1.1.................... moves to amend H.F. No. 1914, the delete everything amendment
1.2(H1914DE1), as follows:
1.3Page 1, delete sections 1 to 3, and insert:

1.4    "Section 1. Minnesota Statutes 2011 Supplement, section 16A.152, subdivision 2,
1.5is amended to read:
1.6    Subd. 2. Additional revenues; priority. (a) If on the basis of a forecast of general
1.7fund revenues and expenditures, the commissioner of management and budget determines
1.8that there will be a positive unrestricted budgetary general fund balance at the close of
1.9the biennium, the commissioner of management and budget must allocate money to the
1.10following accounts and purposes in priority order:
1.11    (1) the cash flow account established in subdivision 1 until that account reaches
1.12$350,000,000;
1.13    (2) the budget reserve account established in subdivision 1a until that account
1.14reaches $653,000,000;
1.15    (3) the amount necessary to increase the aid payment schedule for school district
1.16aids and credits payments in section 127A.45 to not more than 90 percent rounded to the
1.17nearest tenth of a percent without exceeding the amount available and with any remaining
1.18funds deposited in the budget reserve;
1.19    (4) the amount necessary to restore all or a portion of the net aid reductions under
1.20section 127A.441 and to reduce the property tax revenue recognition shift under section
1.21123B.75, subdivision 5 , by the same amount;
1.22    (5) to the state airports fund, the amount necessary to restore the amount transferred
1.23from the state airports fund under Laws 2008, chapter 363, article 11, section 3,
1.24subdivision 5; and
1.25    (6) to the fire safety account in the special revenue fund, the amount necessary to
1.26restore transfers from the account to the general fund made in Laws 2010; and
2.1    (7) to reduce the levy of the state general tax under section 275.025, subdivision
2.21. The commissioner of revenue shall allocate the entire amount of the reduction to the
2.3portion of the levy imposed on commercial-industrial property.
2.4    (b) The amounts necessary to meet the requirements of this section are appropriated
2.5from the general fund within two weeks after the forecast is released or, in the case of
2.6transfers under paragraph (a), clauses (3) and (4), as necessary to meet the appropriations
2.7schedules otherwise established in statute.
2.8    (c) The commissioner of management and budget shall certify the total dollar
2.9amount of the reductions under paragraph (a), clauses (3) and (4), to the commissioner of
2.10education. The commissioner of education shall increase the aid payment percentage and
2.11reduce the property tax shift percentage by these amounts and apply those reductions to
2.12the current fiscal year and thereafter.
2.13EFFECTIVE DATE.This section is effective begnining for property taxes levied
2.14in 2012, payable in 2013."
2.15Page 5, delete sections 5 and 6
2.16Pages 8 to 11, delete sections 8 to 11 and insert:

2.17    "Sec. 5. Minnesota Statutes 2010, section 289A.08, subdivision 3, is amended to read:
2.18    Subd. 3. Corporations. (a) A corporation that is subject to the state's jurisdiction to
2.19tax under section 290.014, subdivision 5, must file a return, except that a foreign operating
2.20corporation as defined in section 290.01, subdivision 6b, is not required to file a return.
2.21    (b) Members of a unitary business that are required to file a combined report on one
2.22return must designate a member of the unitary business to be responsible for tax matters,
2.23including the filing of returns, the payment of taxes, additions to tax, penalties, interest,
2.24or any other payment, and for the receipt of refunds of taxes or interest paid in excess of
2.25taxes lawfully due. The designated member must be a member of the unitary business that
2.26is filing the single combined report and either:
2.27    (1) a corporation that is subject to the taxes imposed by chapter 290; or
2.28    (2) a corporation that is not subject to the taxes imposed by chapter 290:
2.29    (i) Such corporation consents by filing the return as a designated member under this
2.30clause to remit taxes, penalties, interest, or additions to tax due from the members of the
2.31unitary business subject to tax, and receive refunds or other payments on behalf of other
2.32members of the unitary business. The member designated under this clause is a "taxpayer"
2.33for the purposes of this chapter and chapter 270C, and is liable for any liability imposed
2.34on the unitary business under this chapter and chapter 290.
3.1    (ii) If the state does not otherwise have the jurisdiction to tax the member designated
3.2under this clause, consenting to be the designated member does not create the jurisdiction
3.3to impose tax on the designated member, other than as described in item (i).
3.4    (iii) The member designated under this clause must apply for a business tax account
3.5identification number.
3.6    (c) The commissioner shall adopt rules for the filing of one return on behalf of the
3.7members of an affiliated group of corporations that are required to file a combined report.
3.8All members of an affiliated group that are required to file a combined report must file one
3.9return on behalf of the members of the group under rules adopted by the commissioner.
3.10    (d) If a corporation claims on a return that it has paid tax in excess of the amount of
3.11taxes lawfully due, that corporation must include on that return information necessary for
3.12payment of the tax in excess of the amount lawfully due by electronic means.
3.13EFFECTIVE DATE.This section is effective for taxable years beginning after
3.14December 31, 2011.

3.15    Sec. 6. Minnesota Statutes 2010, section 290.01, subdivision 5, is amended to read:
3.16    Subd. 5. Domestic corporation. The term "domestic" when applied to a corporation
3.17means a corporation:
3.18    (1) created or organized in the United States, or under the laws of the United States
3.19or of any state, the District of Columbia, or any political subdivision of any of the
3.20foregoing but not including the Commonwealth of Puerto Rico, or any possession of
3.21the United States;
3.22    (2) which qualifies as a DISC, as defined in section 992(a) of the Internal Revenue
3.23Code; or
3.24    (3) which qualifies as a FSC, as defined in section 922 of the Internal Revenue Code.;
3.25    (4) which is incorporated in a tax haven;
3.26    (5) which is engaged in activity in a tax haven sufficient for the tax haven to impose
3.27a net income tax under United States constitutional standards and section 290.015, and
3.28which reports that 20 percent or more of its income is attributable to business in the tax
3.29haven; or
3.30    (6) which has 20 percent or more of the average of its property, payroll, and sales
3.31factors, as defined under section 290.191, within the 50 states of the United States and
3.32the District of Columbia.
3.33EFFECTIVE DATE.This section is effective for returns filed for taxable years
3.34beginning after December 31, 2011.

4.1    Sec. 7. Minnesota Statutes 2010, section 290.01, is amended by adding a subdivision
4.2to read:
4.3    Subd. 5c. Tax haven. (a) "Tax haven" means the following foreign jurisdictions,
4.4unless the listing of the jurisdiction does not apply under paragraph (b):
4.5    (1) Andorra;
4.6    (2) Anguilla;
4.7    (3) Antigua and Barbuda;
4.8    (4) Aruba;
4.9    (5) Bahamas;
4.10    (6) Bahrain;
4.11    (7) Belize;
4.12    (8) British Virgin Islands;
4.13    (9) Cayman Islands;
4.14    (10) Cook Islands;
4.15    (11) Costa Rica;
4.16    (12) Dominica;
4.17    (13) Gibraltar;
4.18    (14) Grenada;
4.19    (15) Guernsey-Sark-Alderney;
4.20    (16) Jersey;
4.21    (17) Jordan;
4.22    (18) Lebanon;
4.23    (19) Liberia;
4.24    (20) Liechtenstein;
4.25    (21) Maldives;
4.26    (22) Marshall Islands;
4.27    (23) Monaco;
4.28    (24) Montserrat;
4.29    (25) Nauru;
4.30    (26) Netherlands Antilles;
4.31    (27) Niue;
4.32    (28) Panama;
4.33    (29) St. Kitts and Nevis;
4.34    (30) St. Lucia;
4.35    (31) St. Vincent and Grenadines;
4.36    (32) Tonga;
5.1    (33) Turks and Caicos; and
5.2    (34) Vanuatu.
5.3    (b) A foreign jurisdiction's listing under paragraph (a) does not apply to the first
5.4taxable year after the United States enters into a tax treaty or other agreement with the
5.5foreign jurisdiction that provides for prompt, obligatory, and automatic exchange of
5.6information with the United States government relevant to enforcing the provisions of
5.7federal tax laws and the treaty or other agreement was in effect for the taxable year.
5.8EFFECTIVE DATE.This section is effective for returns filed for taxable years
5.9beginning after December 31, 2011.

5.10    Sec. 8. Minnesota Statutes 2011 Supplement, section 290.01, subdivision 19c, is
5.11amended to read:
5.12    Subd. 19c. Corporations; additions to federal taxable income. For corporations,
5.13there shall be added to federal taxable income:
5.14    (1) the amount of any deduction taken for federal income tax purposes for income,
5.15excise, or franchise taxes based on net income or related minimum taxes, including but not
5.16limited to the tax imposed under section 290.0922, paid by the corporation to Minnesota,
5.17another state, a political subdivision of another state, the District of Columbia, or any
5.18foreign country or possession of the United States;
5.19    (2) interest not subject to federal tax upon obligations of: the United States, its
5.20possessions, its agencies, or its instrumentalities; the state of Minnesota or any other
5.21state, any of its political or governmental subdivisions, any of its municipalities, or any
5.22of its governmental agencies or instrumentalities; the District of Columbia; or Indian
5.23tribal governments;
5.24    (3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal
5.25Revenue Code;
5.26    (4) the amount of any net operating loss deduction taken for federal income tax
5.27purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss
5.28deduction under section 810 of the Internal Revenue Code;
5.29    (5) the amount of any special deductions taken for federal income tax purposes
5.30under sections 241 to 247 and 965 of the Internal Revenue Code;
5.31    (6) losses from the business of mining, as defined in section 290.05, subdivision 1,
5.32clause (a), that are not subject to Minnesota income tax;
5.33    (7) the amount of any capital losses deducted for federal income tax purposes under
5.34sections 1211 and 1212 of the Internal Revenue Code;
6.1    (8) the exempt foreign trade income of a foreign sales corporation under sections
6.2921(a) and 291 of the Internal Revenue Code;
6.3    (9) the amount of percentage depletion deducted under sections 611 through 614 and
6.4291 of the Internal Revenue Code;
6.5    (10) for certified pollution control facilities placed in service in a taxable year
6.6beginning before December 31, 1986, and for which amortization deductions were elected
6.7under section 169 of the Internal Revenue Code of 1954, as amended through December
6.831, 1985, the amount of the amortization deduction allowed in computing federal taxable
6.9income for those facilities;
6.10    (11) the amount of any deemed dividend from a foreign operating corporation
6.11determined pursuant to section 290.17, subdivision 4, paragraph (g). The deemed dividend
6.12shall be reduced by the amount of the addition to income required by clauses (20), (21),
6.13(22), and (23);
6.14    (12) (11) the amount of a partner's pro rata share of net income which does not flow
6.15through to the partner because the partnership elected to pay the tax on the income under
6.16section 6242(a)(2) of the Internal Revenue Code;
6.17    (13) (12) the amount of net income excluded under section 114 of the Internal
6.18Revenue Code;
6.19    (14) (13) any increase in subpart F income, as defined in section 952(a) of the
6.20Internal Revenue Code, for the taxable year when subpart F income is calculated without
6.21regard to the provisions of Division C, title III, section 303(b) of Public Law 110-343;
6.22    (15) (14) 80 percent of the depreciation deduction allowed under section
6.23168(k)(1)(A) and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if
6.24the taxpayer has an activity that in the taxable year generates a deduction for depreciation
6.25under section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable
6.26year that the taxpayer is not allowed to claim for the taxable year, "the depreciation
6.27allowed under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess
6.28of the depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A)
6.29over the amount of the loss from the activity that is not allowed in the taxable year. In
6.30succeeding taxable years when the losses not allowed in the taxable year are allowed, the
6.31depreciation under section 168(k)(1)(A) and (k)(4)(A) is allowed;
6.32    (16) (15) 80 percent of the amount by which the deduction allowed by section 179 of
6.33the Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
6.34Revenue Code of 1986, as amended through December 31, 2003;
6.35    (17) (16) to the extent deducted in computing federal taxable income, the amount of
6.36the deduction allowable under section 199 of the Internal Revenue Code;
7.1    (18) (17) for taxable years beginning before January 1, 2013, the exclusion allowed
7.2under section 139A of the Internal Revenue Code for federal subsidies for prescription
7.3drug plans;
7.4    (19) (18) the amount of expenses disallowed under section 290.10, subdivision 2;
7.5    (20) an amount equal to the interest and intangible expenses, losses, and costs paid,
7.6accrued, or incurred by any member of the taxpayer's unitary group to or for the benefit
7.7of a corporation that is a member of the taxpayer's unitary business group that qualifies
7.8as a foreign operating corporation. For purposes of this clause, intangible expenses and
7.9costs include:
7.10    (i) expenses, losses, and costs for, or related to, the direct or indirect acquisition,
7.11use, maintenance or management, ownership, sale, exchange, or any other disposition of
7.12intangible property;
7.13    (ii) losses incurred, directly or indirectly, from factoring transactions or discounting
7.14transactions;
7.15    (iii) royalty, patent, technical, and copyright fees;
7.16    (iv) licensing fees; and
7.17    (v) other similar expenses and costs.
7.18For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
7.19applications, trade names, trademarks, service marks, copyrights, mask works, trade
7.20secrets, and similar types of intangible assets.
7.21This clause does not apply to any item of interest or intangible expenses or costs paid,
7.22accrued, or incurred, directly or indirectly, to a foreign operating corporation with respect
7.23to such item of income to the extent that the income to the foreign operating corporation
7.24is income from sources without the United States as defined in subtitle A, chapter 1,
7.25subchapter N, part 1, of the Internal Revenue Code;
7.26    (21) except as already included in the taxpayer's taxable income pursuant to clause
7.27(20), any interest income and income generated from intangible property received or
7.28accrued by a foreign operating corporation that is a member of the taxpayer's unitary
7.29group. For purposes of this clause, income generated from intangible property includes:
7.30    (i) income related to the direct or indirect acquisition, use, maintenance or
7.31management, ownership, sale, exchange, or any other disposition of intangible property;
7.32    (ii) income from factoring transactions or discounting transactions;
7.33    (iii) royalty, patent, technical, and copyright fees;
7.34    (iv) licensing fees; and
7.35    (v) other similar income.
8.1For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
8.2applications, trade names, trademarks, service marks, copyrights, mask works, trade
8.3secrets, and similar types of intangible assets.
8.4This clause does not apply to any item of interest or intangible income received or accrued
8.5by a foreign operating corporation with respect to such item of income to the extent that
8.6the income is income from sources without the United States as defined in subtitle A,
8.7chapter 1, subchapter N, part 1, of the Internal Revenue Code;
8.8    (22) the dividends attributable to the income of a foreign operating corporation that
8.9is a member of the taxpayer's unitary group in an amount that is equal to the dividends
8.10paid deduction of a real estate investment trust under section 561(a) of the Internal
8.11Revenue Code for amounts paid or accrued by the real estate investment trust to the
8.12foreign operating corporation;
8.13    (23) the income of a foreign operating corporation that is a member of the taxpayer's
8.14unitary group in an amount that is equal to gains derived from the sale of real or personal
8.15property located in the United States;
8.16    (24) (19) for taxable years beginning before January 1, 2010, the additional amount
8.17allowed as a deduction for donation of computer technology and equipment under section
8.18170(e)(6) of the Internal Revenue Code, to the extent deducted from taxable income; and
8.19    (25) (20) discharge of indebtedness income resulting from reacquisition of business
8.20indebtedness and deferred under section 108(i) of the Internal Revenue Code.
8.21EFFECTIVE DATE.This section is effective for taxable years beginning after
8.22December 31, 2011.

8.23    Sec. 9. Minnesota Statutes 2010, section 290.01, subdivision 19d, is amended to read:
8.24    Subd. 19d. Corporations; modifications decreasing federal taxable income. For
8.25corporations, there shall be subtracted from federal taxable income after the increases
8.26provided in subdivision 19c:
8.27    (1) the amount of foreign dividend gross-up added to gross income for federal
8.28income tax purposes under section 78 of the Internal Revenue Code;
8.29    (2) the amount of salary expense not allowed for federal income tax purposes due to
8.30claiming the work opportunity credit under section 51 of the Internal Revenue Code;
8.31    (3) any dividend (not including any distribution in liquidation) paid within the
8.32taxable year by a national or state bank to the United States, or to any instrumentality of
8.33the United States exempt from federal income taxes, on the preferred stock of the bank
8.34owned by the United States or the instrumentality;
9.1    (4) amounts disallowed for intangible drilling costs due to differences between
9.2this chapter and the Internal Revenue Code in taxable years beginning before January
9.31, 1987, as follows:
9.4    (i) to the extent the disallowed costs are represented by physical property, an amount
9.5equal to the allowance for depreciation under Minnesota Statutes 1986, section 290.09,
9.6subdivision 7 , subject to the modifications contained in subdivision 19e; and
9.7    (ii) to the extent the disallowed costs are not represented by physical property, an
9.8amount equal to the allowance for cost depletion under Minnesota Statutes 1986, section
9.9290.09, subdivision 8 ;
9.10    (5) the deduction for capital losses pursuant to sections 1211 and 1212 of the
9.11Internal Revenue Code, except that:
9.12    (i) for capital losses incurred in taxable years beginning after December 31, 1986,
9.13capital loss carrybacks shall not be allowed;
9.14    (ii) for capital losses incurred in taxable years beginning after December 31, 1986,
9.15a capital loss carryover to each of the 15 taxable years succeeding the loss year shall be
9.16allowed;
9.17    (iii) for capital losses incurred in taxable years beginning before January 1, 1987, a
9.18capital loss carryback to each of the three taxable years preceding the loss year, subject to
9.19the provisions of Minnesota Statutes 1986, section 290.16, shall be allowed; and
9.20    (iv) for capital losses incurred in taxable years beginning before January 1, 1987,
9.21a capital loss carryover to each of the five taxable years succeeding the loss year to the
9.22extent such loss was not used in a prior taxable year and subject to the provisions of
9.23Minnesota Statutes 1986, section 290.16, shall be allowed;
9.24    (6) an amount for interest and expenses relating to income not taxable for federal
9.25income tax purposes, if (i) the income is taxable under this chapter and (ii) the interest and
9.26expenses were disallowed as deductions under the provisions of section 171(a)(2), 265 or
9.27291 of the Internal Revenue Code in computing federal taxable income;
9.28    (7) in the case of mines, oil and gas wells, other natural deposits, and timber for
9.29which percentage depletion was disallowed pursuant to subdivision 19c, clause (9), a
9.30reasonable allowance for depletion based on actual cost. In the case of leases the deduction
9.31must be apportioned between the lessor and lessee in accordance with rules prescribed
9.32by the commissioner. In the case of property held in trust, the allowable deduction must
9.33be apportioned between the income beneficiaries and the trustee in accordance with the
9.34pertinent provisions of the trust, or if there is no provision in the instrument, on the basis
9.35of the trust's income allocable to each;
10.1    (8) for certified pollution control facilities placed in service in a taxable year
10.2beginning before December 31, 1986, and for which amortization deductions were elected
10.3under section 169 of the Internal Revenue Code of 1954, as amended through December
10.431, 1985, an amount equal to the allowance for depreciation under Minnesota Statutes
10.51986, section 290.09, subdivision 7;
10.6    (9) amounts included in federal taxable income that are due to refunds of income,
10.7excise, or franchise taxes based on net income or related minimum taxes paid by the
10.8corporation to Minnesota, another state, a political subdivision of another state, the
10.9District of Columbia, or a foreign country or possession of the United States to the extent
10.10that the taxes were added to federal taxable income under section 290.01, subdivision 19c,
10.11clause (1), in a prior taxable year;
10.12    (10) 80 percent of royalties, fees, or other like income accrued or received from a
10.13foreign operating corporation or a foreign corporation which is part of the same unitary
10.14business as the receiving corporation, unless the income resulting from such payments or
10.15accruals is income from sources within the United States as defined in subtitle A, chapter
10.161, subchapter N, part 1, of the Internal Revenue Code;
10.17    (11) (10) income or gains from the business of mining as defined in section 290.05,
10.18subdivision 1 , clause (a), that are not subject to Minnesota franchise tax;
10.19    (12) (11) the amount of disability access expenditures in the taxable year which are
10.20not allowed to be deducted or capitalized under section 44(d)(7) of the Internal Revenue
10.21Code;
10.22    (13) (12) the amount of qualified research expenses not allowed for federal income
10.23tax purposes under section 280C(c) of the Internal Revenue Code, but only to the extent
10.24that the amount exceeds the amount of the credit allowed under section 290.068;
10.25    (14) (13) the amount of salary expenses not allowed for federal income tax purposes
10.26due to claiming the Indian employment credit under section 45A(a) of the Internal
10.27Revenue Code;
10.28    (15) (14) for a corporation whose foreign sales corporation, as defined in section
10.29922 of the Internal Revenue Code, constituted a foreign operating corporation during any
10.30taxable year ending before January 1, 1995, and a return was filed by August 15, 1996,
10.31claiming the deduction under section 290.21, subdivision 4, for income received from
10.32the foreign operating corporation, an amount equal to 1.23 multiplied by the amount of
10.33income excluded under section 114 of the Internal Revenue Code, provided the income is
10.34not income of a foreign operating company;
11.1    (16) (15) any decrease in subpart F income, as defined in section 952(a) of the
11.2Internal Revenue Code, for the taxable year when subpart F income is calculated without
11.3regard to the provisions of Division C, title III, section 303(b) of Public Law 110-343;
11.4    (17) (16) in each of the five tax years immediately following the tax year in which an
11.5addition is required under subdivision 19c, clause (15) (14), an amount equal to one-fifth
11.6of the delayed depreciation. For purposes of this clause, "delayed depreciation" means the
11.7amount of the addition made by the taxpayer under subdivision 19c, clause (15) (14). The
11.8resulting delayed depreciation cannot be less than zero;
11.9    (18) (17) in each of the five tax years immediately following the tax year in which an
11.10addition is required under subdivision 19c, clause (16) (15), an amount equal to one-fifth
11.11of the amount of the addition; and
11.12    (19) (18) to the extent included in federal taxable income, discharge of indebtedness
11.13income resulting from reacquisition of business indebtedness included in federal taxable
11.14income under section 108(i) of the Internal Revenue Code. This subtraction applies only
11.15to the extent that the income was included in net income in a prior year as a result of the
11.16addition under section 290.01, subdivision 19c, clause (25) (20).
11.17EFFECTIVE DATE.This section is effective for taxable years beginning after
11.18December 31, 2011.

11.19    Sec. 10. Minnesota Statutes 2010, section 290.0921, subdivision 3, is amended to read:
11.20    Subd. 3. Alternative minimum taxable income. "Alternative minimum taxable
11.21income" is Minnesota net income as defined in section 290.01, subdivision 19, and
11.22includes the adjustments and tax preference items in sections 56, 57, 58, and 59(d), (e),
11.23(f), and (h) of the Internal Revenue Code. If a corporation files a separate company
11.24Minnesota tax return, the minimum tax must be computed on a separate company basis.
11.25If a corporation is part of a tax group filing a unitary return, the minimum tax must be
11.26computed on a unitary basis. The following adjustments must be made.
11.27    (1) For purposes of the depreciation adjustments under section 56(a)(1) and
11.2856(g)(4)(A) of the Internal Revenue Code, the basis for depreciable property placed in
11.29service in a taxable year beginning before January 1, 1990, is the adjusted basis for federal
11.30income tax purposes, including any modification made in a taxable year under section
11.31290.01, subdivision 19e , or Minnesota Statutes 1986, section 290.09, subdivision 7,
11.32paragraph (c).
11.33    For taxable years beginning after December 31, 2000, the amount of any remaining
11.34modification made under section 290.01, subdivision 19e, or Minnesota Statutes 1986,
12.1section 290.09, subdivision 7, paragraph (c), not previously deducted is a depreciation
12.2allowance in the first taxable year after December 31, 2000.
12.3    (2) The portion of the depreciation deduction allowed for federal income tax
12.4purposes under section 168(k) of the Internal Revenue Code that is required as an addition
12.5under section 290.01, subdivision 19c, clause (15) (14), is disallowed in determining
12.6alternative minimum taxable income.
12.7    (3) The subtraction for depreciation allowed under section 290.01, subdivision 19d,
12.8clause (17), is allowed as a depreciation deduction in determining alternative minimum
12.9taxable income.
12.10    (4) The alternative tax net operating loss deduction under sections 56(a)(4) and 56(d)
12.11of the Internal Revenue Code does not apply.
12.12    (5) The special rule for certain dividends under section 56(g)(4)(C)(ii) of the Internal
12.13Revenue Code does not apply.
12.14    (6) The special rule for dividends from section 936 companies under section
12.1556(g)(4)(C)(iii) does not apply.
12.16    (7) The tax preference for depletion under section 57(a)(1) of the Internal Revenue
12.17Code does not apply.
12.18    (8) The tax preference for intangible drilling costs under section 57(a)(2) of the
12.19Internal Revenue Code must be calculated without regard to subparagraph (E) and the
12.20subtraction under section 290.01, subdivision 19d, clause (4).
12.21    (9) The tax preference for tax exempt interest under section 57(a)(5) of the Internal
12.22Revenue Code does not apply.
12.23    (10) The tax preference for charitable contributions of appreciated property under
12.24section 57(a)(6) of the Internal Revenue Code does not apply.
12.25    (11) For purposes of calculating the tax preference for accelerated depreciation or
12.26amortization on certain property placed in service before January 1, 1987, under section
12.2757(a)(7) of the Internal Revenue Code, the deduction allowable for the taxable year is the
12.28deduction allowed under section 290.01, subdivision 19e.
12.29    For taxable years beginning after December 31, 2000, the amount of any remaining
12.30modification made under section 290.01, subdivision 19e, not previously deducted is a
12.31depreciation or amortization allowance in the first taxable year after December 31, 2004.
12.32    (12) For purposes of calculating the adjustment for adjusted current earnings in
12.33section 56(g) of the Internal Revenue Code, the term "alternative minimum taxable
12.34income" as it is used in section 56(g) of the Internal Revenue Code, means alternative
12.35minimum taxable income as defined in this subdivision, determined without regard to the
12.36adjustment for adjusted current earnings in section 56(g) of the Internal Revenue Code.
13.1    (13) For purposes of determining the amount of adjusted current earnings under
13.2section 56(g)(3) of the Internal Revenue Code, no adjustment shall be made under section
13.356(g)(4) of the Internal Revenue Code with respect to (i) the amount of foreign dividend
13.4gross-up subtracted as provided in section 290.01, subdivision 19d, clause (1), or (ii) the
13.5amount of refunds of income, excise, or franchise taxes subtracted as provided in section
13.6290.01, subdivision 19d , clause (9), or (iii) the amount of royalties, fees or other like
13.7income subtracted as provided in section 290.01, subdivision 19d, clause (10).
13.8    (14) Alternative minimum taxable income excludes the income from operating in a
13.9job opportunity building zone as provided under section 469.317.
13.10    (15) Alternative minimum taxable income excludes the income from operating in a
13.11biotechnology and health sciences industry zone as provided under section 469.337.
13.12    (16) Alternative minimum taxable income excludes the income from operating in an
13.13international economic development zone as provided under section 469.326.
13.14    Items of tax preference must not be reduced below zero as a result of the
13.15modifications in this subdivision.
13.16EFFECTIVE DATE.This section is effective for taxable years beginning after
13.17December 31, 2011.

13.18    Sec. 11. Minnesota Statutes 2010, section 290.17, subdivision 4, is amended to read:
13.19    Subd. 4. Unitary business principle. (a) If a trade or business conducted wholly
13.20within this state or partly within and partly without this state is part of a unitary business,
13.21the entire income of the unitary business is subject to apportionment pursuant to section
13.22290.191 . Notwithstanding subdivision 2, paragraph (c), none of the income of a unitary
13.23business is considered to be derived from any particular source and none may be allocated
13.24to a particular place except as provided by the applicable apportionment formula. The
13.25provisions of this subdivision do not apply to business income subject to subdivision 5,
13.26income of an insurance company, or income of an investment company determined under
13.27section 290.36.
13.28    (b) The term "unitary business" means business activities or operations which
13.29result in a flow of value between them. The term may be applied within a single legal
13.30entity or between multiple entities and without regard to whether each entity is a sole
13.31proprietorship, a corporation, a partnership or a trust.
13.32    (c) Unity is presumed whenever there is unity of ownership, operation, and use,
13.33evidenced by centralized management or executive force, centralized purchasing,
13.34advertising, accounting, or other controlled interaction, but the absence of these
13.35centralized activities will not necessarily evidence a nonunitary business. Unity is also
14.1presumed when business activities or operations are of mutual benefit, dependent upon or
14.2contributory to one another, either individually or as a group.
14.3    (d) Where a business operation conducted in Minnesota is owned by a business
14.4entity that carries on business activity outside the state different in kind from that
14.5conducted within this state, and the other business is conducted entirely outside the state, it
14.6is presumed that the two business operations are unitary in nature, interrelated, connected,
14.7and interdependent unless it can be shown to the contrary.
14.8    (e) Unity of ownership is not deemed to exist when a corporation is involved unless
14.9that corporation is a member of a group of two or more business entities and more than 50
14.10percent of the voting stock of each member of the group is directly or indirectly owned
14.11by a common owner or by common owners, either corporate or noncorporate, or by one
14.12or more of the member corporations of the group. For this purpose, the term "voting
14.13stock" shall include membership interests of mutual insurance holding companies formed
14.14under section 66A.40.
14.15    (f) The net income and apportionment factors under section 290.191 or 290.20 of
14.16foreign corporations and other foreign entities which are part of a unitary business shall
14.17not be included in the net income or the apportionment factors of the unitary business.
14.18A foreign corporation or other foreign entity which is required to file a return under this
14.19chapter shall file on a separate return basis. The net income and apportionment factors
14.20under section 290.191 or 290.20 of foreign operating corporations shall not be included in
14.21the net income or the apportionment factors of the unitary business except as provided in
14.22paragraph (g). The provisions of this paragraph are not severable from the provisions of
14.23section 290.01, subdivision 5, clauses (4) to (6); if any of those provisions are found to be
14.24unconstitutional, the provisions of this paragraph are void for the respective taxable years.
14.25    (g) The adjusted net income of a foreign operating corporation shall be deemed to
14.26be paid as a dividend on the last day of its taxable year to each shareholder thereof, in
14.27proportion to each shareholder's ownership, with which such corporation is engaged in
14.28a unitary business. Such deemed dividend shall be treated as a dividend under section
14.29290.21, subdivision 4.
14.30    Dividends actually paid by a foreign operating corporation to a corporate shareholder
14.31which is a member of the same unitary business as the foreign operating corporation shall
14.32be eliminated from the net income of the unitary business in preparing a combined report
14.33for the unitary business. The adjusted net income of a foreign operating corporation
14.34shall be its net income adjusted as follows:
15.1    (1) any taxes paid or accrued to a foreign country, the commonwealth of Puerto
15.2Rico, or a United States possession or political subdivision of any of the foregoing shall
15.3be a deduction; and
15.4    (2) the subtraction from federal taxable income for payments received from foreign
15.5corporations or foreign operating corporations under section 290.01, subdivision 19d,
15.6clause (10), shall not be allowed.
15.7    If a foreign operating corporation incurs a net loss, neither income nor deduction
15.8from that corporation shall be included in determining the net income of the unitary
15.9business.
15.10    (h) (g) For purposes of determining the net income of a unitary business and the
15.11factors to be used in the apportionment of net income pursuant to section 290.191 or
15.12290.20 , there must be included only the income and apportionment factors of domestic
15.13corporations or other domestic entities other than foreign operating corporations that are
15.14determined to be part of the unitary business pursuant to this subdivision, notwithstanding
15.15that foreign corporations or other foreign entities might be included in the unitary
15.16business, except that foreign corporations or other foreign entities that are included on a
15.17federal income tax return must be included on the combined report. Income of a foreign
15.18partnership or other foreign entity treated as a partnership included in federal taxable
15.19income, as defined in section 63 of the Internal Revenue Code of 1986, as amended
15.20through the date named in section 290.01, subdivision 19, and the proportionate amount of
15.21apportionment factors, must be included in the combined report.
15.22    (i) (h) Deductions for expenses, interest, or taxes otherwise allowable under
15.23this chapter that are connected with or allocable against dividends, deemed dividends
15.24described in paragraph (g), or royalties, fees, or other like income described in section
15.25290.01, subdivision 19d, clause (10), shall not be disallowed.
15.26    (j) (i) Each corporation or other entity, except a sole proprietorship, that is part of
15.27a unitary business must file combined reports as the commissioner determines. On the
15.28reports, all intercompany transactions between entities included pursuant to paragraph
15.29(h) (g) must be eliminated and the entire net income of the unitary business determined in
15.30accordance with this subdivision is apportioned among the entities by using each entity's
15.31Minnesota factors for apportionment purposes in the numerators of the apportionment
15.32formula and the total factors for apportionment purposes of all entities included pursuant
15.33to paragraph (h) (g) in the denominators of the apportionment formula. All sales of the
15.34unitary business made within Minnesota pursuant to section 290.191 or 290.20 must be
15.35included on the separate combined report of a corporation that is a member of the unitary
15.36business and is subject to the jurisdiction of this state to impose tax under this chapter.
16.1    (k) (j) If a corporation has been divested from a unitary business and is included in a
16.2combined report for a fractional part of the common accounting period of the combined
16.3report:
16.4    (1) its income includable in the combined report is its income incurred for that part
16.5of the year determined by proration or separate accounting; and
16.6    (2) its sales, property, and payroll included in the apportionment formula must
16.7be prorated or accounted for separately.
16.8EFFECTIVE DATE.This section is effective for returns filed for taxable years
16.9beginning after December 31, 2011.

16.10    Sec. 12. Minnesota Statutes 2010, section 290.191, subdivision 5, is amended to read:
16.11    Subd. 5. Determination of sales factor. For purposes of this section, the following
16.12rules apply in determining the sales factor.
16.13    (a) The sales factor includes all sales, gross earnings, or receipts received in the
16.14ordinary course of the business, except that the following types of income are not included
16.15in the sales factor:
16.16    (1) interest;
16.17    (2) dividends;
16.18    (3) sales of capital assets as defined in section 1221 of the Internal Revenue Code;
16.19    (4) sales of property used in the trade or business, except sales of leased property of
16.20a type which is regularly sold as well as leased; and
16.21    (5) sales of debt instruments as defined in section 1275(a)(1) of the Internal Revenue
16.22Code or sales of stock; and.
16.23    (6) royalties, fees, or other like income of a type which qualify for a subtraction from
16.24federal taxable income under section 290.01, subdivision 19d(10).
16.25    (b) Sales of tangible personal property are made within this state if the property is
16.26received by a purchaser at a point within this state, and the taxpayer is taxable in this state,
16.27regardless of the f.o.b. point, other conditions of the sale, or the ultimate destination
16.28of the property.
16.29    (c) Tangible personal property delivered to a common or contract carrier or foreign
16.30vessel for delivery to a purchaser in another state or nation is a sale in that state or nation,
16.31regardless of f.o.b. point or other conditions of the sale.
16.32    (d) Notwithstanding paragraphs (b) and (c), when intoxicating liquor, wine,
16.33fermented malt beverages, cigarettes, or tobacco products are sold to a purchaser who is
16.34licensed by a state or political subdivision to resell this property only within the state of
16.35ultimate destination, the sale is made in that state.
17.1    (e) Sales made by or through a corporation that is qualified as a domestic
17.2international sales corporation under section 992 of the Internal Revenue Code are not
17.3considered to have been made within this state.
17.4    (f) Sales, rents, royalties, and other income in connection with real property is
17.5attributed to the state in which the property is located.
17.6    (g) Receipts from the lease or rental of tangible personal property, including finance
17.7leases and true leases, must be attributed to this state if the property is located in this
17.8state and to other states if the property is not located in this state. Receipts from the
17.9lease or rental of moving property including, but not limited to, motor vehicles, rolling
17.10stock, aircraft, vessels, or mobile equipment are included in the numerator of the receipts
17.11factor to the extent that the property is used in this state. The extent of the use of moving
17.12property is determined as follows:
17.13    (1) A motor vehicle is used wholly in the state in which it is registered.
17.14    (2) The extent that rolling stock is used in this state is determined by multiplying
17.15the receipts from the lease or rental of the rolling stock by a fraction, the numerator of
17.16which is the miles traveled within this state by the leased or rented rolling stock and the
17.17denominator of which is the total miles traveled by the leased or rented rolling stock.
17.18    (3) The extent that an aircraft is used in this state is determined by multiplying the
17.19receipts from the lease or rental of the aircraft by a fraction, the numerator of which is
17.20the number of landings of the aircraft in this state and the denominator of which is the
17.21total number of landings of the aircraft.
17.22    (4) The extent that a vessel, mobile equipment, or other mobile property is used in
17.23the state is determined by multiplying the receipts from the lease or rental of the property
17.24by a fraction, the numerator of which is the number of days during the taxable year the
17.25property was in this state and the denominator of which is the total days in the taxable year.
17.26    (h) Royalties and other income not described in paragraph (a), clause (6), received
17.27for the use of or for the privilege of using intangible property, including patents,
17.28know-how, formulas, designs, processes, patterns, copyrights, trade names, service names,
17.29franchises, licenses, contracts, customer lists, or similar items, must be attributed to the
17.30state in which the property is used by the purchaser. If the property is used in more
17.31than one state, the royalties or other income must be apportioned to this state pro rata
17.32according to the portion of use in this state. If the portion of use in this state cannot be
17.33determined, the royalties or other income must be excluded from both the numerator
17.34and the denominator. Intangible property is used in this state if the purchaser uses the
17.35intangible property or the rights therein in the regular course of its business operations in
17.36this state, regardless of the location of the purchaser's customers.
18.1    (i) Sales of intangible property are made within the state in which the property is
18.2used by the purchaser. If the property is used in more than one state, the sales must be
18.3apportioned to this state pro rata according to the portion of use in this state. If the
18.4portion of use in this state cannot be determined, the sale must be excluded from both the
18.5numerator and the denominator of the sales factor. Intangible property is used in this
18.6state if the purchaser used the intangible property in the regular course of its business
18.7operations in this state.
18.8    (j) Receipts from the performance of services must be attributed to the state where
18.9the services are received. For the purposes of this section, receipts from the performance
18.10of services provided to a corporation, partnership, or trust may only be attributed to a state
18.11where it has a fixed place of doing business. If the state where the services are received is
18.12not readily determinable or is a state where the corporation, partnership, or trust receiving
18.13the service does not have a fixed place of doing business, the services shall be deemed
18.14to be received at the location of the office of the customer from which the services were
18.15ordered in the regular course of the customer's trade or business. If the ordering office
18.16cannot be determined, the services shall be deemed to be received at the office of the
18.17customer to which the services are billed.
18.18    (k) For the purposes of this subdivision and subdivision 6, paragraph (l), receipts
18.19from management, distribution, or administrative services performed by a corporation
18.20or trust for a fund of a corporation or trust regulated under United States Code, title 15,
18.21sections 80a-1 through 80a-64, must be attributed to the state where the shareholder of
18.22the fund resides. Under this paragraph, receipts for services attributed to shareholders are
18.23determined on the basis of the ratio of: (1) the average of the outstanding shares in the
18.24fund owned by shareholders residing within Minnesota at the beginning and end of each
18.25year; and (2) the average of the total number of outstanding shares in the fund at the
18.26beginning and end of each year. Residence of the shareholder, in the case of an individual,
18.27is determined by the mailing address furnished by the shareholder to the fund. Residence
18.28of the shareholder, when the shares are held by an insurance company as a depositor for
18.29the insurance company policyholders, is the mailing address of the policyholders. In
18.30the case of an insurance company holding the shares as a depositor for the insurance
18.31company policyholders, if the mailing address of the policyholders cannot be determined
18.32by the taxpayer, the receipts must be excluded from both the numerator and denominator.
18.33Residence of other shareholders is the mailing address of the shareholder.
18.34EFFECTIVE DATE.This section is effective for taxable years beginning after
18.35December 31, 2011."
18.36Pages 16 to 17, delete section 15 and 16
19.1Page 18, delete sections 19 and 20, and insert:

19.2    "Sec. 21. REPEALER.
19.3(a) Minnesota Statutes 2010, sections 290.01, subdivision 6b; and 290.0921,
19.4subdivision 7, are repealed.
19.5(b) Minnesota Statutes 2011 Supplement, section 289A.60, subdivision 31, is
19.6repealed.
19.7EFFECTIVE DATE.Paragraph (a) is effective for taxable years beginning after
19.8December 31, 2011. Paragraph (b) is effective for taxes due and payable after July
19.91, 2012."
19.10Renumber the sections in sequence and correct the internal references
19.11Amend the title accordingly