1.1 A bill for an act
1.2 relating to taxation; corporate franchise and unitary taxation; expanding the unitary
1.3 group to foreign corporations; amending Minnesota Statutes 2024, sections 290.01,
1.4 subdivision 19; 290.0132, by adding subdivisions; 290.0134, by adding
1.5 subdivisions; 290.17, subdivision 4; repealing Minnesota Statutes 2024, section
1.6 290.21, subdivisions 9, 10.
1.7BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.8 Section 1. Minnesota Statutes 2024, section 290.01, subdivision 19, is amended to read:
1.9 Subd. 19.Net income.(a) For a trust or estate taxable under section 290.03, and a
1.10corporation taxable under section 290.02, the term "net income" means the federal taxable
1.11income, as defined in section 63 of the Internal Revenue Code of 1986, as amended through
1.12the date named in this subdivision, incorporating the federal effective dates of changes to
1.13the Internal Revenue Code and any elections made by the taxpayer in accordance with the
1.14Internal Revenue Code in determining federal taxable income for federal income tax
1.15purposes, and with the modifications provided in sections 290.0131 to 290.0136.
1.16 (b) For an individual, the term "net income" means federal adjusted gross income with
1.17the modifications provided in sections 290.0131, 290.0132, and 290.0135 to 290.0137.
1.18 (c) In the case of a regulated investment company or a fund thereof, as defined in section
1.19851(a) or 851(g) of the Internal Revenue Code, federal taxable income means investment
1.20company taxable income as defined in section 852(b)(2) of the Internal Revenue Code,
1.21except that:
1.22 (1) the exclusion of net capital gain provided in section 852(b)(2)(A) of the Internal
1.23Revenue Code does not apply;
1Section 1.
REVISOR EAP/AD 25-0367702/14/25
State of Minnesota
This Document can be made available
in alternative formats upon request
HOUSE OF REPRESENTATIVES
H. F. No. 1480
NINETY-FOURTH SESSION 2.1 (2) the deduction for dividends paid under section 852(b)(2)(D) of the Internal Revenue
2.2Code must be applied by allowing a deduction for capital gain dividends and exempt-interest
2.3dividends as defined in sections 852(b)(3)(C) and 852(b)(5) of the Internal Revenue Code;
2.4and
2.5 (3) the deduction for dividends paid must also be applied in the amount of any
2.6undistributed capital gains which the regulated investment company elects to have treated
2.7as provided in section 852(b)(3)(D) of the Internal Revenue Code.
2.8 (d) The net income of a real estate investment trust as defined and limited by section
2.9856(a), (b), and (c) of the Internal Revenue Code means the real estate investment trust
2.10taxable income as defined in section 857(b)(2) of the Internal Revenue Code.
2.11 (e) The net income of a designated settlement fund as defined in section 468B(d) of the
2.12Internal Revenue Code means the gross income as defined in section 468B(b) of the Internal
2.13Revenue Code.
2.14 (f) The Internal Revenue Code of 1986, as amended through May 1, 2023, applies for
2.15taxable years beginning after December 31, 1996.
2.16 (g) Except as otherwise provided, references to the Internal Revenue Code in this
2.17subdivision and sections 290.0131 to 290.0136 mean the code in effect for purposes of
2.18determining net income for the applicable year.
2.19 (h) In the case of a partnership electing to file a composite return under section 289A.08,
2.20subdivision 7, "net income" means the partner's share of federal adjusted gross income from
2.21the partnership modified by the additions provided in section 290.0131, subdivisions 8 to
2.2210, 16, and 17, and the subtractions provided in: (1) section 290.0132, subdivisions 9, 27,
2.23and 28, to the extent the amount is assignable or allocable to Minnesota under section 290.17;
2.24and (2) section 290.0132, subdivision 14. The subtraction allowed under section 290.0132,
2.25subdivision 9, is only allowed on the composite tax computation to the extent the electing
2.26partner would have been allowed the subtraction.
2.27 (i) In the case of a qualifying entity electing to pay the pass-through entity tax under
2.28section 289A.08, subdivision 7a, "net income" means the qualifying owner's share of federal
2.29adjusted gross income from the qualifying entity modified by the additions provided in
2.30section 290.0131, subdivisions 5, 8 to 10, 16, and 17, and the subtractions provided in: (1)
2.31section 290.0132, subdivisions 3, 9, 27, and 28, to the extent the amount is assignable or
2.32allocable to Minnesota under section 290.17; and (2) section 290.0132, subdivision 14. The
2.33subtraction allowed under section 290.0132, subdivision 9, is only allowed on the
2.34pass-through entity tax computation to the extent the qualifying owners would have been
2Section 1.
REVISOR EAP/AD 25-0367702/14/25 3.1allowed the subtraction. The income of both a resident and nonresident qualifying owner
3.2is allocated and assigned to this state as provided for nonresident partners and shareholders
3.3under sections 290.17, 290.191, and 290.20.
3.4 (j) For a foreign corporation or other foreign entity that is unitary under section 290.17,
3.5subdivision 4, "net income" means federal taxable income, as provided in paragraph (a). If
3.6the commissioner finds that the determination of a foreign corporation's or foreign entity's
3.7federal taxable income is not administrable, then for purposes of determining net income
3.8the commissioner may require the use of profit and loss statements, provided that the
3.9statements conform to generally accepted accounting principles or United States Securities
3.10and Exchange Commission filings or reports. The commissioner may require any method
3.11of information reporting the commissioner deems necessary to administer this section,
3.12including translation requirements or currency conversions.
3.13 EFFECTIVE DATE.This section is effective for taxable years beginning after December
3.1431, 2025.
3.15 Sec. 2. Minnesota Statutes 2024, section 290.0132, is amended by adding a subdivision
3.16to read:
3.17 Subd. 36.Global intangible low-taxed income.The amount of global intangible
3.18low-taxed income included in gross income under section 951A of the Internal Revenue
3.19Code is a subtraction.
3.20 EFFECTIVE DATE.This section is effective for taxable years beginning after December
3.2131, 2025.
3.22 Sec. 3. Minnesota Statutes 2024, section 290.0132, is amended by adding a subdivision
3.23to read:
3.24 Subd. 37.Subpart F income.The amount of subpart F income included in gross income
3.25under section 951 of the Internal Revenue Code is a subtraction.
3.26 EFFECTIVE DATE.This section is effective for taxable years beginning after December
3.2731, 2025.
3Sec. 3.
REVISOR EAP/AD 25-0367702/14/25 4.1 Sec. 4. Minnesota Statutes 2024, section 290.0134, is amended by adding a subdivision
4.2to read:
4.3 Subd. 21.Global intangible low-taxed income.The amount of global intangible
4.4low-taxed income included in gross income under section 951A of the Internal Revenue
4.5Code is a subtraction.
4.6 EFFECTIVE DATE.This section is effective for taxable years beginning after December
4.731, 2025.
4.8 Sec. 5. Minnesota Statutes 2024, section 290.0134, is amended by adding a subdivision
4.9to read:
4.10 Subd. 22.Subpart F income.The amount of subpart F income included in gross income
4.11under section 951 of the Internal Revenue Code is a subtraction.
4.12 EFFECTIVE DATE.This section is effective for taxable years beginning after December
4.1331, 2025.
4.14 Sec. 6. Minnesota Statutes 2024, section 290.17, subdivision 4, is amended to read:
4.15 Subd. 4.Unitary business principle.(a) If a trade or business conducted wholly within
4.16this state or partly within and partly without this state is part of a unitary business, the entire
4.17worldwide income of the unitary business is subject to apportionment pursuant to section
4.18290.191. Notwithstanding subdivision 2, paragraph (c), none of the income of a unitary
4.19business is considered to be derived from any particular source and none may be allocated
4.20to a particular place except as provided by the applicable apportionment formula. The
4.21provisions of this subdivision do not apply to business income subject to subdivision 5,
4.22income of an insurance company, or income of an investment company determined under
4.23section 290.36.
4.24 (b) The term "unitary business" means business activities or operations which result in
4.25a flow of value between them. The term may be applied within a single legal entity or
4.26between multiple entities and without regard to whether each entity is a sole proprietorship,
4.27a corporation, a partnership or a trust.
4.28 (c) Unity is presumed whenever there is unity of ownership, operation, and use, evidenced
4.29by centralized management or executive force, centralized purchasing, advertising,
4.30accounting, or other controlled interaction, but the absence of these centralized activities
4.31will not necessarily evidence a nonunitary business. Unity is also presumed when business
4Sec. 6.
REVISOR EAP/AD 25-0367702/14/25 5.1activities or operations are of mutual benefit, dependent upon or contributory to one another,
5.2either individually or as a group.
5.3 (d) Where a business operation conducted in Minnesota is owned by a business entity
5.4that carries on business activity outside the state different in kind from that conducted within
5.5this state, and the other business is conducted entirely outside the state, it is presumed that
5.6the two business operations are unitary in nature, interrelated, connected, and interdependent
5.7unless it can be shown to the contrary.
5.8 (e) Unity of ownership does not exist when two or more corporations are involved unless
5.9more than 50 percent of the voting stock of each corporation is directly or indirectly owned
5.10by a common owner or by common owners, either corporate or noncorporate, or by one or
5.11more of the member corporations of the group. For this purpose, the term "voting stock"
5.12shall include membership interests of mutual insurance holding companies formed under
5.13section 66A.40.
5.14 (f) The net income and apportionment factors under section 290.191 or 290.20 of foreign
5.15corporations and other foreign entities, but excluding including a disqualified captive
5.16insurance company, which are part of a unitary business shall not be included in the net
5.17income or the apportionment factors of the unitary business; except that. The income and
5.18apportionment factors of a foreign entity, other than an entity treated as a C corporation for
5.19federal income tax purposes, that are included in the federal taxable income, as defined in
5.20section 63 of the Internal Revenue Code as amended through the date named in section
5.21290.01, subdivision 19, of a domestic corporation, domestic entity, or individual must be
5.22included in determining net income and the factors to be used in the apportionment of net
5.23income pursuant to section 290.191 or 290.20. A foreign corporation or other foreign entity
5.24which is not included on a combined report and which is required to file a return under this
5.25chapter shall file on a separate return basis.
5.26 (g) For purposes of determining the net income of a unitary business and the factors to
5.27be used in the apportionment of net income pursuant to section 290.191 or 290.20, there
5.28must be included only the income and apportionment factors of domestic and foreign
5.29corporations or other domestic and foreign entities that are determined to be part of the
5.30unitary business pursuant to this subdivision, notwithstanding that foreign corporations or
5.31other foreign entities might be included in the unitary business; except that. The income
5.32and apportionment factors of a foreign entity, other than an entity treated as a C corporation
5.33for federal income tax purposes, that is included in the federal taxable income, as defined
5.34in section 63 of the Internal Revenue Code as amended through the date named in section
5.35290.01, subdivision 19, of a domestic corporation, domestic entity, or individual must be
5Sec. 6.
REVISOR EAP/AD 25-0367702/14/25 6.1included in determining net income and the factors to be used in the apportionment of net
6.2income pursuant to section 290.191 or 290.20.
6.3 (h) Each corporation or other entity, except a sole proprietorship, that is part of a unitary
6.4business must file combined reports as the commissioner determines. On the reports, all
6.5intercompany transactions between entities included pursuant to paragraph (g) must be
6.6eliminated and the entire net income of the unitary business determined in accordance with
6.7this subdivision is apportioned among the entities by using each entity's Minnesota factors
6.8for apportionment purposes in the numerators of the apportionment formula and the total
6.9factors for apportionment purposes of all entities included pursuant to paragraph (g) in the
6.10denominators of the apportionment formula. Except as otherwise provided by paragraph
6.11(f), all sales of the unitary business made within this state pursuant to section 290.191 or
6.12290.20 must be included on the combined report of a corporation or other entity that is a
6.13member of the unitary business and is subject to the jurisdiction of this state to impose tax
6.14under this chapter.
6.15 (i) If a corporation has been divested from a unitary business and is included in a
6.16combined report for a fractional part of the common accounting period of the combined
6.17report:
6.18 (1) its income includable in the combined report is its income incurred for that part of
6.19the year determined by proration or separate accounting; and
6.20 (2) its sales, property, and payroll included in the apportionment formula must be prorated
6.21or accounted for separately.
6.22 (j) For purposes of this subdivision, "insurance company" means an insurance company,
6.23as defined in section 290.01, subdivision 5b, that is not a disqualified captive insurance
6.24company.
6.25 EFFECTIVE DATE.This section is effective for taxable years beginning after December
6.2631, 2025.
6.27 Sec. 7. REPEALER.
6.28 Minnesota Statutes 2024, section 290.21, subdivisions 9 and 10, are repealed.
6.29 EFFECTIVE DATE.This section is effective for taxable years beginning after December
6.3031, 2025.
6Sec. 7.
REVISOR EAP/AD 25-0367702/14/25 290.21 DEDUCTIONS ALLOWED TO CORPORATIONS.
Subd. 9.Controlled foreign corporations.The net income of a corporation that is included
pursuant to section 951 of the Internal Revenue Code is dividend income.
Subd. 10.Global intangible low-taxed income.Any amounts included in taxable income
pursuant to section 951A of the Internal Revenue Code, are dividend income.
1R
APPENDIX
Repealed Minnesota Statutes: 25-03677