Tax News

CCH (cch.taxgroup.com) reports:

  On May 16, 2009, Minnesota Gov. Tim Pawlenty signed legislation that generally conforms Minnesota's corporate franchise tax, individual income tax, and estate tax to federal tax administrative provisions made between December 31, 2008, and March 31, 2009 (specifically, the American Recovery and Reinvestment Act of 2009 (P.L. 111-5)).

  Minnesota has not adopted the extension of bonus depreciation or increased §179 amounts, but will continue to follow its requirement that taxpayers add back to taxable income 80% of the additional expensing or depreciation amount in the first tax year and then subtract one-fifth of the amount added back in each of the five following tax years.

  Provisions of the Recovery Act that allow the deduction of motor vehicle sales taxes as an itemized deduction for individuals who choose to deduct state income taxes, and as an additional standard deduction for non-itemizers for certain purchases, as well as the deduction of the first $2,400 of unemployment compensation, are not adopted by Minnesota. Instead, effective for tax years beginning after 2008, additions to taxable income are required of personal income taxpayers. The addition for motor vehicle sales taxes must not be more than total itemized deductions in excess of the standard deduction.

  Additionally, Minnesota has not adopted the provision allowing the deferral of discharge of indebtedness income resulting from reacquisition of business indebtedness in 2009 and 2010. Effective for taxable years ending after 2008, additions to taxable income and corresponding subtractions are required for individuals and corporations.

  In addition to the federal conformity update, the legislation makes various miscellaneous changes, including extending the time for filing estate tax returns and requiring qualified intermediaries to report to the Commissioner of Internal Revenue on §1031 exchanges.

  Sales and use tax changes (TAXDAY, 2009/05/19, S.8) and property tax changes (TAXDAY, 2009/05/19, S.10) are covered in separate stories.

  Subscribers can view the bill.

H.F. 1298, Laws 2009, effective May 17, 2009, except as noted