(a) In the case of a nonresident individual or a person who becomes a nonresident individual during the tax year, taxable net income shall include the amount realized upon a sale of the assets of, or any interest in, an S corporation or partnership that operated in Minnesota during the year of sale, including any income or gain to be recognized in future years pursuant to an installment sale method of reporting under the Internal Revenue Code.
(1) For the purposes of this paragraph, an individual who becomes a nonresident of Minnesota in any year after an installment sale is required to recognize the full amount of any income or gain described in this paragraph on the individual's final Minnesota resident tax return to the extent that such income has not been recognized in a prior year.
(2) For the purposes of this section, "realized" has the meaning given in section 1001(b) of the Internal Revenue Code.
(3) For the purposes of this section, "installment sale" means any installment sale under section 453 of the Internal Revenue Code and any other sale that is reported utilizing a method of accounting authorized under subchapter E of the Internal Revenue Code that allows taxpayers to delay reporting or recognizing a realized gain until a future year.
(b) Notwithstanding paragraph (a), nonresident taxpayers may elect to defer recognizing unrecognized installment sale gains by making an election under this paragraph. The election must be filed on a form to be determined or prescribed by the commissioner and must be filed by the due date of the individual income tax return, including any extension. Electing taxpayers must make an irrevocable agreement to:
(1) file Minnesota tax returns in all subsequent years when gains from the installment sales are recognized and reported to the Internal Revenue Service;
(2) allocate gains to the state of Minnesota as though the gains were realized in the year of sale under section 290.17, 290.191, or 290.20; and
(3) include all relevant federal tax documents reporting the installment sale with subsequent Minnesota tax returns.
(c) Income or gain recognized for Minnesota purposes pursuant to paragraph (a) must be excluded from taxable net income in any future year that the taxpayer files a Minnesota tax return to the extent that the income or gain has already been subject to tax pursuant to paragraph (a).
1Sp2017 c 1 art 1 s 11; 1Sp2019 c 6 art 12 s 1
Structure Minnesota Statutes
Chapters 289A - 295 — Various State Taxes And Programs
Chapter 290 — Income And Franchise Taxes
Section 290.0111 — Temporary Conformity To Certain Federal Tax Changes.
Section 290.0121 — Dependent Exemption.
Section 290.0122 — Itemized Deductions.
Section 290.0123 — Standard Deduction.
Section 290.0133 — Corporations; Additions To Federal Taxable Income.
Section 290.0134 — Corporations; Subtractions From Federal Taxable Income.
Section 290.0135 — Basis Modifications Affecting Gain Or Loss On Disposition Of Property.
Section 290.0136 — Certain Preferred Stock Losses.
Section 290.0137 — Accelerated Recognition Of Certain Installment Sale Gains.
Section 290.014 — Jurisdiction To Tax In General.
Section 290.015 — Minimum Contacts Required For Jurisdiction To Tax Trade Or Business.
Section 290.02 — Franchise Tax On Corporations Measured By Net Income.
Section 290.03 — Income Tax; Imposition, Classes Of Taxpayers.
Section 290.032 — Lump-sum Distribution Tax.
Section 290.04 — Liability For Tax.
Section 290.05 — Exempt Individuals, Organizations, Estates, Trusts.
Section 290.06 — Rates Of Tax; Credits.
Section 290.067 — Dependent Care Credit.
Section 290.0671 — Minnesota Working Family Credit.
Section 290.0672 — Long-term Care Insurance Credit.
Section 290.0674 — Minnesota Education Credit.
Section 290.0675 — Marriage Penalty Credit.
Section 290.0677 — Military Service Credits.
Section 290.0679 — Assignment Of Refund.
Section 290.068 — Credit For Increasing Research Activities.
Section 290.0681 — Credit For Historic Structure Rehabilitation.
Section 290.0682 — Student Loan Credit.
Section 290.0683 — Minnesota Housing Tax Credit.
Section 290.0684 — Section 529 Plan Credit.
Section 290.0685 — Credit For Parents Of Stillborn Children.
Section 290.0686 — Credit For Attaining Master's Degree In Teacher's Licensure Field.
Section 290.0692 — Small Business Investment Credit.
Section 290.07 — Net Income; Computation, Accounting Period.
Section 290.0802 — Subtraction For The Elderly And Disabled.
Section 290.081 — Income Of Nonresidents, Reciprocity.
Section 290.091 — Alternative Minimum Tax On Preference Items.
Section 290.0921 — Corporate Alternative Minimum Tax After 1989.
Section 290.0922 — Minimum Fee; Corporations; Partnerships.
Section 290.093 — Tax Computation For Mutual Savings Banks Conducting Life Insurance Business.
Section 290.095 — Operating Loss Deduction.
Section 290.10 — Nondeductible Items.
Section 290.17 — Gross Income, Allocation To State.
Section 290.172 — Commissioner Of Revenue.
Section 290.191 — Apportionment Of Net Income.
Section 290.20 — Net Income; Allocation To State.
Section 290.21 — Deductions Allowed To Corporations.
Section 290.22 — Estates And Trusts, Imposition Of Tax.
Section 290.26 — Exemption For Individual Retirement Account.
Section 290.281 — Common Trust Fund.
Section 290.30 — Fiduciaries, Duty To Pay Tax.
Section 290.31 — Partnerships; Individual Liability Of Partners.
Section 290.311 — Partnership Gross Income.
Section 290.32 — Taxes For Part Of Year, Computation.
Section 290.34 — Corporations, Special Provisions.
Section 290.371 — Notice Of Business Activities Report.
Section 290.431 — Nongame Wildlife Checkoff.
Section 290.432 — Corporate Nongame Wildlife Checkoff.
Section 290.48 — Large Amounts Of Cash; Presumption Of Jeopardy.
Section 290.491 — Tax On Gain; Discharge In Bankruptcy.
Section 290.62 — Distribution Of Revenues.
Section 290.92 — Tax Withheld At Source Upon Wages; Other Payments.
Section 290.9201 — Tax On Nonresident Entertainers.
Section 290.923 — Tax Withheld On Royalties Upon Ore.
Section 290.9705 — Surety Deposits Required For Construction Contracts.
Section 290.9725 — S Corporation.
Section 290.9726 — Corporation Taxable Income Taxed To Shareholders.
Section 290.9727 — Tax On Certain Built-in Gains.
Section 290.9728 — Tax On Capital Gains.
Section 290.9729 — Tax On Passive Investment Income.
Section 290.9741 — Election By Remic.
Section 290.9742 — Remic Income Taxable To Holders Of Interests.