Minnesota Statutes Various State Taxes and Programs (Ch. 289A-295) § 290.9727. Tax on certain built-in gains

Subdivision 1. Tax imposed. For an “S” corporation electing S corporation status pursuant tosection 1362 of the Internal Revenue Codeafter December 31, 1986, 1and having a recognized built-in gain as defined insection 1374 of the Internal Revenue Code, there is imposed a tax on the taxable income of such S corporation, as defined in this section, at the rate prescribed bysection 290.06, subdivision 1. This subdivision does not apply to any corporation having an S election in effect for each of its taxable years. An S corporation and any predecessor corporation must be treated as one corporation for purposes of the preceding sentence.

Subd. 1a. Asset transfers. In the case of the transfer of assets from a C corporation to an S corporation as described insection 1374(d)(8) of the Internal Revenue Code, a tax is imposed on the taxable income of the S corporation, as defined in this section, at the rate prescribed insection 290.06, subdivision 1.

Subd. 2. Taxable income.For purposes of this section, taxable income means taxable net income less the deduction for net operating loss carryforwards as provided by this section.

Subd. 3. Taxable net income. For purposes of this section, taxable net income means the lesser of:

Subd. 4. Net operating loss carryforward.A net operating loss carryforward, as determined undersection 290.095, arising in a taxable year before the corporation elected S corporation status, shall be allowed as a deduction against the lesser of the amounts referred to in subdivision 3, clauses (1) and (2). For purposes of determining the amount of any such loss that may be carried to later taxable years, the lesser of the amounts referred to in subdivision 3, clauses (1) and (2), shall be treated as taxable income.

Subd. 5. Credit carryforward. Any credit carryforward allowed under this chapter and arising in a taxable year in which the corporation was a C corporation is allowed as a credit against the tax imposed by this section.