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S.F. No. 4012 - Apportionment of net operating losses for qualifying corporations
Author: Senator Ann H. Rest
Prepared By: Nora Pollock, Senate Counsel (651/297-8066)
Date: March 11, 2020


Under current law, businesses operating within and outside of Minnesota apportion their income to Minnesota based on the ratio of sales within the state to total sales. Minnesota also allows corporations to carryforward net operating losses (NOLs) for up to 15 years after the year the losses are incurred. Corporations that apportion income may carryforward NOLs to the same extent as their income is apportioned to Minnesota in the year the losses are incurred.

This bill would allow qualifying corporations to apportion 100% of their income to Minnesota for purposes of carrying forward NOLs. To qualify for the apportionment treatment, a qualifying corporation must: (1) apportion its income; (2) have zero Minnesota sales and zero sales outside Minnesota; and (3) have its principal address and place of business in Minnesota. The effect of the bill would be to allow corporations whose principal address and place of business is in Minnesota and have no sales in a taxable year to apportion all of their business losses to Minnesota and carryforward those losses as allowed under current law.

Effective beginning in tax year 2020.

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