• Minnesota passes tax conformity bill because of uncontrolled black crim

    From Blue Politics Disasters@21:1/5 to All on Mon Oct 9 15:04:44 2023
    XPost: mn.politics, alt.business, alt.politics.democrats
    XPost: alt.fan.rush-limbaugh, talk.politics.guns, sac.politics

    https://media.cnn.com/api/v1/images/stellar/prod/210525053512- minneapolis-business-damage-file.jpg? q=x_3,y_311,h_1684,w_2993,c_crop/h_720,w_1280/f_webp

    On Jan. 12, 2023, Minnesota Gov. Tim Walz signed HF 31 into law. The
    bill updates Minnesota’s conformity to the Internal Revenue Code
    (Code) as of Dec. 15, 2022. Minnesota previously conformed to the
    Code in effect on Dec. 31, 2018.

    HF 31 adds specific decoupling provisions that ensure Minnesota
    remains decoupled from certain Code sections enacted after 2018 but
    which had retroactive effective dates for federal purposes.
    Consequently, much of the new bill is clarifying, but not changing,
    the haphazard conformity of the prior law. Some taxpayers may not
    see a significant tax impact as a result of the changes, but other
    taxpayers could be materially impacted due to retroactive
    application of the changes and need to consider amended returns.

    Conformity updates in detail
    Business interest limitation
    Minnesota has historically conformed to the federal business
    interest limitation rules under section 163(j), as codified in the
    Tax Cuts and Jobs Act (TCJA), which limit deductible interest
    expense to 30% of adjusted taxable income (ATI). However, Minnesota
    did not adopt the temporary changes made to section 163(j) by the
    Coronavirus, Aid, Relief and Economic Security (CARES) Act, enacted
    in 2020, which increased the limitation to 50% of ATI for tax years
    2019 and 2020.

    The bill provides that any amounts deducted under section 163(j) for
    federal purposes related to the increase in the ATI limitation
    enacted in the CARES act should be added to federal taxable income
    in the computation of Minnesota taxable income. The addition
    provisions are retroactive, intended to offset the update in the
    general IRC conformity and maintain the state’s historical treatment
    of the business interest expense limitation changes made by the
    CARES Act.

    Additionally, for each of the five taxable years beginning after
    Dec. 31, 2022, taxpayers are allowed to subtract 20% of the total
    interest expense additions required during the 2019 and 2020 tax
    years, to the extent the additional carryforward has not already
    otherwise been recovered through application of the section 163(j)
    rules in tax years 2021 and 2022. This subtraction for “delayed
    business interest” applies to tax years beginning after Dec. 31,
    2022.

    The Minnesota changes to required additions related to business
    interest expense under the CARES Act as well as the associated
    subtraction for delayed business interest apply to individuals,
    estates, trusts, and corporations.

    Delayed net operating loss subtractions
    For federal purposes, the TCJA made several changes to the treatment
    of net operating losses (NOLs), including eliminating carrybacks,
    limiting utilization to 80% of taxable income and changing the
    carryforward period for post-2017 NOLs to be indefinite. The CARES
    Act temporarily removed the 80% limitation and allowed for NOLs
    generated in 2018 through 2020 to be carried back for five years.
    Minnesota previously decoupled from the changes to NOLs made under
    the CARES Act.

    Since Minnesota’s updated conformity date would technically include
    the NOL changes enacted in CARES, the bill includes specific
    provisions intended to clarify Minnesota’s NOL rules and maintain
    the historical decoupling from these federal provisions. Minnesota
    will continue to allow taxpayers to deduct NOLs up to a limit of 80%
    of taxable income and to carry forward state NOLs for 20 years.
    However, the state continues to decouple from the special federal
    NOL carryback rules for losses generated in tax years 2018, 2019 and
    2020, and does not allow NOL carrybacks.

    Excess business losses
    The TCJA enacted the excess business loss provisions of section 461,
    limiting the amount of business losses noncorporate taxpayers may
    use to offset nonbusiness income. The enactment of the CARES Act
    delayed the effective date of those provisions to tax year 2021 for
    federal purposes. HF 31 includes specific retroactive addition
    modifications to preserve the historical treatment of excess
    business losses for Minnesota purposes—losses allowed for federal
    purposes under the CARES Act should have been added back in the
    computation of Minnesota taxable income in prior years.

    However, for tax years beginning in 2026, a subtraction is allowed
    for any excess business losses that are limited for federal
    purposes, effectively decoupling Minnesota from the federal
    provisions for 2026 and beyond.

    https://rsmus.com/insights/tax-alerts/2023/Minnesota-passes-tax- conformity-bill.html

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