This bill modifies the expiration date of the pass-through entity tax in Minnesota, specifically amending Minnesota Statutes 2024, sections 289A.08 and 290.06. The expiration of the pass-through entity tax, which was previously aligned with section 164(b)(6)(B) of the Internal Revenue Code, is now set for taxable years beginning after December 31, 2027. Additionally, the bill clarifies that the pass-through entity tax return will be treated as a composite return, and it establishes that a qualifying owner's adjusted basis in the interest in the qualifying entity will be determined as if the election to pay the pass-through entity tax is not made.

Furthermore, the bill introduces a credit against the tax imposed on a qualifying entity for pass-through entity tax paid to another state, which can only be claimed by qualifying owners. The language also specifies that this credit must be claimed in a manner prescribed by the commissioner. The effective date for these changes is the day following final enactment, ensuring that the new provisions are implemented promptly.

Statutes affected:
Introduction: 289A.08, 290.06