For MN Tax Folks-another retroactive chg for 2010

[Mike Mac]

In case you do not get an electronic version of the "Revenue Connection" here is what came out earlier this morning:

MINNESOTA DEPARTMENT OF REVENUE
Revenue Connection #2
March 25, 2011

A. Federal changes adopted by Minnesota for tax year 2010
B. Legislation repeals refund delays imposed on businesses
C. Refunds for e-filed returns


A. Federal changes adopted by Minnesota for tax year 2010
Legislation enacted March 21, 2011 (Chapter 8), adopts all of the federal tax provisions enacted between March 18 and December 31, 2010, that affect federal taxable income for tax year 2010, with the following exception:

• The 50 percent/100 percent federal bonus depreciation and the increased federal section 179 expensing have been adopted, but these provisions are subject to an addback of 80 percent in the first year and five-year recovery, as under current state law.

What this means for your clients:

Individuals: The new law eliminates the need for the 2010 Schedule M1NC, Federal Adjustments. The law also eliminates the need to add back the federal educator expenses and college tuition and fees deductions on line 9 of Schedule M1M, Income Additions and Subtractions, for tax year 2010. Affected taxpayers are not required to file an amended return. For information on what taxpayers need to do and a list of revised forms, see “What’s new for individuals for tax year 2010.”

Corporations: The new law eliminates the need for corporations to recompute federal taxable income for Minnesota tax purposes for tax year 2010. The law also eliminates the need to add back the federal enhanced charitable contribution deduction for donated computers or to make adjustments for subpart F income. For information on what taxpayers need to do and a list of revised forms, see “What’s new for corporation franchise tax.”

Partnerships, S corporations and fiduciaries: The new law eliminates the need for the entity to recompute the federal return and to pass through the difference for Minnesota tax purposes for tax year 2010. For information on what taxpayers need to do and a list of revised forms, see “What’s new for partnerships for 2010,” and “What’s new for S corporations for 2010.”
What preparers need to do:
Use the most current forms, which are available on our website at http://taxes.state.mn.us/pages/current_forms.aspx.
Software developers have been notified of the above changes. Verify that the software you use has been updated. Beginning March 29, 2011, the department will no longer accept any electronically filed Form M1 that reports an amount on Schedule M1M, line 9, and/or with Schedule M1NC.
B. Legislation repeals refund delays imposed on businesses
The legislation enacted March 21, 2011 (Chapter 8), also repeals the refund delay imposed on businesses by the 2010 legislature. Beginning immediately, the department is releasing $97 million in business tax refunds.
For additional information, see the press release at http://taxes.state.mn.us/publication..._released.aspx.

C. Refunds for e-filed returns
Generally, refunds for electronically filed returns are processed very quickly. However, some returns take longer to process.

If your client does not receive their refund or a letter within 45 days after the return is accepted electronically, contact the department.

[veritas]

Hmmm

Looks vaguely familar.

March 8, 2011.

Today, the Senate passed SB 301. This follows yesterday’s passage of the same bill in the House of Representatives. The bill now heads to the governor for his signature.

For tax year 2010 - Proceed with filing returns! The bill reconnects Oregon to the federal definition of taxable income including all of the changes Congress made in 2010 with these significant exceptions:

(1) Additional expensing allowed under IRC section 179 (Oregon’s limit remains at $134,000 with a dollar for dollar reduction beginning at $530,000); and
(2) Bonus depreciation allowed under IRC section 168(k).

To reiterate, Oregon is connected to the following items for tax year 2010:
• Tuition and fees deduction
• Educator expenses deduction
• Exemption of imputed income related to the extension of health insurance coverage provided to adult children (as allowed by the Affordable Care Act)
• Modification of the calculation of the self-employment tax
• Tax free distributions from IRAs for charitable purposes
• Contribution of capital gain property for conservation purposes
• Any amount excluded from income under section 2011 of the Small Business Jobs Act relating to the sale of small business stock
• Additional start-up expenses deducted under section 2031 of the Small Business Jobs Act
• Any other federal difference except those listed below

Important! Remember that Oregon remains disconnected from (and an addition on the 2010 return is required) for the following items:
-IRC section 139A (federal subsidies for prescription drug plans) [ORS 316.837; ORS 317.401]
-IRC section 199 (domestic production activities – QPAI) [ORS 316.836; ORS 317.398]
-IRC section 108(i) (discharge of indebtedness from the reacquisition of an applicable debt instrument after December 31, 2008) [ORS 316.739(1); ORS 317.301(1)]
-IRC section 179 (temporary federal increase of 179 expense deduction) [ORS 316.739(3) ORS 317.301(3)]
-IRC section 168(k) (bonus deprecation) [ORS 316.739(2); ORS 317.301(2)]

[thomtax]

Isn't it nice that they change the rules after the game is over? I helps keep the light off what is really happening and gives another hiding spot when the insiders gets called on their actions, of lack thereof.

LT