Senate Counsel, Research
and Fiscal Analysis
Minnesota Senate Bldg.
95 University Avenue W. Suite 3300
St. Paul, MN 55155
(651) 296-4791
Tom Bottern
Director
   Senate   
State of Minnesota
 
 
 
 
 
S.F. No. 1008 - Fixed base percentage allowed for R & D credit
 
Author: Senator Carla J. Nelson
 
Prepared By: Nora Pollock, Senate Counsel (651/297-8066)
 
Date: February 19, 2019



 

The research and development credit represents the increase in Minnesota qualified research expenses (QREs) in a tax year over a “base amount.” The base amount is the larger of the following two calculations:

  • 50% of QREs; or
  • Average Minnesota sales for the four preceding tax years multiplied by the “fixed base percentage.” The fixed base percentage equals the total Minnesota QREs from 1984 to 1988 divided by its total Minnesota gross receipts for that period.

The base amount is then subtracted from the current year QREs to determine the credit eligible QREs. The credit-eligible QREs are then applied to the two-tiered credit calculation.

Under federal law, the maximum fixed base percentage is 16% and for businesses starting up after 1988, the base amount is 3%.

This bill would allow businesses to use the 16% fixed base percentage if there are inadequate records or records are unavailable to calculate or verify the fixed base percentage.

Effective beginning in tax year 2019.

 
Check on the status of this bill
 
Back to Senate Counsel and Research Bill Summaries page
 

 
This page is maintained by the Office of Senate Counsel, Research, and Fiscal Analysis for the Minnesota Senate.
 
Last review or update: 02/19/2019
 
If you see any errors on this page, please e-mail us at webmaster@senate.mn