1.1.................... moves to amend the H2083A12 amendment to H.F. No. 2083, the first
1.2engrossment, as follows:
1.3Page 1, after line 1, insert:
1.4"Page 4, after line 26, insert:

1.5    Sec. .... Minnesota Statutes 2011 Supplement, section 126C.10, subdivision 2, is
1.6amended to read:
1.7    Subd. 2. Basic revenue. (a) The basic revenue for each district equals the formula
1.8allowance times the adjusted marginal cost pupil units for the school year. The formula
1.9allowance for fiscal year 2011 is $5,124. The formula allowance for fiscal year 2012 is
1.10$5,174. The formula allowance for fiscal year 2013 and subsequent years is $5,224 $5,279.
1.11(b) A formula allowance increase in paragraph (a) in excess of $5,224 per pupil
1.12occurs only after the commissioner of revenue certifies to the commissioner of education
1.13that there are sufficient estimated revenues contained within this bill to fully fund the
1.14formula allowance increase.
1.15EFFECTIVE DATE.This section is effective for revenue for fiscal year 2013
1.16and later.

1.17    Sec. .... Minnesota Statutes 2010, section 126C.17, subdivision 6, is amended to read:
1.18    Subd. 6. Referendum equalization levy. (a) For fiscal year 2003 and later,
1.19a district's referendum equalization levy equals the sum of the first tier referendum
1.20equalization levy and the second tier referendum equalization levy.
1.21(b) A district's first tier referendum equalization levy equals the district's first tier
1.22referendum equalization revenue times the lesser of one or the ratio of the district's
1.23referendum market value per resident marginal cost pupil unit to $476,000 $710,000.
1.24(c) A district's second tier referendum equalization levy equals the district's second
1.25tier referendum equalization revenue times the lesser of one or the ratio of the district's
1.26referendum market value per resident marginal cost pupil unit to $270,000 $710,000.
2.1EFFECTIVE DATE.This section is effective for revenue for fiscal years 2014
2.2and later.
2.3Page 2, after line 9, insert:
2.4Page 5, after line 24, insert:

2.5    Sec. ... Minnesota Statutes 2010, section 289A.08, subdivision 3, is amended to read:
2.6    Subd. 3. Corporations. (a) A corporation that is subject to the state's jurisdiction to
2.7tax under section 290.014, subdivision 5, must file a return, except that a foreign operating
2.8corporation as defined in section 290.01, subdivision 6b, is not required to file a return.
2.9    (b) Members of a unitary business that are required to file a combined report on one
2.10return must designate a member of the unitary business to be responsible for tax matters,
2.11including the filing of returns, the payment of taxes, additions to tax, penalties, interest,
2.12or any other payment, and for the receipt of refunds of taxes or interest paid in excess of
2.13taxes lawfully due. The designated member must be a member of the unitary business that
2.14is filing the single combined report and either:
2.15    (1) a corporation that is subject to the taxes imposed by chapter 290; or
2.16    (2) a corporation that is not subject to the taxes imposed by chapter 290:
2.17    (i) Such corporation consents by filing the return as a designated member under this
2.18clause to remit taxes, penalties, interest, or additions to tax due from the members of the
2.19unitary business subject to tax, and receive refunds or other payments on behalf of other
2.20members of the unitary business. The member designated under this clause is a "taxpayer"
2.21for the purposes of this chapter and chapter 270C, and is liable for any liability imposed
2.22on the unitary business under this chapter and chapter 290.
2.23    (ii) If the state does not otherwise have the jurisdiction to tax the member designated
2.24under this clause, consenting to be the designated member does not create the jurisdiction
2.25to impose tax on the designated member, other than as described in item (i).
2.26    (iii) The member designated under this clause must apply for a business tax account
2.27identification number.
2.28    (c) The commissioner shall adopt rules for the filing of one return on behalf of the
2.29members of an affiliated group of corporations that are required to file a combined report.
2.30All members of an affiliated group that are required to file a combined report must file one
2.31return on behalf of the members of the group under rules adopted by the commissioner.
2.32    (d) If a corporation claims on a return that it has paid tax in excess of the amount of
2.33taxes lawfully due, that corporation must include on that return information necessary for
2.34payment of the tax in excess of the amount lawfully due by electronic means.
3.1EFFECTIVE DATE.This section is effective for taxable years beginning after
3.2December 31, 2011.

3.3    Sec. ... Minnesota Statutes 2010, section 290.01, subdivision 5, is amended to read:
3.4    Subd. 5. Domestic corporation. The term "domestic" when applied to a corporation
3.5means a corporation:
3.6    (1) created or organized in the United States, or under the laws of the United States
3.7or of any state, the District of Columbia, or any political subdivision of any of the
3.8foregoing but not including the Commonwealth of Puerto Rico, or any possession of
3.9the United States;
3.10    (2) which qualifies as a DISC, as defined in section 992(a) of the Internal Revenue
3.11Code; or
3.12    (3) which qualifies as a FSC, as defined in section 922 of the Internal Revenue Code;
3.13    (4) which is incorporated in a tax haven;
3.14    (5) which is engaged in activity in a tax haven sufficient for the tax haven to impose
3.15a net income tax under United States constitutional standards and section 290.015, and
3.16which reports that 20 percent or more of its income is attributable to business in the tax
3.17haven; or
3.18    (6) which has 20 percent or more of the average of its property, payroll, and sales
3.19factors, as defined under section 290.191, within the 50 states of the United States and
3.20the District of Columbia.
3.21EFFECTIVE DATE.This section is effective for returns filed for taxable years
3.22beginning after December 31, 2011.

3.23    Sec. ... Minnesota Statutes 2010, section 290.01, is amended by adding a subdivision
3.24to read:
3.25    Subd. 5c. Tax haven. (a) "Tax haven" means the following foreign jurisdictions,
3.26unless the listing of the jurisdiction does not apply under paragraph (b):
3.27    (1) Andorra;
3.28    (2) Anguilla;
3.29    (3) Antigua and Barbuda;
3.30    (4) Aruba;
3.31    (5) Bahamas;
3.32    (6) Bahrain;
3.33    (7) Belize;
3.34    (8) British Virgin Islands;
4.1    (9) Cayman Islands;
4.2    (10) Cook Islands;
4.3    (11) Costa Rica;
4.4    (12) Dominica;
4.5    (13) Gibraltar;
4.6    (14) Grenada;
4.7    (15) Guernsey-Sark-Alderney;
4.8    (16) Jersey;
4.9    (17) Jordan;
4.10    (18) Lebanon;
4.11    (19) Liberia;
4.12    (20) Liechtenstein;
4.13    (21) Maldives;
4.14    (22) Marshall Islands;
4.15    (23) Monaco;
4.16    (24) Montserrat;
4.17    (25) Nauru;
4.18    (26) Netherlands Antilles;
4.19    (27) Niue;
4.20    (28) Panama;
4.21    (29) St. Kitts and Nevis;
4.22    (30) St. Lucia;
4.23    (31) St. Vincent and Grenadines;
4.24    (32) Tonga;
4.25    (33) Turks and Caicos; and
4.26    (34) Vanuatu.
4.27    (b) A foreign jurisdiction's listing under paragraph (a) does not apply to the first
4.28taxable year after the United States enters into a tax treaty or other agreement with the
4.29foreign jurisdiction that provides for prompt, obligatory, and automatic exchange of
4.30information with the United States government relevant to enforcing the provisions of
4.31federal tax laws and the treaty or other agreement was in effect for the taxable year.
4.32EFFECTIVE DATE.This section is effective for returns filed for taxable years
4.33beginning after December 31, 2011.

4.34    Sec. ... Minnesota Statutes 2011 Supplement, section 290.01, subdivision 19c, is
4.35amended to read:
5.1    Subd. 19c. Corporations; additions to federal taxable income. For corporations,
5.2there shall be added to federal taxable income:
5.3    (1) the amount of any deduction taken for federal income tax purposes for income,
5.4excise, or franchise taxes based on net income or related minimum taxes, including but not
5.5limited to the tax imposed under section 290.0922, paid by the corporation to Minnesota,
5.6another state, a political subdivision of another state, the District of Columbia, or any
5.7foreign country or possession of the United States;
5.8    (2) interest not subject to federal tax upon obligations of: the United States, its
5.9possessions, its agencies, or its instrumentalities; the state of Minnesota or any other
5.10state, any of its political or governmental subdivisions, any of its municipalities, or any
5.11of its governmental agencies or instrumentalities; the District of Columbia; or Indian
5.12tribal governments;
5.13    (3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal
5.14Revenue Code;
5.15    (4) the amount of any net operating loss deduction taken for federal income tax
5.16purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss
5.17deduction under section 810 of the Internal Revenue Code;
5.18    (5) the amount of any special deductions taken for federal income tax purposes
5.19under sections 241 to 247 and 965 of the Internal Revenue Code;
5.20    (6) losses from the business of mining, as defined in section 290.05, subdivision 1,
5.21clause (a), that are not subject to Minnesota income tax;
5.22    (7) the amount of any capital losses deducted for federal income tax purposes under
5.23sections 1211 and 1212 of the Internal Revenue Code;
5.24    (8) the exempt foreign trade income of a foreign sales corporation under sections
5.25921(a) and 291 of the Internal Revenue Code;
5.26    (9) the amount of percentage depletion deducted under sections 611 through 614 and
5.27291 of the Internal Revenue Code;
5.28    (10) for certified pollution control facilities placed in service in a taxable year
5.29beginning before December 31, 1986, and for which amortization deductions were elected
5.30under section 169 of the Internal Revenue Code of 1954, as amended through December
5.3131, 1985, the amount of the amortization deduction allowed in computing federal taxable
5.32income for those facilities;
5.33    (11) the amount of any deemed dividend from a foreign operating corporation
5.34determined pursuant to section 290.17, subdivision 4, paragraph (g). The deemed dividend
5.35shall be reduced by the amount of the addition to income required by clauses (20), (21),
5.36(22), and (23);
6.1    (12) (11) the amount of a partner's pro rata share of net income which does not flow
6.2through to the partner because the partnership elected to pay the tax on the income under
6.3section 6242(a)(2) of the Internal Revenue Code;
6.4    (13) (12) the amount of net income excluded under section 114 of the Internal
6.5Revenue Code;
6.6    (14) (13) any increase in subpart F income, as defined in section 952(a) of the
6.7Internal Revenue Code, for the taxable year when subpart F income is calculated without
6.8regard to the provisions of Division C, title III, section 303(b) of Public Law 110-343;
6.9    (15) (14) 80 percent of the depreciation deduction allowed under section
6.10168(k)(1)(A) and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if
6.11the taxpayer has an activity that in the taxable year generates a deduction for depreciation
6.12under section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable
6.13year that the taxpayer is not allowed to claim for the taxable year, "the depreciation
6.14allowed under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess
6.15of the depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A)
6.16over the amount of the loss from the activity that is not allowed in the taxable year. In
6.17succeeding taxable years when the losses not allowed in the taxable year are allowed, the
6.18depreciation under section 168(k)(1)(A) and (k)(4)(A) is allowed;
6.19    (16) (15) 80 percent of the amount by which the deduction allowed by section 179 of
6.20the Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
6.21Revenue Code of 1986, as amended through December 31, 2003;
6.22    (17) (16) to the extent deducted in computing federal taxable income, the amount of
6.23the deduction allowable under section 199 of the Internal Revenue Code;
6.24    (18) (17) for taxable years beginning before January 1, 2013, the exclusion allowed
6.25under section 139A of the Internal Revenue Code for federal subsidies for prescription
6.26drug plans;
6.27    (19) (18) the amount of expenses disallowed under section 290.10, subdivision 2;
6.28    (20) an amount equal to the interest and intangible expenses, losses, and costs paid,
6.29accrued, or incurred by any member of the taxpayer's unitary group to or for the benefit
6.30of a corporation that is a member of the taxpayer's unitary business group that qualifies
6.31as a foreign operating corporation. For purposes of this clause, intangible expenses and
6.32costs include:
6.33    (i) expenses, losses, and costs for, or related to, the direct or indirect acquisition,
6.34use, maintenance or management, ownership, sale, exchange, or any other disposition of
6.35intangible property;
7.1    (ii) losses incurred, directly or indirectly, from factoring transactions or discounting
7.2transactions;
7.3    (iii) royalty, patent, technical, and copyright fees;
7.4    (iv) licensing fees; and
7.5    (v) other similar expenses and costs.
7.6For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
7.7applications, trade names, trademarks, service marks, copyrights, mask works, trade
7.8secrets, and similar types of intangible assets.
7.9This clause does not apply to any item of interest or intangible expenses or costs paid,
7.10accrued, or incurred, directly or indirectly, to a foreign operating corporation with respect
7.11to such item of income to the extent that the income to the foreign operating corporation
7.12is income from sources without the United States as defined in subtitle A, chapter 1,
7.13subchapter N, part 1, of the Internal Revenue Code;
7.14    (21) except as already included in the taxpayer's taxable income pursuant to clause
7.15(20), any interest income and income generated from intangible property received or
7.16accrued by a foreign operating corporation that is a member of the taxpayer's unitary
7.17group. For purposes of this clause, income generated from intangible property includes:
7.18    (i) income related to the direct or indirect acquisition, use, maintenance or
7.19management, ownership, sale, exchange, or any other disposition of intangible property;
7.20    (ii) income from factoring transactions or discounting transactions;
7.21    (iii) royalty, patent, technical, and copyright fees;
7.22    (iv) licensing fees; and
7.23    (v) other similar income.
7.24For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
7.25applications, trade names, trademarks, service marks, copyrights, mask works, trade
7.26secrets, and similar types of intangible assets.
7.27This clause does not apply to any item of interest or intangible income received or accrued
7.28by a foreign operating corporation with respect to such item of income to the extent that
7.29the income is income from sources without the United States as defined in subtitle A,
7.30chapter 1, subchapter N, part 1, of the Internal Revenue Code;
7.31    (22) the dividends attributable to the income of a foreign operating corporation that
7.32is a member of the taxpayer's unitary group in an amount that is equal to the dividends
7.33paid deduction of a real estate investment trust under section 561(a) of the Internal
7.34Revenue Code for amounts paid or accrued by the real estate investment trust to the
7.35foreign operating corporation;
8.1    (23) the income of a foreign operating corporation that is a member of the taxpayer's
8.2unitary group in an amount that is equal to gains derived from the sale of real or personal
8.3property located in the United States;
8.4    (24) (19) for taxable years beginning before January 1, 2010, the additional amount
8.5allowed as a deduction for donation of computer technology and equipment under section
8.6170(e)(6) of the Internal Revenue Code, to the extent deducted from taxable income; and
8.7    (25) (20) discharge of indebtedness income resulting from reacquisition of business
8.8indebtedness and deferred under section 108(i) of the Internal Revenue Code.
8.9EFFECTIVE DATE.This section is effective for taxable years beginning after
8.10December 31, 2011.

8.11    Sec. ... Minnesota Statutes 2010, section 290.01, subdivision 19d, is amended to read:
8.12    Subd. 19d. Corporations; modifications decreasing federal taxable income. For
8.13corporations, there shall be subtracted from federal taxable income after the increases
8.14provided in subdivision 19c:
8.15    (1) the amount of foreign dividend gross-up added to gross income for federal
8.16income tax purposes under section 78 of the Internal Revenue Code;
8.17    (2) the amount of salary expense not allowed for federal income tax purposes due to
8.18claiming the work opportunity credit under section 51 of the Internal Revenue Code;
8.19    (3) any dividend (not including any distribution in liquidation) paid within the
8.20taxable year by a national or state bank to the United States, or to any instrumentality of
8.21the United States exempt from federal income taxes, on the preferred stock of the bank
8.22owned by the United States or the instrumentality;
8.23    (4) amounts disallowed for intangible drilling costs due to differences between
8.24this chapter and the Internal Revenue Code in taxable years beginning before January
8.251, 1987, as follows:
8.26    (i) to the extent the disallowed costs are represented by physical property, an amount
8.27equal to the allowance for depreciation under Minnesota Statutes 1986, section 290.09,
8.28subdivision 7 , subject to the modifications contained in subdivision 19e; and
8.29    (ii) to the extent the disallowed costs are not represented by physical property, an
8.30amount equal to the allowance for cost depletion under Minnesota Statutes 1986, section
8.31290.09, subdivision 8 ;
8.32    (5) the deduction for capital losses pursuant to sections 1211 and 1212 of the
8.33Internal Revenue Code, except that:
8.34    (i) for capital losses incurred in taxable years beginning after December 31, 1986,
8.35capital loss carrybacks shall not be allowed;
9.1    (ii) for capital losses incurred in taxable years beginning after December 31, 1986,
9.2a capital loss carryover to each of the 15 taxable years succeeding the loss year shall be
9.3allowed;
9.4    (iii) for capital losses incurred in taxable years beginning before January 1, 1987, a
9.5capital loss carryback to each of the three taxable years preceding the loss year, subject to
9.6the provisions of Minnesota Statutes 1986, section 290.16, shall be allowed; and
9.7    (iv) for capital losses incurred in taxable years beginning before January 1, 1987,
9.8a capital loss carryover to each of the five taxable years succeeding the loss year to the
9.9extent such loss was not used in a prior taxable year and subject to the provisions of
9.10Minnesota Statutes 1986, section 290.16, shall be allowed;
9.11    (6) an amount for interest and expenses relating to income not taxable for federal
9.12income tax purposes, if (i) the income is taxable under this chapter and (ii) the interest and
9.13expenses were disallowed as deductions under the provisions of section 171(a)(2), 265 or
9.14291 of the Internal Revenue Code in computing federal taxable income;
9.15    (7) in the case of mines, oil and gas wells, other natural deposits, and timber for
9.16which percentage depletion was disallowed pursuant to subdivision 19c, clause (9), a
9.17reasonable allowance for depletion based on actual cost. In the case of leases the deduction
9.18must be apportioned between the lessor and lessee in accordance with rules prescribed
9.19by the commissioner. In the case of property held in trust, the allowable deduction must
9.20be apportioned between the income beneficiaries and the trustee in accordance with the
9.21pertinent provisions of the trust, or if there is no provision in the instrument, on the basis
9.22of the trust's income allocable to each;
9.23    (8) for certified pollution control facilities placed in service in a taxable year
9.24beginning before December 31, 1986, and for which amortization deductions were elected
9.25under section 169 of the Internal Revenue Code of 1954, as amended through December
9.2631, 1985, an amount equal to the allowance for depreciation under Minnesota Statutes
9.271986, section 290.09, subdivision 7;
9.28    (9) amounts included in federal taxable income that are due to refunds of income,
9.29excise, or franchise taxes based on net income or related minimum taxes paid by the
9.30corporation to Minnesota, another state, a political subdivision of another state, the
9.31District of Columbia, or a foreign country or possession of the United States to the extent
9.32that the taxes were added to federal taxable income under section 290.01, subdivision 19c,
9.33clause (1), in a prior taxable year;
9.34    (10) 80 percent of royalties, fees, or other like income accrued or received from a
9.35foreign operating corporation or a foreign corporation which is part of the same unitary
9.36business as the receiving corporation, unless the income resulting from such payments or
10.1accruals is income from sources within the United States as defined in subtitle A, chapter
10.21, subchapter N, part 1, of the Internal Revenue Code;
10.3    (11) (10) income or gains from the business of mining as defined in section 290.05,
10.4subdivision 1 , clause (a), that are not subject to Minnesota franchise tax;
10.5    (12) (11) the amount of disability access expenditures in the taxable year which are
10.6not allowed to be deducted or capitalized under section 44(d)(7) of the Internal Revenue
10.7Code;
10.8    (13) (12) the amount of qualified research expenses not allowed for federal income
10.9tax purposes under section 280C(c) of the Internal Revenue Code, but only to the extent
10.10that the amount exceeds the amount of the credit allowed under section 290.068;
10.11    (14) (13) the amount of salary expenses not allowed for federal income tax purposes
10.12due to claiming the Indian employment credit under section 45A(a) of the Internal
10.13Revenue Code;
10.14    (15) (14) for a corporation whose foreign sales corporation, as defined in section
10.15922 of the Internal Revenue Code, constituted a foreign operating corporation during any
10.16taxable year ending before January 1, 1995, and a return was filed by August 15, 1996,
10.17claiming the deduction under section 290.21, subdivision 4, for income received from
10.18the foreign operating corporation, an amount equal to 1.23 multiplied by the amount of
10.19income excluded under section 114 of the Internal Revenue Code, provided the income is
10.20not income of a foreign operating company;
10.21    (16) (15) any decrease in subpart F income, as defined in section 952(a) of the
10.22Internal Revenue Code, for the taxable year when subpart F income is calculated without
10.23regard to the provisions of Division C, title III, section 303(b) of Public Law 110-343;
10.24    (17) (16) in each of the five tax years immediately following the tax year in which an
10.25addition is required under subdivision 19c, clause (15) (14), an amount equal to one-fifth
10.26of the delayed depreciation. For purposes of this clause, "delayed depreciation" means the
10.27amount of the addition made by the taxpayer under subdivision 19c, clause (15) (14). The
10.28resulting delayed depreciation cannot be less than zero;
10.29    (18) (17) in each of the five tax years immediately following the tax year in which an
10.30addition is required under subdivision 19c, clause (16) (15), an amount equal to one-fifth
10.31of the amount of the addition; and
10.32    (19) (18) to the extent included in federal taxable income, discharge of indebtedness
10.33income resulting from reacquisition of business indebtedness included in federal taxable
10.34income under section 108(i) of the Internal Revenue Code. This subtraction applies only
10.35to the extent that the income was included in net income in a prior year as a result of the
10.36addition under section 290.01, subdivision 19c, clause (25) (20).
11.1EFFECTIVE DATE.This section is effective for taxable years beginning after
11.2December 31, 2011.

11.3    Sec. ... Minnesota Statutes 2010, section 290.0921, subdivision 3, is amended to read:
11.4    Subd. 3. Alternative minimum taxable income. "Alternative minimum taxable
11.5income" is Minnesota net income as defined in section 290.01, subdivision 19, and
11.6includes the adjustments and tax preference items in sections 56, 57, 58, and 59(d), (e),
11.7(f), and (h) of the Internal Revenue Code. If a corporation files a separate company
11.8Minnesota tax return, the minimum tax must be computed on a separate company basis.
11.9If a corporation is part of a tax group filing a unitary return, the minimum tax must be
11.10computed on a unitary basis. The following adjustments must be made.
11.11    (1) For purposes of the depreciation adjustments under section 56(a)(1) and
11.1256(g)(4)(A) of the Internal Revenue Code, the basis for depreciable property placed in
11.13service in a taxable year beginning before January 1, 1990, is the adjusted basis for federal
11.14income tax purposes, including any modification made in a taxable year under section
11.15290.01, subdivision 19e , or Minnesota Statutes 1986, section 290.09, subdivision 7,
11.16paragraph (c).
11.17    For taxable years beginning after December 31, 2000, the amount of any remaining
11.18modification made under section 290.01, subdivision 19e, or Minnesota Statutes 1986,
11.19section 290.09, subdivision 7, paragraph (c), not previously deducted is a depreciation
11.20allowance in the first taxable year after December 31, 2000.
11.21    (2) The portion of the depreciation deduction allowed for federal income tax
11.22purposes under section 168(k) of the Internal Revenue Code that is required as an addition
11.23under section 290.01, subdivision 19c, clause (15) (14), is disallowed in determining
11.24alternative minimum taxable income.
11.25    (3) The subtraction for depreciation allowed under section 290.01, subdivision 19d,
11.26clause (17), is allowed as a depreciation deduction in determining alternative minimum
11.27taxable income.
11.28    (4) The alternative tax net operating loss deduction under sections 56(a)(4) and 56(d)
11.29of the Internal Revenue Code does not apply.
11.30    (5) The special rule for certain dividends under section 56(g)(4)(C)(ii) of the Internal
11.31Revenue Code does not apply.
11.32    (6) The special rule for dividends from section 936 companies under section
11.3356(g)(4)(C)(iii) does not apply.
11.34    (7) The tax preference for depletion under section 57(a)(1) of the Internal Revenue
11.35Code does not apply.
12.1    (8) The tax preference for intangible drilling costs under section 57(a)(2) of the
12.2Internal Revenue Code must be calculated without regard to subparagraph (E) and the
12.3subtraction under section 290.01, subdivision 19d, clause (4).
12.4    (9) The tax preference for tax exempt interest under section 57(a)(5) of the Internal
12.5Revenue Code does not apply.
12.6    (10) The tax preference for charitable contributions of appreciated property under
12.7section 57(a)(6) of the Internal Revenue Code does not apply.
12.8    (11) For purposes of calculating the tax preference for accelerated depreciation or
12.9amortization on certain property placed in service before January 1, 1987, under section
12.1057(a)(7) of the Internal Revenue Code, the deduction allowable for the taxable year is the
12.11deduction allowed under section 290.01, subdivision 19e.
12.12    For taxable years beginning after December 31, 2000, the amount of any remaining
12.13modification made under section 290.01, subdivision 19e, not previously deducted is a
12.14depreciation or amortization allowance in the first taxable year after December 31, 2004.
12.15    (12) For purposes of calculating the adjustment for adjusted current earnings in
12.16section 56(g) of the Internal Revenue Code, the term "alternative minimum taxable
12.17income" as it is used in section 56(g) of the Internal Revenue Code, means alternative
12.18minimum taxable income as defined in this subdivision, determined without regard to the
12.19adjustment for adjusted current earnings in section 56(g) of the Internal Revenue Code.
12.20    (13) For purposes of determining the amount of adjusted current earnings under
12.21section 56(g)(3) of the Internal Revenue Code, no adjustment shall be made under section
12.2256(g)(4) of the Internal Revenue Code with respect to (i) the amount of foreign dividend
12.23gross-up subtracted as provided in section 290.01, subdivision 19d, clause (1), or (ii) the
12.24amount of refunds of income, excise, or franchise taxes subtracted as provided in section
12.25290.01, subdivision 19d , clause (9), or (iii) the amount of royalties, fees or other like
12.26income subtracted as provided in section 290.01, subdivision 19d, clause (10).
12.27    (14) Alternative minimum taxable income excludes the income from operating in a
12.28job opportunity building zone as provided under section 469.317.
12.29    (15) Alternative minimum taxable income excludes the income from operating in a
12.30biotechnology and health sciences industry zone as provided under section 469.337.
12.31    (16) Alternative minimum taxable income excludes the income from operating in an
12.32international economic development zone as provided under section 469.326.
12.33    Items of tax preference must not be reduced below zero as a result of the
12.34modifications in this subdivision.
12.35EFFECTIVE DATE.This section is effective for taxable years beginning after
12.36December 31, 2011.

13.1    Sec. ... Minnesota Statutes 2010, section 290.17, subdivision 4, is amended to read:
13.2    Subd. 4. Unitary business principle. (a) If a trade or business conducted wholly
13.3within this state or partly within and partly without this state is part of a unitary business,
13.4the entire income of the unitary business is subject to apportionment pursuant to section
13.5290.191 . Notwithstanding subdivision 2, paragraph (c), none of the income of a unitary
13.6business is considered to be derived from any particular source and none may be allocated
13.7to a particular place except as provided by the applicable apportionment formula. The
13.8provisions of this subdivision do not apply to business income subject to subdivision 5,
13.9income of an insurance company, or income of an investment company determined under
13.10section 290.36.
13.11    (b) The term "unitary business" means business activities or operations which
13.12result in a flow of value between them. The term may be applied within a single legal
13.13entity or between multiple entities and without regard to whether each entity is a sole
13.14proprietorship, a corporation, a partnership or a trust.
13.15    (c) Unity is presumed whenever there is unity of ownership, operation, and use,
13.16evidenced by centralized management or executive force, centralized purchasing,
13.17advertising, accounting, or other controlled interaction, but the absence of these
13.18centralized activities will not necessarily evidence a nonunitary business. Unity is also
13.19presumed when business activities or operations are of mutual benefit, dependent upon or
13.20contributory to one another, either individually or as a group.
13.21    (d) Where a business operation conducted in Minnesota is owned by a business
13.22entity that carries on business activity outside the state different in kind from that
13.23conducted within this state, and the other business is conducted entirely outside the state, it
13.24is presumed that the two business operations are unitary in nature, interrelated, connected,
13.25and interdependent unless it can be shown to the contrary.
13.26    (e) Unity of ownership is not deemed to exist when a corporation is involved unless
13.27that corporation is a member of a group of two or more business entities and more than 50
13.28percent of the voting stock of each member of the group is directly or indirectly owned
13.29by a common owner or by common owners, either corporate or noncorporate, or by one
13.30or more of the member corporations of the group. For this purpose, the term "voting
13.31stock" shall include membership interests of mutual insurance holding companies formed
13.32under section 66A.40.
13.33    (f) The net income and apportionment factors under section 290.191 or 290.20 of
13.34foreign corporations and other foreign entities which are part of a unitary business shall
13.35not be included in the net income or the apportionment factors of the unitary business.
13.36A foreign corporation or other foreign entity which is required to file a return under this
14.1chapter shall file on a separate return basis. The net income and apportionment factors
14.2under section 290.191 or 290.20 of foreign operating corporations shall not be included in
14.3the net income or the apportionment factors of the unitary business except as provided in
14.4paragraph (g). The provisions of this paragraph are not severable from the provisions of
14.5section 290.01, subdivision 5, clauses (4) to (6); if any of those provisions are found to be
14.6unconstitutional, the provisions of this paragraph are void for the respective taxable years.
14.7    (g) The adjusted net income of a foreign operating corporation shall be deemed to
14.8be paid as a dividend on the last day of its taxable year to each shareholder thereof, in
14.9proportion to each shareholder's ownership, with which such corporation is engaged in
14.10a unitary business. Such deemed dividend shall be treated as a dividend under section
14.11290.21, subdivision 4.
14.12    Dividends actually paid by a foreign operating corporation to a corporate shareholder
14.13which is a member of the same unitary business as the foreign operating corporation shall
14.14be eliminated from the net income of the unitary business in preparing a combined report
14.15for the unitary business. The adjusted net income of a foreign operating corporation
14.16shall be its net income adjusted as follows:
14.17    (1) any taxes paid or accrued to a foreign country, the commonwealth of Puerto
14.18Rico, or a United States possession or political subdivision of any of the foregoing shall
14.19be a deduction; and
14.20    (2) the subtraction from federal taxable income for payments received from foreign
14.21corporations or foreign operating corporations under section 290.01, subdivision 19d,
14.22clause (10), shall not be allowed.
14.23    If a foreign operating corporation incurs a net loss, neither income nor deduction
14.24from that corporation shall be included in determining the net income of the unitary
14.25business.
14.26    (h) (g) For purposes of determining the net income of a unitary business and the
14.27factors to be used in the apportionment of net income pursuant to section 290.191 or
14.28290.20 , there must be included only the income and apportionment factors of domestic
14.29corporations or other domestic entities other than foreign operating corporations that are
14.30determined to be part of the unitary business pursuant to this subdivision, notwithstanding
14.31that foreign corporations or other foreign entities might be included in the unitary
14.32business, except that foreign corporations or other foreign entities that are included on a
14.33federal income tax return must be included on the combined report. Income of a foreign
14.34partnership or other foreign entity treated as a partnership included in federal taxable
14.35income, as defined in section 63 of the Internal Revenue Code of 1986, as amended
15.1through the date named in section 290.01, subdivision 19, and the proportionate amount of
15.2apportionment factors, must be included in the combined report.
15.3    (i) (h) Deductions for expenses, interest, or taxes otherwise allowable under
15.4this chapter that are connected with or allocable against dividends, deemed dividends
15.5described in paragraph (g), or royalties, fees, or other like income described in section
15.6290.01, subdivision 19d, clause (10), shall not be disallowed.
15.7    (j) (i) Each corporation or other entity, except a sole proprietorship, that is part of
15.8a unitary business must file combined reports as the commissioner determines. On the
15.9reports, all intercompany transactions between entities included pursuant to paragraph
15.10(h) (g) must be eliminated and the entire net income of the unitary business determined in
15.11accordance with this subdivision is apportioned among the entities by using each entity's
15.12Minnesota factors for apportionment purposes in the numerators of the apportionment
15.13formula and the total factors for apportionment purposes of all entities included pursuant
15.14to paragraph (h) (g) in the denominators of the apportionment formula. All sales of the
15.15unitary business made within Minnesota pursuant to section 290.191 or 290.20 must be
15.16included on the separate combined report of a corporation that is a member of the unitary
15.17business and is subject to the jurisdiction of this state to impose tax under this chapter.
15.18    (k) (j) If a corporation has been divested from a unitary business and is included in a
15.19combined report for a fractional part of the common accounting period of the combined
15.20report:
15.21    (1) its income includable in the combined report is its income incurred for that part
15.22of the year determined by proration or separate accounting; and
15.23    (2) its sales, property, and payroll included in the apportionment formula must
15.24be prorated or accounted for separately.
15.25EFFECTIVE DATE.This section is effective for returns filed for taxable years
15.26beginning after December 31, 2011.

15.27    Sec. ... Minnesota Statutes 2010, section 290.191, subdivision 5, is amended to read:
15.28    Subd. 5. Determination of sales factor. For purposes of this section, the following
15.29rules apply in determining the sales factor.
15.30    (a) The sales factor includes all sales, gross earnings, or receipts received in the
15.31ordinary course of the business, except that the following types of income are not included
15.32in the sales factor:
15.33    (1) interest;
15.34    (2) dividends;
15.35    (3) sales of capital assets as defined in section 1221 of the Internal Revenue Code;
16.1    (4) sales of property used in the trade or business, except sales of leased property of
16.2a type which is regularly sold as well as leased; and
16.3    (5) sales of debt instruments as defined in section 1275(a)(1) of the Internal Revenue
16.4Code or sales of stock; and.
16.5    (6) royalties, fees, or other like income of a type which qualify for a subtraction from
16.6federal taxable income under section 290.01, subdivision 19d(10).
16.7    (b) Sales of tangible personal property are made within this state if the property is
16.8received by a purchaser at a point within this state, and the taxpayer is taxable in this state,
16.9regardless of the f.o.b. point, other conditions of the sale, or the ultimate destination
16.10of the property.
16.11    (c) Tangible personal property delivered to a common or contract carrier or foreign
16.12vessel for delivery to a purchaser in another state or nation is a sale in that state or nation,
16.13regardless of f.o.b. point or other conditions of the sale.
16.14    (d) Notwithstanding paragraphs (b) and (c), when intoxicating liquor, wine,
16.15fermented malt beverages, cigarettes, or tobacco products are sold to a purchaser who is
16.16licensed by a state or political subdivision to resell this property only within the state of
16.17ultimate destination, the sale is made in that state.
16.18    (e) Sales made by or through a corporation that is qualified as a domestic
16.19international sales corporation under section 992 of the Internal Revenue Code are not
16.20considered to have been made within this state.
16.21    (f) Sales, rents, royalties, and other income in connection with real property is
16.22attributed to the state in which the property is located.
16.23    (g) Receipts from the lease or rental of tangible personal property, including finance
16.24leases and true leases, must be attributed to this state if the property is located in this
16.25state and to other states if the property is not located in this state. Receipts from the
16.26lease or rental of moving property including, but not limited to, motor vehicles, rolling
16.27stock, aircraft, vessels, or mobile equipment are included in the numerator of the receipts
16.28factor to the extent that the property is used in this state. The extent of the use of moving
16.29property is determined as follows:
16.30    (1) A motor vehicle is used wholly in the state in which it is registered.
16.31    (2) The extent that rolling stock is used in this state is determined by multiplying
16.32the receipts from the lease or rental of the rolling stock by a fraction, the numerator of
16.33which is the miles traveled within this state by the leased or rented rolling stock and the
16.34denominator of which is the total miles traveled by the leased or rented rolling stock.
16.35    (3) The extent that an aircraft is used in this state is determined by multiplying the
16.36receipts from the lease or rental of the aircraft by a fraction, the numerator of which is
17.1the number of landings of the aircraft in this state and the denominator of which is the
17.2total number of landings of the aircraft.
17.3    (4) The extent that a vessel, mobile equipment, or other mobile property is used in
17.4the state is determined by multiplying the receipts from the lease or rental of the property
17.5by a fraction, the numerator of which is the number of days during the taxable year the
17.6property was in this state and the denominator of which is the total days in the taxable year.
17.7    (h) Royalties and other income not described in paragraph (a), clause (6), received
17.8for the use of or for the privilege of using intangible property, including patents,
17.9know-how, formulas, designs, processes, patterns, copyrights, trade names, service names,
17.10franchises, licenses, contracts, customer lists, or similar items, must be attributed to the
17.11state in which the property is used by the purchaser. If the property is used in more
17.12than one state, the royalties or other income must be apportioned to this state pro rata
17.13according to the portion of use in this state. If the portion of use in this state cannot be
17.14determined, the royalties or other income must be excluded from both the numerator
17.15and the denominator. Intangible property is used in this state if the purchaser uses the
17.16intangible property or the rights therein in the regular course of its business operations in
17.17this state, regardless of the location of the purchaser's customers.
17.18    (i) Sales of intangible property are made within the state in which the property is
17.19used by the purchaser. If the property is used in more than one state, the sales must be
17.20apportioned to this state pro rata according to the portion of use in this state. If the
17.21portion of use in this state cannot be determined, the sale must be excluded from both the
17.22numerator and the denominator of the sales factor. Intangible property is used in this
17.23state if the purchaser used the intangible property in the regular course of its business
17.24operations in this state.
17.25    (j) Receipts from the performance of services must be attributed to the state where
17.26the services are received. For the purposes of this section, receipts from the performance
17.27of services provided to a corporation, partnership, or trust may only be attributed to a state
17.28where it has a fixed place of doing business. If the state where the services are received is
17.29not readily determinable or is a state where the corporation, partnership, or trust receiving
17.30the service does not have a fixed place of doing business, the services shall be deemed
17.31to be received at the location of the office of the customer from which the services were
17.32ordered in the regular course of the customer's trade or business. If the ordering office
17.33cannot be determined, the services shall be deemed to be received at the office of the
17.34customer to which the services are billed.
17.35    (k) For the purposes of this subdivision and subdivision 6, paragraph (l), receipts
17.36from management, distribution, or administrative services performed by a corporation
18.1or trust for a fund of a corporation or trust regulated under United States Code, title 15,
18.2sections 80a-1 through 80a-64, must be attributed to the state where the shareholder of
18.3the fund resides. Under this paragraph, receipts for services attributed to shareholders are
18.4determined on the basis of the ratio of: (1) the average of the outstanding shares in the
18.5fund owned by shareholders residing within Minnesota at the beginning and end of each
18.6year; and (2) the average of the total number of outstanding shares in the fund at the
18.7beginning and end of each year. Residence of the shareholder, in the case of an individual,
18.8is determined by the mailing address furnished by the shareholder to the fund. Residence
18.9of the shareholder, when the shares are held by an insurance company as a depositor for
18.10the insurance company policyholders, is the mailing address of the policyholders. In
18.11the case of an insurance company holding the shares as a depositor for the insurance
18.12company policyholders, if the mailing address of the policyholders cannot be determined
18.13by the taxpayer, the receipts must be excluded from both the numerator and denominator.
18.14Residence of other shareholders is the mailing address of the shareholder.
18.15EFFECTIVE DATE.This section is effective for taxable years beginning after
18.16December 31, 2011.

18.17    Sec. ... Minnesota Statutes 2010, section 290.21, subdivision 4, is amended to read:
18.18    Subd. 4. Dividends received from another corporation. (a)(1) Eighty percent
18.19of dividends received by a corporation during the taxable year from another corporation,
18.20in which the recipient owns 20 percent or more of the stock, by vote and value, not
18.21including stock described in section 1504(a)(4) of the Internal Revenue Code when the
18.22corporate stock with respect to which dividends are paid does not constitute the stock in
18.23trade of the taxpayer or would not be included in the inventory of the taxpayer, or does not
18.24constitute property held by the taxpayer primarily for sale to customers in the ordinary
18.25course of the taxpayer's trade or business, or when the trade or business of the taxpayer
18.26does not consist principally of the holding of the stocks and the collection of the income
18.27and gains therefrom; and
18.28    (2)(i) the remaining 20 percent of dividends if the dividends received are the stock in
18.29an affiliated company transferred in an overall plan of reorganization and the dividend
18.30is eliminated in consolidation under Treasury Department Regulation 1.1502-14(a), as
18.31amended through December 31, 1989;
18.32    (ii) the remaining 20 percent of dividends if the dividends are received from a
18.33corporation which is subject to tax under section 290.36 and which is a member of an
18.34affiliated group of corporations as defined by the Internal Revenue Code and the dividend
18.35is eliminated in consolidation under Treasury Department Regulation 1.1502-14(a), as
19.1amended through December 31, 1989, or is deducted under an election under section
19.2243(b) of the Internal Revenue Code; or
19.3    (iii) the remaining 20 percent of the dividends if the dividends are received from a
19.4property and casualty insurer as defined under section 60A.60, subdivision 8, which is a
19.5member of an affiliated group of corporations as defined by the Internal Revenue Code
19.6and either: (A) the dividend is eliminated in consolidation under Treasury Regulation
19.71.1502-14(a), as amended through December 31, 1989; or (B) the dividend is deducted
19.8under an election under section 243(b) of the Internal Revenue Code.
19.9    (b) Seventy percent of dividends received by a corporation during the taxable year
19.10from another corporation in which the recipient owns less than 20 percent of the stock,
19.11by vote or value, not including stock described in section 1504(a)(4) of the Internal
19.12Revenue Code when the corporate stock with respect to which dividends are paid does not
19.13constitute the stock in trade of the taxpayer, or does not constitute property held by the
19.14taxpayer primarily for sale to customers in the ordinary course of the taxpayer's trade or
19.15business, or when the trade or business of the taxpayer does not consist principally of the
19.16holding of the stocks and the collection of income and gain therefrom.
19.17    (c) The dividend deduction provided in this subdivision shall be allowed only with
19.18respect to dividends that are included in a corporation's Minnesota taxable net income
19.19for the taxable year.
19.20    The dividend deduction provided in this subdivision does not apply to a dividend
19.21from a corporation which, for the taxable year of the corporation in which the distribution
19.22is made or for the next preceding taxable year of the corporation, is a corporation exempt
19.23from tax under section 501 of the Internal Revenue Code.
19.24    The dividend deduction provided in this subdivision does not apply to a dividend
19.25received from a real estate investment trust, as defined in section 856 of the Internal
19.26Revenue Code.
19.27    The dividend deduction provided in this subdivision applies to the amount of
19.28regulated investment company dividends only to the extent determined under section
19.29854(b) of the Internal Revenue Code.
19.30    The dividend deduction provided in this subdivision shall not be allowed with
19.31respect to any dividend for which a deduction is not allowed under the provisions of
19.32section 246(c) of the Internal Revenue Code.
19.33    (d) If dividends received by a corporation that does not have nexus with Minnesota
19.34under the provisions of Public Law 86-272 are included as income on the return of
19.35an affiliated corporation permitted or required to file a combined report under section
19.36290.17, subdivision 4 , or 290.34, subdivision 2, then for purposes of this subdivision the
20.1determination as to whether the trade or business of the corporation consists principally
20.2of the holding of stocks and the collection of income and gains therefrom shall be made
20.3with reference to the trade or business of the affiliated corporation having a nexus with
20.4Minnesota.
20.5    (e) The deduction provided by this subdivision does not apply if the dividends are
20.6paid by a FSC as defined in section 922 of the Internal Revenue Code.
20.7    (f) If one or more of the members of the unitary group whose income is included on
20.8the combined report received a dividend, the deduction under this subdivision for each
20.9member of the unitary business required to file a return under this chapter is the product
20.10of: (1) 100 percent of the dividends received by members of the group; (2) the percentage
20.11allowed pursuant to paragraph (a) or (b); and (3) the percentage of the taxpayer's business
20.12income apportionable to this state for the taxable year under section 290.191 or 290.20.
20.13EFFECTIVE DATE.This section is effective for taxable years beginning after
20.14December 31, 2011.
20.15Page 7, after line 32, insert:

20.16    Sec. ... REPEALER.
20.17Minnesota Statutes 2010, sections 290.01, subdivision 6b; and 290.0921, subdivision
20.187, are repealed.
20.19EFFECTIVE DATE.This section is effective for taxable years beginning after
20.20December 31, 2011."
20.21Renumber the sections in sequence and correct the internal references
20.22Amend the title accordingly