Minnesota Statutes Various State Taxes and Programs (Ch. 289A-295) § 290.9728. Tax on capital gains

(1) elected S corporation status pursuant tosection 1362 of the Internal Revenue Code of 1986, as amended through December 31, 1986, 1before January 1, 1987;

(2) a net capital gain for the taxable year (i) in excess of $25,000 and (ii) exceeding 50 percent of the corporation's federal taxable income for the taxable year; and

(3) federal taxable income for the taxable year exceeding $25,000.

The tax is imposed at the rate prescribed bysection 290.06, subdivision 1. For purposes of this section, “federal taxable income” means federal taxable income determined undersection 1374(4)(d) of the Internal Revenue Code. This section does not apply to an S corporation which has had an election undersection 1362 of the Internal Revenue Code of 1954, in effect for the three immediately preceding taxable years. This section does not apply to an S corporation that has been in existence for less than four taxable years and has had an election in effect undersection 1362 of the Internal Revenue Code of 1954for each of the corporation's taxable years. For purposes of this section, an S corporation and any predecessor corporation are treated as one corporation.

(1) the amount of the net capital gain of the S corporation for the taxable year, as determined undersections 1222and1374 of the Internal Revenue Code, and subject to the modifications provided insection 290.0135, in excess of $25,000 that is allocable to this state undersection 290.17,290.191, or290.20; or

(2) the amount of the S corporation's federal taxable income, subject to the provisions ofsections 290.0133to290.0135, that is allocable to this state undersection 290.17,290.191, or290.20.