Minnesota Statutes Various State Taxes and Programs (Ch. 289A-295) § 290.095. Operating loss deduction

Subdivision 1. Allowance of deduction. (a) There shall be allowed as a deduction for the taxable year the amount of any net operating loss deduction as provided insection 172 of the Internal Revenue Code, 1subject to the limitations and modifications provided in this section.

(b) A net operating loss deduction shall be available under this section only to corporate taxpayers except that subdivisions 9 and 11 hereof apply only to individuals, estates, and trusts.

(c) In the case of a regulated investment company or fund thereof, as defined insection 851(a)or851(g) of the Internal Revenue Code, the deduction provided by this section shall not be allowed.

Subd. 2. Defined and limited. (a) The term “net operating loss” as used in this section shall mean a net operating loss as defined insection 172(c) of the Internal Revenue Code, with the modifications specified in subdivision 4. The deductions provided insection 290.21cannot be used in the determination of a net operating loss.

(b) The term “net operating loss deduction” as used in this section means the aggregate of the net operating loss carryovers to the taxable year, computed in accordance with subdivision 3. The provisions ofsection 172(b) of the Internal Revenue Coderelating to the carryback of net operating losses, do not apply.

(c) The amount of net operating loss deduction under this section must not exceed 70 percent of taxable net income in a single taxable year.

Subd. 3. Carryover. (a) A net operating loss incurred during the taxable year shall be a net operating loss carryover to each of the 15 taxable years following the taxable year of such loss.

(b) The entire amount of the net operating loss for any taxable year shall be carried to the earliest of the taxable years to which such loss may be carried. The portion of such loss which shall be carried to each of the other taxable years shall be the excess, if any, of the amount of such loss over the sum of the taxable net income, adjusted by the modifications specified in subdivision 4, for each of the taxable years to which such loss may be carried.

(c) Where a corporation apportions its income under the provisions ofsection 290.191, the net operating loss deduction incurred in any taxable year shall be allowed to the extent of the apportionment ratio of the loss year.

(d) The provisions ofsections 381,382, and384 of the Internal Revenue Codeapply to carryovers in certain corporate acquisitions and special limitations on net operating loss carryovers. The limitation amount determined undersection 382shall be applied to net income, before apportionment, in each post change year to which a loss is carried.

(a) No deduction shall be allowed for or with respect to losses connected with income producing activities if the income therefrom would not be required to be either assignable to this state or included in computing the taxpayer's taxable net income.

(b) A net operating loss deduction shall not be allowed.

(c) The amount deductible on account of losses from sales or exchanges of capital assets shall not exceed the amount includable on account of gains from sales or exchanges of capital assets.

(d) Renegotiation of profits for a prior taxable year under the renegotiation laws of the United States of America, including renegotiation of the profits with a subcontractor, shall not enter into the computation.

(e) Federal income and excess profits taxes shall not be allowed as a deduction.

Subd. 11. Carryback or carryover adjustments. (a) Except as provided in paragraphs (c) and (d), for individuals, estates, and trusts the amount of a net operating loss that may be carried back or carried over shall be the same dollar amount allowable in the determination of federal taxable income, provided that, notwithstanding any other provision, estates and trusts must apply the following adjustments to the amount of the net operating loss that may be carried back or carried over:

(b) The net operating loss carryback or carryover applied as a deduction in the taxable year to which the net operating loss is carried back or carried over shall be equal to the net operating loss carryback or carryover applied in the taxable year in arriving at federal taxable income provided that trusts and estates must apply the following modifications:

(c) This paragraph does not apply to eligible small businesses that make a valid election to carry back their losses for federal purposes undersection 172(b)(1)(H) of the Internal Revenue Codeas amended through March 31, 2009.

(d) The amount of a net operating loss carried forward must be reduced by any amounts used for the subtraction in section 290.0132, subdivision 33, in the next taxable year following the subtraction in which a net operating loss deduction is claimed.