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S.F. No. 3526 - Alternative simplified credit election for R & D credit (as proposed to be amended by A-1)
 
Author: Senator Carla J. Nelson
 
Prepared By: Nora Pollock, Senate Counsel (651/297-8066)
 
Date: April 19, 2016



 

This bill provides an alternative method for calculating the base amount of qualified research expenses for the Minnesota research and development (R & D) credit.  Under current law, the base amount is the greater of the percentage of a business’s Minnesota qualified research expenditures relative to its gross receipts from 1984-1988, multiplied by the average Minnesota gross receipts for the previous four years; or 50 percent of Minnesota qualified research expenses for the current year.  The percentage amount cannot exceed 16 percent.  Most businesses must use the 50 percent calculation.  Federal law allows an alternative simplified credit (ASC) calculation option for purposes of claiming the federal R & D credit.  This bill authorizes an ASC election for Minnesota taxpayers similar to the federal option, effective beginning in tax year 2016. 

 

Section

Provision

1

Allows a credit of six percent of Minnesota qualified research expenditures over the base amount.
 

2

Provides that for taxpayers electing ASC calculation, the base amount is 50 percent of average Minnesota qualified research expenditures over the three years preceding the year the credit is determined.
 

3

Authorizes the ASC election.  A taxpayer may elect to use the ASC in an original return, including any applicable extensions, for a tax year.  The taxpayer may revoke the ASC election at any time. 

 
 
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