Income/Franchise:
Minnesota DOR Clarifies NOL Treatment for Unrelated Business Income Tax Purposes
Revenue Notice No. 21-01, Minn. Dept. of Rev. (4/26/21). The Minnesota Department of Revenue (Department) issued a notice (Revenue Notice No. 21-01) clarifying that pursuant to legislation enacted in 2019, Minnesota’s unrelated business income tax (UBIT) is aligned with Minnesota’s corporate franchise (income) tax treatment of net operating loss (NOL) deductions. Accordingly, the Department explains that UBIT taxpayers must add back any amount of NOLs claimed under Internal Revenue Code (IRC) section 172, and then must calculate and deduct Minnesota NOLs consistent with the state corporate tax treatment of NOLs. As a result, the Department announces that a portion of its earlier Revenue Notice No. 17-04 “is in direct conflict with Minnesota Statutes, section 290.05, subdivision 3(d)” and is “hereby revoked in part” and replaced with this Revenue Notice No. 21-01.
Revenue Notice No. 21-01 also explains that exempt entities that are subject to Minnesota UBIT are required to use the attribute calculation and timing provisions provided for in IRC section 172 in determining their income under Minn. Stat. section 290.05, subdivision 3(a)(3). Please contact us with any questions.
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