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Federal Changes Not Adopted by Minnesota

Definitions used in determining Minnesota

Update as of January 2017

If you claimed the modified treat- ment

If you expensed up to the first 50%

taxable income are based on the Internal

of certain qualified film and television

of the cost of qualified mine safety

A bill signed into law on January 13,

Revenue Code, as amended through Decem-

production expenses on federal Form

equipment, calculate the depreciation

2017, conforms Minnesota law to

ber 31, 2014.

4562, recalculate your expenses for Min-

on the portion of the equipment you

federal law when determining federal

nesota purposes and enter the difference.

expensed. Enter the difference between

Since that date, federal tax laws have been

taxable income for tax year 2015.

the amount expensed and the amount

Individual taxpayer enter this amount on

passed that contain a number of provisions

As a result, taxpayers are no longer

allowed as depreciation on the cor-

line 7 of Schedule M1NC.

affecting tax year 2015. Minnesota has not

required to recompute Minnesota

responding line. Individual taxpayers

adopted these federal changes.

If you placed into service certain quali-

taxable income for Minnesota tax

enter this amount on line 10 of Schedule

fied leasehold improvements, restaurant

M1NC

The following codes will reference a non-

purposes.

or retail improvement property and

conformity issue, which will require an

40 Other Additions

deprecated the property using a 15 year

adjustment to Minnesota Income. Place the

class life, recalculate your Minnesota

code in the box and the amount on the cor-

M2, Line 39; M2SB, Line 26;

depreciation using a 39 year class life and

responding line. If you need additional lines,

M2X Line 45

enter the difference. Individual taxpayers

attach a supplemental schedule.

enter this amount on line 8 of Scheduled

Code Description of Issue

M2, Line 31; M2SB, Line 18;

M1NC.

50 Other general subtractions. Attach

M2X, Line 37

a supplemental statement with your

If you utilized the special 7 year cost

return regarding your subtraction

Code Description of Issue

recovery period for property used for

If you claimed depreciation for busi-

land improvement and support facilities

Continue to check our website for updates.

ness property on Indian reservation on

for motor sports entertainment facilities

federal Form 4562 using the alterna-

you must recalculate the depreciation

tive depreciation class-life, recalculate

using a 15 or 39 year life (as appropriate).

depreciation using the regular class-life

Enter the difference between the special

and enter the difference. Individual

7 year depreciation and the recomputed

taxpayer enter this amount on line 6 of

depreciation on the corresponding line.

Schedule M1NC.

Individual taxpayer enter this amount on

line 9 of the Scheduled M1NC.

Allocation of Adjustments

Column C

The purpose of this section is to allocate any

If there is no federal distributable net in-

adjustments noted on lines 25-33 and 35–42

come, the adjustment, if any, is dis tributed

Enter the federal distributable net income as-

between the beneficiary(s) and fiduciary.

according to the terms of the will or trust

signed to each beneficiary and the fiduciary

If all the income is retained by the trust

instrument or according to Minnesota law.

as deter mined for federal purposes. Add

or estate, then any adjustment is allocated

the amounts and enter the total on line 46,

entirely to the fiduciary. If all of the income

column C.

Schedule KF

is distributed, then any adjustment is passed

Column D

through to the beneficiary(s) in proportion

to their share of distributable net income.

To obtain the proper percentage, divide each

If part of the income is retained and part

figure from column C on lines 44 and 45 by

Complete and provide Schedule KF to each

distributed, then part of the adjustment is

the total of column C on line 46. Enter this

nonresident beneficiary with Minnesota

allocated to the fiduciary and part to the

percentage in column D for to correspond

source income and any Minnesota ben-

beneficiary(s).

with each beneficiary and the fiduciary. The

eficiary who has adjustments to income.

total of column D must equal 100%.

The share of adjustments in column E is the

Purpose

same percentage share as the fiduciary’s and

Column E

each beneficiary’s share of federal distribut-

The purpose of Schedule KF is to provide

To obtain the proper share for each benefi-

able net income to the total distributable

beneficiaries with the information they

ciary and the fiduciary, multiply the adjust-

net income (the amount on Form 1041,

need to file Form M1, Minnesota Individual

ment on line 46, column E, under addi-

Schedule B, line 7.) Divide each share by the

Income Tax Return. The schedule shows

tions and subtractions by the percentage in

total distributable net income to determine

each beneficiary their specific share of the

column D. Enter the result for each benefi-

the percentage.

fiduciary’s income, credits and modifica-

ciary and the fiduciary in column E, under

tions.

Where the adjustment is an addition, that

additions or subtractions.

portion of the adjustment allo cated to each

A beneficiary who is a Minnesota resident

Complete a Schedule KF for each beneficiary

beneficiary and to the fiduciary must be

must report all income from the trust or es-

who is assigned adjustments.

shown as an addi tion.

tate. A nonresident beneficiary must report

Any adjustment allocated to the fiduciary on

Where the adjustment is a subtraction, that

income which is assignable to Minnesota.

line 45, column E, must be reported on Form

part of the adjustment allocated to each ben-

M2 as an addition on line 4 or a subtraction

Be sure to include copies of all Schedules

eficiary and to the fiduciary must be shown

on line 6.

KF and federal Schedules K-1 when you file

as a subtraction.

your Form M2.

Instructions For Form M2 - Minnesota Income Tax For Estates And Trusts (Fiduciary) - 2015 Page 9

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