely outside the state, it
10.34is presumed that the two business operations are unitary in nature, interrelated, connected,
10.35and interdependent unless it can be shown to the contrary.
11.1(e) Unity of ownership is not deemed to exist when a corporation is involved unless
11.2that corporation is a member of a group of two or more business entities and more than 50
11.3percent of the voting stock of each member of the group is directly or indirectly owned
11.4by a common owner or by common owners, either corporate or noncorporate, or by one
11.5or more of the member corporations of the group. For this purpose, the term "voting
11.6stock" shall include membership interests of mutual insurance holding companies formed
11.7under section 66A.40.
11.8(f) The net income and apportionment factors under section 290.191 or 290.20 of
11.9foreign corporations and other foreign entities which are part of a unitary business shall
11.10not be included in the net income or the apportionment factors of the unitary business.
11.11A foreign corporation or other foreign entity which is required to file a return under this
11.12chapter shall file on a separate return basis. The net income and apportionment factors
11.13under section 290.191 or 290.20 of foreign operating corporations shall not be included in
11.14the net income or the apportionment factors of the unitary business except as provided in
11.15paragraph (g). The provisions of this paragraph are not severable from the provisions of
11.16section 290.01, subdivision 5, clauses (4) to (6); if any of those provisions are found to be
11.17unconstitutional, the provisions of this paragraph are void for the respective taxable years.
11.18(g) The adjusted net income of a foreign operating corporation shall be deemed to
11.19be paid as a dividend on the last day of its taxable year to each shareholder thereof, in
11.20proportion to each shareholder's ownership, with which such corporation is engaged in
11.21a unitary business. Such deemed dividend shall be treated as a dividend under section
11.22290.21, subdivision 4.
11.23Dividends actually paid by a foreign operating corporation to a corporate shareholder
11.24which is a member of the same unitary business as the foreign operating corporation shall
11.25be eliminated from the net income of the unitary business in preparing a combined report
11.26for the unitary business. The adjusted net income of a foreign operating corporation
11.27shall be its net income adjusted as follows:
11.28(1) any taxes paid or accrued to a foreign country, the commonwealth of Puerto
11.29Rico, or a United States possession or political subdivision of any of the foregoing shall
11.30be a deduction; and
11.31(2) the subtraction from federal taxable income for payments received from foreign
11.32corporations or foreign operating corporations under section 290.01, subdivision 19d,
11.33clause (10), shall not be allowed.
11.34If a foreign operating corporation incurs a net loss, neither income nor deduction
11.35from that corporation shall be included in determining the net income of the unitary
11.36business.
12.1(h) (g) For purposes of determining the net income of a unitary business and the
12.2factors to be used in the apportionment of net income pursuant to section 290.191 or
12.3290.20 , there must be included only the income and apportionment factors of domestic
12.4corporations or other domestic entities other than foreign operating corporations that are
12.5determined to be part of the unitary business pursuant to this subdivision, notwithstanding
12.6that foreign corporations or other foreign entities might be included in the unitary
12.7business, except that foreign corporations or other foreign entities that are included on a
12.8federal income tax return must be included on the combined report. Income of a foreign
12.9partnership or other foreign entity treated as a partnership included in federal taxable
12.10income, as defined in section 63 of the Internal Revenue Code of 1986, as amended
12.11through the date named in section 290.01, subdivision 19, and the proportionate amount of
12.12apportionment factors, must be included in the combined report.
12.13(i) (h) Deductions for expenses, interest, or taxes otherwise allowable under
12.14this chapter that are connected with or allocable against dividends, deemed dividends
12.15described in paragraph (g), or royalties, fees, or other like income described in section
12.16290.01, subdivision 19d , clause (10), shall not be disallowed.
12.17(j) (i) Each corporation or other entity, except a sole proprietorship, that is part of
12.18a unitary business must file combined reports as the commissioner determines. On the
12.19reports, all intercompany transactions between entities included pursuant to paragraph
12.20(h) (g) must be eliminated and the entire net income of the unitary business determined in
12.21accordance with this subdivision is apportioned among the entities by using each entity's
12.22Minnesota factors for apportionment purposes in the numerators of the apportionment
12.23formula and the total factors for apportionment purposes of all entities included pursuant
12.24to paragraph (h) (g) in the denominators of the apportionment formula. All sales of the
12.25unitary business made within Minnesota pursuant to section 290.191 or 290.20 must be
12.26included on the separate combined report of a corporation that is a member of the unitary
12.27business and is subject to the jurisdiction of this state to impose tax under this chapter.
12.28(k) (j) If a corporation has been divested from a unitary business and is included in a
12.29combined report for a fractional part of the common accounting period of the combined
12.30report:
12.31(1) its income includable in the combined report is its income incurred for that part
12.32of the year determined by proration or separate accounting; and
12.33(2) its sales, property, and payroll included in the apportionment formula must
12.34be prorated or accounted for separately.
12.35EFFECTIVE DATE.This section is effective for returns filed for taxable years
12.36beginning after December 31, 2011.

13.1    Sec. 7. Minnesota Statutes 2010, section 290.191, subdivision 5, is amended to read:
13.2    Subd. 5. Determination of sales factor. For purposes of this section, the following
13.3rules apply in determining the sales factor.
13.4    (a) The sales factor includes all sales, gross earnings, or receipts received in the
13.5ordinary course of the business, except that the following types of income are not included
13.6in the sales factor:
13.7    (1) interest;
13.8    (2) dividends;
13.9    (3) sales of capital assets as defined in section 1221 of the Internal Revenue Code;
13.10    (4) sales of property used in the trade or business, except sales of leased property of
13.11a type which is regularly sold as well as leased; and
13.12    (5) sales of debt instruments as defined in section 1275(a)(1) of the Internal Revenue
13.13Code or sales of stock; and.
13.14    (6) royalties, fees, or other like income of a type which qualify for a subtraction from
13.15federal taxable income under section 290.01, subdivision 19d(10).
13.16    (b) Sales of tangible personal property are made within this state if the property is
13.17received by a purchaser at a point within this state, and the taxpayer is taxable in this state,
13.18regardless of the f.o.b. point, other conditions of the sale, or the ultimate destination
13.19of the property.
13.20    (c) Tangible personal property delivered to a common or contract carrier or foreign
13.21vessel for delivery to a purchaser in another state or nation is a sale in that state or nation,
13.22regardless of f.o.b. point or other conditions of the sale.
13.23    (d) Notwithstanding paragraphs (b) and (c), when intoxicating liquor, wine,
13.24fermented malt beverages, cigarettes, or tobacco products are sold to a purchaser who is
13.25licensed by a state or political subdivision to resell this property only within the state of
13.26ultimate destination, the sale is made in that state.
13.27    (e) Sales made by or through a corporation that is qualified as a domestic
13.28international sales corporation under section 992 of the Internal Revenue Code are not
13.29considered to have been made within this state.
13.30    (f) Sales, rents, royalties, and other income in connection with real property is
13.31attributed to the state in which the property is located.
13.32    (g) Receipts from the lease or rental of tangible personal property, including finance
13.33leases and true leases, must be attributed to this state if the property is located in this
13.34state and to other states if the property is not located in this state. Receipts from the
13.35lease or rental of moving property including, but not limited to, motor vehicles, rolling
13.36stock, aircraft, vessels, or mobile equipment are included in the numerator of the receipts
14.1factor to the extent that the property is used in this state. The extent of the use of moving
14.2property is determined as follows:
14.3    (1) A motor vehicle is used wholly in the state in which it is registered.
14.4    (2) The extent that rolling stock is used in this state is determined by multiplying
14.5the receipts from the lease or rental of the rolling stock by a fraction, the numerator of
14.6which is the miles traveled within this state by the leased or rented rolling stock and the
14.7denominator of which is the total miles traveled by the leased or rented rolling stock.
14.8    (3) The extent that an aircraft is used in this state is determined by multiplying the
14.9receipts from the lease or rental of the aircraft by a fraction, the numerator of which is
14.10the number of landings of the aircraft in this state and the denominator of which is the
14.11total number of landings of the aircraft.
14.12    (4) The extent that a vessel, mobile equipment, or other mobile property is used in
14.13the state is determined by multiplying the receipts from the lease or rental of the property
14.14by a fraction, the numerator of which is the number of days during the taxable year the
14.15property was in this state and the denominator of which is the total days in the taxable year.
14.16    (h) Royalties and other income not described in paragraph (a), clause (6), received
14.17for the use of or for the privilege of using intangible property, including patents,
14.18know-how, formulas, designs, processes, patterns, copyrights, trade names, service names,
14.19franchises, licenses, contracts, customer lists, or similar items, must be attributed to the
14.20state in which the property is used by the purchaser. If the property is used in more
14.21than one state, the royalties or other income must be apportioned to this state pro rata
14.22according to the portion of use in this state. If the portion of use in this state cannot be
14.23determined, the royalties or other income must be excluded from both the numerator
14.24and the denominator. Intangible property is used in this state if the purchaser uses the
14.25intangible property or the rights therein in the regular course of its business operations in
14.26this state, regardless of the location of the purchaser's customers.
14.27    (i) Sales of intangible property are made within the state in which the property is
14.28used by the purchaser. If the property is used in more than one state, the sales must be
14.29apportioned to this state pro rata according to the portion of use in this state. If the
14.30portion of use in this state cannot be determined, the sale must be excluded from both the
14.31numerator and the denominator of the sales factor. Intangible property is used in this
14.32state if the purchaser used the intangible property in the regular course of its business
14.33operations in this state.
14.34    (j) Receipts from the performance of services must be attributed to the state where
14.35the services are received. For the purposes of this section, receipts from the performance
14.36of services provided to a corporation, partnership, or trust may only be attributed to a state
15.1where it has a fixed place of doing business. If the state where the services are received is
15.2not readily determinable or is a state where the corporation, partnership, or trust receiving
15.3the service does not have a fixed place of doing business, the services shall be deemed
15.4to be received at the location of the office of the customer from which the services were
15.5ordered in the regular course of the customer's trade or business. If the ordering office
15.6cannot be determined, the services shall be deemed to be received at the office of the
15.7customer to which the services are billed.
15.8    (k) For the purposes of this subdivision and subdivision 6, paragraph (l), receipts
15.9from management, distribution, or administrative services performed by a corporation
15.10or trust for a fund of a corporation or trust regulated under United States Code, title 15,
15.11sections 80a-1 through 80a-64, must be attributed to the state where the shareholder of
15.12the fund resides. Under this paragraph, receipts for services attributed to shareholders are
15.13determined on the basis of the ratio of: (1) the average of the outstanding shares in the
15.14fund owned by shareholders residing within Minnesota at the beginning and end of each
15.15year; and (2) the average of the total number of outstanding shares in the fund at the
15.16beginning and end of each year. Residence of the shareholder, in the case of an individual,
15.17is determined by the mailing address furnished by the shareholder to the fund. Residence
15.18of the shareholder, when the shares are held by an insurance company as a depositor for
15.19the insurance company policyholders, is the mailing address of the policyholders. In
15.20the case of an insurance company holding the shares as a depositor for the insurance
15.21company policyholders, if the mailing address of the policyholders cannot be determined
15.22by the taxpayer, the receipts must be excluded from both the numerator and denominator.
15.23Residence of other shareholders is the mailing address of the shareholder.
15.24EFFECTIVE DATE.This section is effective for taxable years beginning after
15.25December 31, 2011.

15.26    Sec. 8. Minnesota Statutes 2010, section 290.21, subdivision 4, is amended to read:
15.27    Subd. 4. Dividends received from another corporation. (a)(1) Eighty percent
15.28of dividends received by a corporation during the taxable year from another corporation,
15.29in which the recipient owns 20 percent or more of the stock, by vote and value, not
15.30including stock described in section 1504(a)(4) of the Internal Revenue Code when the
15.31corporate stock with respect to which dividends are paid does not constitute the stock in
15.32trade of the taxpayer or would not be included in the inventory of the taxpayer, or does not
15.33constitute property held by the taxpayer primarily for sale to customers in the ordinary
15.34course of the taxpayer's trade or business, or when the trade or business of the taxpayer
16.1does not consist principally of the holding of the stocks and the collection of the income
16.2and gains therefrom; and
16.3    (2)(i) the remaining 20 percent of dividends if the dividends received are the stock in
16.4an affiliated company transferred in an overall plan of reorganization and the dividend
16.5is eliminated in consolidation under Treasury Department Regulation 1.1502-14(a), as
16.6amended through December 31, 1989;
16.7    (ii) the remaining 20 percent of dividends if the dividends are received from a
16.8corporation which is subject to tax under section 290.36 and which is a member of an
16.9affiliated group of corporations as defined by the Internal Revenue Code and the dividend
16.10is eliminated in consolidation under Treasury Department Regulation 1.1502-14(a), as
16.11amended through December 31, 1989, or is deducted under an election under section
16.12243(b) of the Internal Revenue Code; or
16.13    (iii) the remaining 20 percent of the dividends if the dividends are received from a
16.14property and casualty insurer as defined under section 60A.60, subdivision 8, which is a
16.15member of an affiliated group of corporations as defined by the Internal Revenue Code
16.16and either: (A) the dividend is eliminated in consolidation under Treasury Regulation
16.171.1502-14(a), as amended through December 31, 1989; or (B) the dividend is deducted
16.18under an election under section 243(b) of the Internal Revenue Code.
16.19    (b) Seventy percent of dividends received by a corporation during the taxable year
16.20from another corporation in which the recipient owns less than 20 percent of the stock,
16.21by vote or value, not including stock described in section 1504(a)(4) of the Internal
16.22Revenue Code when the corporate stock with respect to which dividends are paid does not
16.23constitute the stock in trade of the taxpayer, or does not constitute property held by the
16.24taxpayer primarily for sale to customers in the ordinary course of the taxpayer's trade or
16.25business, or when the trade or business of the taxpayer does not consist principally of the
16.26holding of the stocks and the collection of income and gain therefrom.
16.27    (c) The dividend deduction provided in this subdivision shall be allowed only with
16.28respect to dividends that are included in a corporation's Minnesota taxable net income
16.29for the taxable year.
16.30    The dividend deduction provided in this subdivision does not apply to a dividend
16.31from a corporation which, for the taxable year of the corporation in which the distribution
16.32is made or for the next preceding taxable year of the corporation, is a corporation exempt
16.33from tax under section 501 of the Internal Revenue Code.
16.34The dividend deduction provided in this subdivision does not apply to a dividend
16.35received from a real estate investment trust, as defined in section 856 of the Internal
16.36Revenue Code.
17.1    The dividend deduction provided in this subdivision applies to the amount of
17.2regulated investment company dividends only to the extent determined under section
17.3854(b) of the Internal Revenue Code.
17.4    The dividend deduction provided in this subdivision shall not be allowed with
17.5respect to any dividend for which a deduction is not allowed under the provisions of
17.6section 246(c) of the Internal Revenue Code.
17.7    (d) If dividends received by a corporation that does not have nexus with Minnesota
17.8under the provisions of Public Law 86-272 are included as income on the return of
17.9an affiliated corporation permitted or required to file a combined report under section
17.10290.17, subdivision 4 , or 290.34, subdivision 2, then for purposes of this subdivision the
17.11determination as to whether the trade or business of the corporation consists principally
17.12of the holding of stocks and the collection of income and gains therefrom shall be made
17.13with reference to the trade or business of the affiliated corporation having a nexus with
17.14Minnesota.
17.15    (e) The deduction provided by this subdivision does not apply if the dividends are
17.16paid by a FSC as defined in section 922 of the Internal Revenue Code.
17.17    (f) If one or more of the members of the unitary group whose income is included on
17.18the combined report received a dividend, the deduction under this subdivision for each
17.19member of the unitary business required to file a return under this chapter is the product
17.20of: (1) 100 percent of the dividends received by members of the group; (2) the percentage
17.21allowed pursuant to paragraph (a) or (b); and (3) the percentage of the taxpayer's business
17.22income apportionable to this state for the taxable year under section 290.191 or 290.20.
17.23EFFECTIVE DATE.This section is effective for taxable years beginning after
17.24December 31, 2011.

17.25    Sec. 9. Minnesota Statutes 2011 Supplement, section 290A.03, subdivision 11, is
17.26amended to read:
17.27    Subd. 11. Rent constituting property taxes. "Rent constituting property taxes"
17.28means 17 19 percent of the gross rent actually paid in cash, or its equivalent, or the portion
17.29of rent paid in lieu of property taxes, in any calendar year by a claimant for the right
17.30of occupancy of the claimant's Minnesota homestead in the calendar year, and which
17.31rent constitutes the basis, in the succeeding calendar year of a claim for relief under this
17.32chapter by the claimant.
17.33EFFECTIVE DATE.This section is effective for claims based on rent paid in
17.342012 and thereafter.

18.1    Sec. 10. Minnesota Statutes 2011 Supplement, section 290A.03, subdivision 13,
18.2is amended to read:
18.3    Subd. 13. Property taxes payable. "Property taxes payable" means the property tax
18.4exclusive of special assessments, penalties, and interest payable on a claimant's homestead
18.5after deductions made under sections 273.135, 273.1384, 273.1391, 273.42, subdivision 2,
18.6and any other state paid property tax credits in any calendar year, and after any refund
18.7claimed and allowable under section 290A.04, subdivision 2h, that is first payable in
18.8the year that the property tax is payable. In the case of a claimant who makes ground
18.9lease payments, "property taxes payable" includes the amount of the payments directly
18.10attributable to the property taxes assessed against the parcel on which the house is located.
18.11No apportionment or reduction of the "property taxes payable" shall be required for the
18.12use of a portion of the claimant's homestead for a business purpose if the claimant does not
18.13deduct any business depreciation expenses for the use of a portion of the homestead in the
18.14determination of federal adjusted gross income. For homesteads which are manufactured
18.15homes as defined in section 273.125, subdivision 8, and for homesteads which are park
18.16trailers taxed as manufactured homes under section 168.012, subdivision 9, "property
18.17taxes payable" shall also include 17 19 percent of the gross rent paid in the preceding
18.18year for the site on which the homestead is located. When a homestead is owned by
18.19two or more persons as joint tenants or tenants in common, such tenants shall determine
18.20between them which tenant may claim the property taxes payable on the homestead. If
18.21they are unable to agree, the matter shall be referred to the commissioner of revenue
18.22whose decision shall be final. Property taxes are considered payable in the year prescribed
18.23by law for payment of the taxes.
18.24In the case of a claim relating to "property taxes payable," the claimant must have
18.25owned and occupied the homestead on January 2 of the year in which the tax is payable
18.26and (i) the property must have been classified as homestead property pursuant to section
18.27273.124 , on or before December 15 of the assessment year to which the "property taxes
18.28payable" relate; or (ii) the claimant must provide documentation from the local assessor
18.29that application for homestead classification has been made on or before December 15
18.30of the year in which the "property taxes payable" were payable and that the assessor has
18.31approved the application.
18.32EFFECTIVE DATE.This section is effective for claims based on rent paid in
18.332012 and thereafter.

18.34    Sec. 11. Minnesota Statutes 2011 Supplement, section 290A.04, subdivision 2, is
18.35amended to read:
19.1    Subd. 2. Homeowners. A claimant whose property taxes payable are in excess
19.2of the percentage of the household income stated below shall pay an amount equal to
19.3the percent of income shown for the appropriate household income level along with the
19.4percent to be paid by the claimant of the remaining amount of property taxes payable.
19.5The state refund equals the amount of property taxes payable that remain, up to the state
19.6refund amount shown below.

19.7 19.8 19.9	Household Income	Percent of Income	Percent Paid by Claimant	Maximum State Refund
19.10 19.11	$0 to 1,549	1.0 percent	15 percent	$	2,460 3,000
19.12 19.13	1,550 to 3,089	1.1 percent	15 percent	$	2,460 3,000
19.14 19.15	3,090 to 4,669	1.2 percent	15 percent	$	2,460 3,000
19.16 19.17	4,670 to 6,229	1.3 percent	20 percent	$	2,460 3,000
19.18 19.19	6,230 to 7,769	1.4 percent	20 percent	$	2,460 3,000
19.20 19.21	7,770 to 10,879	1.5 percent	20 percent	$	2,460 3,000
19.22 19.23	10,880 to 12,429	1.6 percent	20 percent	$	2,460 3,000
19.24 19.25	12,430 to 13,989	1.7 percent	20 percent	$	2,460 3,000
19.26 19.27	13,990 to 15,539	1.8 percent	20 percent	$	2,460 3,000
19.28 19.29	15,540 to 17,079	1.9 percent	25 percent	$	2,460 3,000
19.30 19.31	17,080 to 18,659	2.0 percent	25 percent	$	2,460 3,000
19.32 19.33	18,660 to 21,759	2.12.0 percent	25 percent	$	2,460 3,000
19.34 19.35	21,760 to 23,309	2.22.0 percent	30 percent	$	2,460 3,000
19.36 19.37	23,310 to 24,859	2.32.0 percent	30 percent	$	2,460 3,000
19.38 19.39	24,860 to 26,419	2.42.0 percent	30 percent	$	2,460 3,000
19.40 19.41	26,420 to 32,629	2.52.0 percent	35 percent	$	2,460 2,800
19.42 19.43	32,630 to 37,279	2.62.0 percent	35 percent	$	2,460 2,800
19.44 19.45	37,280 to 46,609	2.72.0 percent	35 percent	$	2,000 2,400
19.46 19.47	46,610 to 54,369	2.82.0 percent	35 percent	$	2,000 2,400
20.1 20.2	54,370 to 62,139	2.82.0 percent	40 percent	$	1,750 2,100
20.3 20.4	62,140 to 69,909	3.02.0 percent	40 percent	$	1,440 1,730
20.5 20.6	69,910 to 77,679	3.02.0 percent	40 percent	$	1,290 1,550
20.7 20.8	77,680 to 85,449	3.02.0 percent	40 percent	$	1,130 1,360
20.9 20.10	85,450 to 90,119	3.52.0 percent	45 percent	$	960 1,150
20.11 20.12	90,120 to 93,239	3.52.0 percent	45 percent	$	790 950
20.13 20.14	93,240 to 97,009	3.52.0 percent	50 percent	$	650 780
20.15 20.16	97,010 to 100,779	3.52.0 percent	50 percent	$	480 580

20.17    The payment made to a claimant shall be the amount of the state refund calculated
20.18under this subdivision. No payment is allowed if the claimant's household income is
20.19$100,780 or more.
20.20EFFECTIVE DATE.The changes in this section to the maximum refund amounts
20.21are effective for refund claims based on taxes payable in 2012 and thereafter, and the
20.22changes to the percent of income thresholds are effective for refund claims based on taxes
20.23payable in 2013 and thereafter.

20.24    Sec. 12. Minnesota Statutes 2010, section 290A.04, subdivision 2h, is amended to read:
20.25    Subd. 2h. Additional refund. (a) If the gross property taxes payable on a homestead
20.26increase more than 12 percent over the property taxes payable in the prior year on the same
20.27property that is owned and occupied by the same owner on January 2 of both years, and the
20.28amount of that increase is $100 or more, a claimant who is a homeowner shall be allowed
20.29an additional refund equal to 60 percent of the amount of the increase over the greater of
20.301210 percent of the prior year's property taxes payable or $100. This subdivision shall not
20.31apply to any increase in the gross property taxes payable attributable to improvements
20.32made to the homestead after the assessment date for the prior year's taxes. This subdivision
20.33shall not apply to any increase in the gross property taxes payable attributable to the
20.34termination of valuation exclusions under section 273.11, subdivision 16.
20.35The maximum refund allowed under this subdivision is $1,000 $1,500.
20.36(b) For purposes of this subdivision "gross property taxes payable" means property
20.37taxes payable determined without regard to the refund allowed under this subdivision.
20.38(c) In addition to the other proofs required by this chapter, each claimant under
20.39this subdivision shall file with the property tax refund return a copy of the property tax
21.1statement for taxes payable in the preceding year or other documents required by the
21.2commissioner.
21.3(d) Upon request, the appropriate county official shall make available the names and
21.4addresses of the property taxpayers who may be eligible for the additional property tax
21.5refund under this section. The information shall be provided on a magnetic computer
21.6disk. The county may recover its costs by charging the person requesting the information
21.7the reasonable cost for preparing the data. The information may not be used for any
21.8purpose other than for notifying the homeowner of potential eligibility and assisting the
21.9homeowner, without charge, in preparing a refund claim.
21.10EFFECTIVE DATE.This section is effective for refund claims based on taxes
21.11payable in 2013 and following years."
21.12Page 4, line 33, delete "90" and insert "100"
21.13Page 4, line 35, delete "$1,000" and insert "$1,500"
21.14Page 5, after line 11, insert:

21.15    "Sec. 14. REPEALER.
21.16Minnesota Statutes 2010, sections 290.01, subdivision 6b; and 290.0921, subdivision
21.177, are repealed.
21.18EFFECTIVE DATE.This section is effective for returns filed for taxable years
21.19beginning after December 31, 2011."
21.20Renumber the sections in sequence and correct the internal references
21.21Amend the title accordingly