1.1    .................... moves to amend H. F. No. 2362, the delete everything amendment
1.2(A07-0842), as follows:
1.3Page 76, delete article 4, and insert:


1.6    Section 1. Minnesota Statutes 2006, section 290.01, subdivision 19c, is amended to
1.7read:
1.8    Subd. 19c. Corporations; additions to federal taxable income. For corporations,
1.9there shall be added to federal taxable income:
1.10    (1) the amount of any deduction taken for federal income tax purposes for income,
1.11excise, or franchise taxes based on net income or related minimum taxes, including but not
1.12limited to the tax imposed under section 290.0922, paid by the corporation to Minnesota,
1.13another state, a political subdivision of another state, the District of Columbia, or any
1.14foreign country or possession of the United States;
1.15    (2) interest not subject to federal tax upon obligations of: the United States, its
1.16possessions, its agencies, or its instrumentalities; the state of Minnesota or any other
1.17state, any of its political or governmental subdivisions, any of its municipalities, or any
1.18of its governmental agencies or instrumentalities; the District of Columbia; or Indian
1.19tribal governments;
1.20    (3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal
1.21Revenue Code;
1.22    (4) the amount of any net operating loss deduction taken for federal income tax
1.23purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss
1.24deduction under section 810 of the Internal Revenue Code;
1.25    (5) the amount of any special deductions taken for federal income tax purposes
1.26under sections 241 to 247 and 965 of the Internal Revenue Code;
2.1    (6) losses from the business of mining, as defined in section 290.05, subdivision 1,
2.2clause (a), that are not subject to Minnesota income tax;
2.3    (7) the amount of any capital losses deducted for federal income tax purposes under
2.4sections 1211 and 1212 of the Internal Revenue Code;
2.5    (8) the exempt foreign trade income of a foreign sales corporation under sections
2.6921(a) and 291 of the Internal Revenue Code;
2.7    (9) the amount of percentage depletion deducted under sections 611 through 614 and
2.8291 of the Internal Revenue Code;
2.9    (10) for certified pollution control facilities placed in service in a taxable year
2.10beginning before December 31, 1986, and for which amortization deductions were elected
2.11under section 169 of the Internal Revenue Code of 1954, as amended through December
2.1231, 1985, the amount of the amortization deduction allowed in computing federal taxable
2.13income for those facilities;
2.14    (11) the amount of any deemed dividend from a foreign operating corporation
2.15determined pursuant to section 290.17, subdivision 4, paragraph (g);
2.16    (12) (11) the amount of a partner's pro rata share of net income which does not flow
2.17through to the partner because the partnership elected to pay the tax on the income under
2.18section 6242(a)(2) of the Internal Revenue Code;
2.19    (13) (12) the amount of net income excluded under section 114 of the Internal
2.20Revenue Code;
2.21    (14) any increase in subpart F income, as defined in section 952(a) of the Internal
2.22Revenue Code, for the taxable year when subpart F income is calculated without regard
2.23to the provisions of section 103 of Public Law 109-222;
2.24    (15) (13) 80 percent of the depreciation deduction allowed under section
2.25168(k)(1)(A) and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if
2.26the taxpayer has an activity that in the taxable year generates a deduction for depreciation
2.27under section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable
2.28year that the taxpayer is not allowed to claim for the taxable year, "the depreciation
2.29allowed under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess
2.30of the depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A)
2.31over the amount of the loss from the activity that is not allowed in the taxable year. In
2.32succeeding taxable years when the losses not allowed in the taxable year are allowed, the
2.33depreciation under section 168(k)(1)(A) and (k)(4)(A) is allowed;
2.34    (16) (14) 80 percent of the amount by which the deduction allowed by section 179 of
2.35the Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
2.36Revenue Code of 1986, as amended through December 31, 2003;
3.1    (17) (15) to the extent deducted in computing federal taxable income, the amount of
3.2the deduction allowable under section 199 of the Internal Revenue Code; and
3.3    (18) (16) the exclusion allowed under section 139A of the Internal Revenue Code
3.4for federal subsidies for prescription drug plans.
3.5EFFECTIVE DATE.This section is effective for taxable years beginning after
3.6December 31, 2006.

3.7    Sec. 2. Minnesota Statutes 2006, section 290.01, subdivision 19d, is amended to read:
3.8    Subd. 19d. Corporations; modifications decreasing federal taxable income. For
3.9corporations, there shall be subtracted from federal taxable income after the increases
3.10provided in subdivision 19c:
3.11    (1) the amount of foreign dividend gross-up added to gross income for federal
3.12income tax purposes under section 78 of the Internal Revenue Code;
3.13    (2) the amount of salary expense not allowed for federal income tax purposes due
3.14to claiming the federal jobs work opportunity credit under section 51 of the Internal
3.15Revenue Code;
3.16    (3) any dividend (not including any distribution in liquidation) paid within the
3.17taxable year by a national or state bank to the United States, or to any instrumentality of
3.18the United States exempt from federal income taxes, on the preferred stock of the bank
3.19owned by the United States or the instrumentality;
3.20    (4) amounts disallowed for intangible drilling costs due to differences between
3.21this chapter and the Internal Revenue Code in taxable years beginning before January
3.221, 1987, as follows:
3.23    (i) to the extent the disallowed costs are represented by physical property, an amount
3.24equal to the allowance for depreciation under Minnesota Statutes 1986, section 290.09,
3.25subdivision 7 , subject to the modifications contained in subdivision 19e; and
3.26    (ii) to the extent the disallowed costs are not represented by physical property, an
3.27amount equal to the allowance for cost depletion under Minnesota Statutes 1986, section
3.28290.09, subdivision 8 ;
3.29    (5) the deduction for capital losses pursuant to sections 1211 and 1212 of the
3.30Internal Revenue Code, except that:
3.31    (i) for capital losses incurred in taxable years beginning after December 31, 1986,
3.32capital loss carrybacks shall not be allowed;
3.33    (ii) for capital losses incurred in taxable years beginning after December 31, 1986,
3.34a capital loss carryover to each of the 15 taxable years succeeding the loss year shall be
3.35allowed;
4.1    (iii) for capital losses incurred in taxable years beginning before January 1, 1987, a
4.2capital loss carryback to each of the three taxable years preceding the loss year, subject to
4.3the provisions of Minnesota Statutes 1986, section 290.16, shall be allowed; and
4.4    (iv) for capital losses incurred in taxable years beginning before January 1, 1987,
4.5a capital loss carryover to each of the five taxable years succeeding the loss year to the
4.6extent such loss was not used in a prior taxable year and subject to the provisions of
4.7Minnesota Statutes 1986, section 290.16, shall be allowed;
4.8    (6) an amount for interest and expenses relating to income not taxable for federal
4.9income tax purposes, if (i) the income is taxable under this chapter and (ii) the interest and
4.10expenses were disallowed as deductions under the provisions of section 171(a)(2), 265 or
4.11291 of the Internal Revenue Code in computing federal taxable income;
4.12    (7) in the case of mines, oil and gas wells, other natural deposits, and timber for
4.13which percentage depletion was disallowed pursuant to subdivision 19c, clause (11) (9), a
4.14reasonable allowance for depletion based on actual cost. In the case of leases the deduction
4.15must be apportioned between the lessor and lessee in accordance with rules prescribed
4.16by the commissioner. In the case of property held in trust, the allowable deduction must
4.17be apportioned between the income beneficiaries and the trustee in accordance with the
4.18pertinent provisions of the trust, or if there is no provision in the instrument, on the basis
4.19of the trust's income allocable to each;
4.20    (8) for certified pollution control facilities placed in service in a taxable year
4.21beginning before December 31, 1986, and for which amortization deductions were elected
4.22under section 169 of the Internal Revenue Code of 1954, as amended through December
4.2331, 1985, an amount equal to the allowance for depreciation under Minnesota Statutes
4.241986, section 290.09, subdivision 7;
4.25    (9) amounts included in federal taxable income that are due to refunds of income,
4.26excise, or franchise taxes based on net income or related minimum taxes paid by the
4.27corporation to Minnesota, another state, a political subdivision of another state, the
4.28District of Columbia, or a foreign country or possession of the United States to the extent
4.29that the taxes were added to federal taxable income under section 290.01, subdivision 19c,
4.30clause (1), in a prior taxable year;
4.31    (10) (9) 80 percent of royalties, fees, or other like income accrued or received from a
4.32foreign operating corporation or a foreign corporation which is part of the same unitary
4.33business as the receiving corporation;
4.34    (11) (10) income or gains from the business of mining as defined in section 290.05,
4.35subdivision 1 , clause (a), that are not subject to Minnesota franchise tax;
5.1    (12) (11) the amount of disability access expenditures in the taxable year which are
5.2not allowed to be deducted or capitalized under section 44(d)(7) of the Internal Revenue
5.3Code;
5.4    (13) (12) the amount of qualified research expenses not allowed for federal income
5.5tax purposes under section 280C(c) of the Internal Revenue Code, but only to the extent
5.6that the amount exceeds the amount of the credit allowed under section 290.068;
5.7    (14) (13) the amount of salary expenses not allowed for federal income tax purposes
5.8due to claiming the Indian employment credit under section 45A(a) of the Internal
5.9Revenue Code;
5.10    (15) the amount of any refund of environmental taxes paid under section 59A of the
5.11Internal Revenue Code;
5.12    (16) (14) for taxable years beginning before January 1, 2008, the amount of the
5.13federal small ethanol producer credit allowed under section 40(a)(3) of the Internal
5.14Revenue Code which is included in gross income under section 87 of the Internal Revenue
5.15Code;
5.16    (17) (15) for a corporation whose foreign sales corporation, as defined in section
5.17922 of the Internal Revenue Code, constituted a foreign operating corporation during any
5.18taxable year ending before January 1, 1995, and a return was filed by August 15, 1996,
5.19claiming the deduction under section 290.21, subdivision 4, for income received from
5.20the foreign operating corporation, an amount equal to 1.23 multiplied by the amount of
5.21income excluded under section 114 of the Internal Revenue Code, provided the income is
5.22not income of a foreign operating company;
5.23    (18) any decrease in subpart F income, as defined in section 952(a) of the Internal
5.24Revenue Code, for the taxable year when subpart F income is calculated without regard
5.25to the provisions of section 614 of Public Law 107-147;
5.26    (19) (16) in each of the five tax years immediately following the tax year in which an
5.27addition is required under subdivision 19c, clause (15) (13), an amount equal to one-fifth
5.28of the delayed depreciation. For purposes of this clause, "delayed depreciation" means the
5.29amount of the addition made by the taxpayer under subdivision 19c, clause (15) (18). The
5.30resulting delayed depreciation cannot be less than zero; and
5.31    (20) (17) in each of the five tax years immediately following the tax year in which an
5.32addition is required under subdivision 19c, clause (16) (14), an amount equal to one-fifth
5.33of the amount of the addition.
5.34EFFECTIVE DATE.This section is effective for taxable years beginning after
5.35December 31, 2006, except the amendment to clause (2) is effective the day following
5.36final enactment.

6.1    Sec. 3. Minnesota Statutes 2006, section 290.191, subdivision 2, is amended to read:
6.2    Subd. 2. Apportionment formula of general application. (a) Except for those
6.3trades or businesses required to use a different formula under subdivision 3 or section
6.4290.36 , and for those trades or businesses that receive permission to use some other
6.5method under section 290.20 or under subdivision 4, a trade or business required to
6.6apportion its net income must apportion its income to this state on the basis of the
6.7percentage obtained by taking the sum of:
6.8    (1) the percent for the sales factor under paragraph (b) of the percentage which
6.9the sales made within this state in connection with the trade or business during the tax
6.10period are of the total sales wherever made in connection with the trade or business during
6.11the tax period;.
6.12    (2) the percent for the property factor under paragraph (b) of the percentage which
6.13the total tangible property used by the taxpayer in this state in connection with the trade or
6.14business during the tax period is of the total tangible property, wherever located, used by
6.15the taxpayer in connection with the trade or business during the tax period; and
6.16    (3) the percent for the payroll factor under paragraph (b) of the percentage which
6.17the taxpayer's total payrolls paid or incurred in this state or paid in respect to labor
6.18performed in this state in connection with the trade or business during the tax period are
6.19of the taxpayer's total payrolls paid or incurred in connection with the trade or business
6.20during the tax period.
6.21    (b) For purposes of paragraph (a) and subdivision 3, the following percentages apply
6.22for the taxable years specified:

6.23 6.24 6.25 6.26	Taxable years beginning during calendar year		Sales factor percent		Property factor percent		Payroll factor percent
6.27	2007		78		11		11
6.28	2008		81		9.5		9.5
6.29	2009		84		8		8
6.30	2010		87		6.5		6.5
6.31	2011		90		5		5
6.32	2012		93		3.5		3.5
6.33	2013		96		2		2
6.34 6.35	2014 and later calendar years		100		0		0

6.36EFFECTIVE DATE.This section is effective for taxable years beginning after
6.37December 31, 2007, provided that for purposes of taxable years beginning during calendar
7.1year 2007 for Minnesota Statutes, section 290.191, subdivisions 2 and 3, the sales factor
7.2percent is 82 and property and payroll factor percents are each nine.

7.3    Sec. 4. Minnesota Statutes 2006, section 290.191, subdivision 3, is amended to read:
7.4    Subd. 3. Apportionment formula for financial institutions. Except for an
7.5investment company required to apportion its income under section 290.36, a financial
7.6institution that is required to apportion its net income must apportion its net income to this
7.7state on the basis of the percentage obtained by taking the sum of:
7.8    (1) the percent for the sales factor under subdivision 2, paragraph (b), of the
7.9percentage which the receipts from within this state in connection with the trade or
7.10business during the tax period are of the total receipts in connection with the trade or
7.11business during the tax period, from wherever derived;.
7.12    (2) the percent for the property factor under subdivision 2, paragraph (b), of the
7.13percentage which the sum of the total tangible property used by the taxpayer in this
7.14state and the intangible property owned by the taxpayer and attributed to this state in
7.15connection with the trade or business during the tax period is of the sum of the total
7.16tangible property, wherever located, used by the taxpayer and the intangible property
7.17owned by the taxpayer and attributed to all states in connection with the trade or business
7.18during the tax period; and
7.19    (3) the percent for the payroll factor under subdivision 2, paragraph (b), of the
7.20percentage which the taxpayer's total payrolls paid or incurred in this state or paid in
7.21respect to labor performed in this state in connection with the trade or business during
7.22the tax period are of the taxpayer's total payrolls paid or incurred in connection with
7.23the trade or business during the tax period.
7.24EFFECTIVE DATE.This section is effective for taxable years beginning after
7.25December 31, 2007, provided that for purposes of taxable years beginning during calendar
7.26year 2007 for Minnesota Statutes, section 290.191, subdivisions 2 and 3, the sales factor
7.27percent is 82 and property and payroll factor percents are each nine.

7.28    Sec. 5. Minnesota Statutes 2006, section 290.191, subdivision 5, is amended to read:
7.29    Subd. 5. Determination of sales factor. For purposes of this section, the following
7.30rules apply in determining the sales factor.
7.31    (a) The sales factor includes all sales, gross earnings, or receipts received in the
7.32ordinary course of the business, except that the following types of income are not included
7.33in the sales factor:
7.34    (1) interest;
7.35    (2) dividends;
8.1    (3) sales of capital assets as defined in section 1221 of the Internal Revenue Code;
8.2    (4) sales of property used in the trade or business, except sales of leased property of
8.3a type which is regularly sold as well as leased; or
8.4    (5) sales of debt instruments as defined in section 1275(a)(1) of the Internal Revenue
8.5Code or sales of stock; and
8.6    (6) royalties, fees, or other like income of a type which qualify for a subtraction from
8.7federal taxable income under section 290.01, subdivision 19d(10).
8.8    (b) Sales of tangible personal property are made within this state if the property is
8.9received by a purchaser at a point within this state, and the taxpayer is taxable in this state,
8.10regardless of the f.o.b. point, other conditions of the sale, or the ultimate destination
8.11of the property.
8.12    (c) Tangible personal property delivered to a common or contract carrier or foreign
8.13vessel for delivery to a purchaser in another state or nation is a sale in that state or nation,
8.14regardless of f.o.b. point or other conditions of the sale.
8.15    (d) Notwithstanding paragraphs (b) and (c), when intoxicating liquor, wine,
8.16fermented malt beverages, cigarettes, or tobacco products are sold to a purchaser who is
8.17licensed by a state or political subdivision to resell this property only within the state of
8.18ultimate destination, the sale is made in that state.
8.19    (e) Sales made by or through a corporation that is qualified as a domestic
8.20international sales corporation under section 992 of the Internal Revenue Code are not
8.21considered to have been made within this state.
8.22    (f) Sales, rents, royalties, and other income in connection with real property is
8.23attributed to the state in which the property is located.
8.24    (g) Receipts from the lease or rental of tangible personal property, including finance
8.25leases and true leases, must be attributed to this state if the property is located in this
8.26state and to other states if the property is not located in this state. Receipts from the
8.27lease or rental of moving property including, but not limited to, motor vehicles, rolling
8.28stock, aircraft, vessels, or mobile equipment are included in the numerator of the receipts
8.29factor to the extent that the property is used in this state. The extent of the use of moving
8.30property is determined as follows:
8.31    (1) A motor vehicle is used wholly in the state in which it is registered.
8.32    (2) The extent that rolling stock is used in this state is determined by multiplying
8.33the receipts from the lease or rental of the rolling stock by a fraction, the numerator of
8.34which is the miles traveled within this state by the leased or rented rolling stock and the
8.35denominator of which is the total miles traveled by the leased or rented rolling stock.
9.1    (3) The extent that an aircraft is used in this state is determined by multiplying the
9.2receipts from the lease or rental of the aircraft by a fraction, the numerator of which is
9.3the number of landings of the aircraft in this state and the denominator of which is the
9.4total number of landings of the aircraft.
9.5    (4) The extent that a vessel, mobile equipment, or other mobile property is used in
9.6the state is determined by multiplying the receipts from the lease or rental of the property
9.7by a fraction, the numerator of which is the number of days during the taxable year the
9.8property was in this state and the denominator of which is the total days in the taxable year.
9.9    (h) Royalties and other income not described in paragraph (a), clause (6), received
9.10for the use of or for the privilege of using intangible property, including patents,
9.11know-how, formulas, designs, processes, patterns, copyrights, trade names, service names,
9.12franchises, licenses, contracts, customer lists, or similar items, must be attributed to the
9.13state in which the property is used by the purchaser. If the property is used in more
9.14than one state, the royalties or other income must be apportioned to this state pro rata
9.15according to the portion of use in this state. If the portion of use in this state cannot be
9.16determined, the royalties or other income must be excluded from both the numerator
9.17and the denominator. Intangible property is used in this state if the purchaser uses the
9.18intangible property or the rights therein in the regular course of its business operations in
9.19this state, regardless of the location of the purchaser's customers.
9.20    (i) Sales of intangible property are made within the state in which the property is
9.21used by the purchaser. If the property is used in more than one state, the sales must be
9.22apportioned to this state pro rata according to the portion of use in this state. If the
9.23portion of use in this state cannot be determined, the sale must be excluded from both the
9.24numerator and the denominator of the sales factor. Intangible property is used in this
9.25state if the purchaser used the intangible property in the regular course of its business
9.26operations in this state.
9.27    (j) Receipts from the performance of services must be attributed to the state where
9.28the services are received. For the purposes of this section, receipts from the performance
9.29of services provided to a corporation, partnership, or trust may only be attributed to a state
9.30where it has a fixed place of doing business. If the state where the services are received is
9.31not readily determinable or is a state where the corporation, partnership, or trust receiving
9.32the service does not have a fixed place of doing business, the services shall be deemed
9.33to be received at the location of the office of the customer from which the services were
9.34ordered in the regular course of the customer's trade or business. If the ordering office
9.35cannot be determined, the services shall be deemed to be received at the office of the
9.36customer to which the services are billed. For purposes of this subdivision and subdivision
10.16, paragraph (l), receipts from the performance of services provided by corporations
10.2or trusts, providing management, distribution, or administrative services to any fund
10.3regulated under the Investment Company Act of 1940, are attributed to the states where
10.4each fund's shareholders reside as determined by the mailing address furnished by the
10.5client, based on the average number of outstanding shares owned by the shareholders at
10.6the end of each month compared to the total number of outstanding shares. For purposes
10.7of this section, when a fund shareholder of record is an insurance company holding the
10.8shares as depositor for policyholders, the corporation can elect to treat the policyholders
10.9of the insurance company as the fund shareholders. This election applies to all fund
10.10shareholders that are insurance companies and is irrevocable for, and applicable for, five
10.11successive income years.
10.12EFFECTIVE DATE.This section is effective for taxable years beginning after
10.13December 31, 2006, except the amendments to paragraph (j) are effective for taxable
10.14years beginning after December 31, 2007.

10.15    Sec. 6. TRANSITION; POLLUTION CONTROL FACILITIES
10.16AMORTIZATION.
10.17    The amount of additions to federal taxable income pursuant to Minnesota Statutes,
10.18section 290.01, subdivision 19c(10), that are properly subtractable pursuant to Minnesota
10.19Statutes, section 290.01, subdivision 19d(8), for taxable years beginning after December
10.2031, 2006, and have not been subtracted pursuant to subdivision 19d(8), are subtractable in
10.21the taxpayer's first taxable year beginning after December 31, 2006.

10.22    Sec. 7. REPEALER.
10.23Minnesota Statutes 2006, section 290.191, subdivision 4, is repealed.
10.24EFFECTIVE DATE.This section is effective for taxable years beginning after
10.25December 31, 2007."