§ 290.34 — Corporations, Special Provisions
Plain-Language Summary
Gives the Commissioner of Revenue authority to adjust a corporation's income when related companies do business in ways that reduce Minnesota taxable income, such as selling goods at below-market prices between affiliates. The commissioner can also require combined reporting for affiliated corporations.
290.34 CORPORATIONS, SPECIAL PROVISIONS.
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Subdivision 1.Business conducted in such a way as to create losses or improper taxable net income.
When any corporation liable to taxation under this chapter conducts its business in such a manner as, directly or indirectly, to benefit its members or stockholders or any person or corporation interested in such business or to reduce the income attributable to this state by selling the commodities or services in which it deals at less than the fair price which might be obtained therefor, or buying such commodities or services at more than the fair price for which they might have been obtained, or when any corporation, a substantial portion of whose shares is owned directly or indirectly by another corporation, deals in the commodities or services of the latter corporation in such a manner as to create a loss or improper net income or to reduce the taxable net income attributable to this state, the commissioner of revenue may determine the amount of its income so as to reflect what would have been its reasonable taxable net income but for the arrangements causing the understatement of its taxable net income or the overstatement of its losses, having regard to the fair profits which, but for any agreement, arrangement, or understanding, might have been or could have been obtained from such business. §
Subd. 2.Affiliated or related corporations, combined report.
When a corporation which is required to file an income tax return is affiliated with or related to any other corporation through stock ownership by the same interests or as parent or subsidiary corporations, or has its income regulated through contract or other arrangement, the commissioner of revenue may permit or require such combined report as, in the commissioner’s opinion, is necessary in order to determine the taxable net income of any one of the affiliated or related corporations. §
Subd. 3.
[Repealed, 1983 c 15 s 33] §
Subd. 4.
[Repealed, 1980 c 419 s 46] §
Subd. 5.Interest limitation.
The interest expense limitation under section 163(j) of the Internal Revenue Code must be computed using the combined report entities included in the unitary group under section 290.17, subdivision 4. The limitation must be aggregated between combined report entities consistent with the application to a consolidated group for federal income tax purposes.
History:
(2394-32) 1933 c 405 s 32; 1941 c 458; 1941 c 550 s 13; 1973 c 582 s 3; 1981 c 178 s 87; 3Sp1981 c 2 art 3 s 15; 1982 c 523 art 29 s 4; 1983 c 342 art 1 s 32; 1986 c 444; 1Sp1986 c 1 art 3 s 15; 1987 c 268 art 1 s 87; 1988 c 719 art 2 s 38; 1Sp2019 c 6 art 1 s 58
History: History: (2394-32) 1933 c 405 s 32; 1941 c 458; 1941 c 550 s 13; 1973 c 582 s 3; 1981 c 178 s 87; 3Sp1981 c 2 art 3 s 15; 1982 c 523 art 29 s 4; 1983 c 342 art 1 s 32; 1986 c 444; 1Sp1986 c 1 art 3 s 15; 1987 c 268 art 1 s 87; 1988 c 719 art 2 s 38; 1Sp2019 c 6 art 1 s 58