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Minnesota Statutes Various State Taxes and Programs (Ch. 289A-295) § 290.091. Alternative minimum tax on preference items

Current as of January 01, 2025 | Updated by Findlaw Staff

Subdivision 1. Imposition of tax. In addition to all other taxes imposed by this chapter a tax is imposed on individuals, estates, and trusts equal to the excess (if any) of

(a) an amount equal to 6.75 percent of alternative minimum taxable income after subtracting the exemption amount, over

(b) the regular tax for the taxable year.

Subd. 2. Definitions. For purposes of the tax imposed by this section, the following terms have the meanings given.

(a) “Alternative minimum taxable income” means the sum of the following for the taxable year:

(1) the taxpayer's federal alternative minimum taxable income as defined insection 55(b)(1)(D) of the Internal Revenue Code; 1

(2) the taxpayer's itemized deductions allowed in computing federal alternative minimum taxable income, but excluding:

(i) the charitable contribution deduction undersection 170 of the Internal Revenue Code;

(ii) the medical expense deduction;

(iii) the casualty, theft, and disaster loss deduction; and

(iv) the impairment-related work expenses of a person with a disability;

(3) for depletion allowances computed undersection 613A(c) of the Internal Revenue Code, with respect to each property (as defined insection 614 of the Internal Revenue Code), to the extent not included in federal alternative minimum taxable income, the excess of the deduction for depletion allowable undersection 611 of the Internal Revenue Codefor the taxable year over the adjusted basis of the property at the end of the taxable year (determined without regard to the depletion deduction for the taxable year);

(4) to the extent not included in federal alternative minimum taxable income, the amount of the tax preference for intangible drilling cost undersection 57(a)(2) of the Internal Revenue Codedetermined without regard to subparagraph (E);

(5) to the extent not included in federal alternative minimum taxable income, the amount of interest income as provided bysection 290.0131, subdivision 2;

(6) the amount of addition required bysection 290.0131, subdivisions 9,10, and16;

(7) the deduction allowed undersection 199A of the Internal Revenue Code, to the extent not included in the addition required under clause (6); and

(8) to the extent not included in federal alternative minimum taxable income, the amount of foreign-derived intangible income deducted undersection 250 of the Internal Revenue Code;

less the sum of the amounts determined under the following:

(i) interest income as defined insection 290.0132, subdivision 2;

(ii) an overpayment of state income tax as provided bysection 290.0132, subdivision 3, to the extent included in federal alternative minimum taxable income;

(iii) the amount of investment interest paid or accrued within the taxable year on indebtedness to the extent that the amount does not exceed net investment income, as defined insection 163(d)(4) of the Internal Revenue Code. Interest does not include amounts deducted in computing federal adjusted gross income;

(iv) amounts subtracted from federal taxable or adjusted gross income as provided bysection 290.0132, subdivisions 7,9to15,17,21,24,26to29,31,34, and35;

(v) the amount of the net operating loss allowed undersection 290.095, subdivision 11, paragraph (c); and

(vi) the amount allowable as a Minnesota itemized deduction undersection 290.0122, subdivision 7.

In the case of an estate or trust, alternative minimum taxable income must be computed as provided insection 59(c) of the Internal Revenue Code, except alternative minimum taxable income must be increased by the addition insection 290.0131, subdivision 16.

(b) “Investment interest” means investment interest as defined insection 163(d)(3) of the Internal Revenue Code.

(c) “Net minimum tax” means the minimum tax imposed by this section.

(d) “Regular tax” means the tax that would be imposed under this chapter (without regard to this section,section 290.033, andsection 290.032), reduced by the sum of the nonrefundable credits allowed under this chapter.

(e) “Tentative minimum tax” equals 6.75 percent of alternative minimum taxable income after subtracting the exemption amount determined under subdivision 3.

Subd. 3. Exemption amount. (a) For purposes of computing the alternative minimum tax, the exemption amount is $77,590 for married couples filing joint returns, $38,800 for married individuals filing separate returns, estates, and trusts, and $58,190 for unmarried individuals.

(b) The exemption amount determined under this subdivision is subject to the phase out undersection 55(d)(2) of the Internal Revenue Code, except that alternative minimum taxable income as determined under this section must be substituted in the computation of the phase out, andsection 55(d)(4) of the Internal Revenue Codedoes not apply.

(c) The commissioner shall annually adjust the amounts in paragraph (a) as provided insection 270C.22. The statutory year is taxable year 2019.

Subd. 4. Part year residents; estates and trusts. (a) An individual who is not a Minnesota resident for the entire year must compute alternative minimum tax liability using a regular tax liability determined undersection 290.06, subdivision 2c, paragraph (e), without regard to the provision for allocation to Minnesota. The resulting alternative minimum tax liability must be multiplied by the fraction defined insection 290.06, subdivision 2c, paragraph (e).

(b) In the case of an estate or trust, the alternative minimum tax liability must be computed by multiplying alternative minimum taxable income and the exemption amount by a fraction, the numerator of which is the amount of the taxpayer's alternative minimum taxable income allocated to this state pursuant to the provisions ofsections 290.17to290.20, and the denominator of which is the taxpayer's total alternative minimum taxable income.

Subd. 5. Tax benefit rule.The tax benefit rule contained insection 59(g) of the Internal Revenue Codeapplies to the computation of the tax under this section only to the extent that it determines if there is an item of tax preference for purposes of subdivision 2, clause (a)(1).

Subd. 6. Credit for prior years' liability. (a) A credit is allowed against the tax imposed by this chapter on individuals, trusts, and estates equal to the minimum tax credit for the taxable year. The minimum tax credit equals the adjusted net minimum tax for taxable years beginning after December 31, 1988, reduced by the minimum tax credits allowed in a prior taxable year. The credit may not exceed the excess (if any) for the taxable year of

(1) the regular tax, over

(2) the greater of (i) the tentative alternative minimum tax, or (ii) zero.

(b) The adjusted net minimum tax for a taxable year equals the lesser of the net minimum tax or the excess (if any) of

(1) the tentative minimum tax, over

(2) 6.75 percent of the sum of

(i) adjusted gross income as defined insection 62 of the Internal Revenue Code,

(ii) interest income as defined insection 290.0131, subdivision 2,

(iii) interest on specified private activity bonds, as defined insection 57(a)(5) of the Internal Revenue Code, to the extent not included under clause (ii),

(iv) depletion as defined insection 57(a)(1), determined without regard to the last sentence of paragraph (1), of the Internal Revenue Code, less

(v) the deductions allowed in computing alternative minimum taxable income provided in subdivision 2, paragraph (a), clause (2) of the first series of clauses and clauses (1), (2), and (3) of the second series of clauses, and

(vi) the exemption amount determined under subdivision 3.

In the case of an individual who is not a Minnesota resident for the entire year, adjusted net minimum tax must be multiplied by the fraction defined insection 290.06, subdivision 2c, paragraph (e). In the case of a trust or estate, adjusted net minimum tax must be multiplied by the fraction defined under subdivision 4, paragraph (b).

1 All text references to Internal Revenue Code sections are to Title 26 of U.S.C.A.
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Cite this article: FindLaw.com - Minnesota Statutes Various State Taxes and Programs (Ch. 289A-295) § 290.091. Alternative minimum tax on preference items - last updated January 01, 2025 | https://codes.findlaw.com/mn/various-state-taxes-and-programs-ch-289a-295/mn-st-sect-290-091/

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