Fill - Free fillable M1nc 18 2018 M1NC, Federal Adjustments PDF form

Before you complete this schedule, read the instrucons which are on a separate sheet. Do not enter amounts in gray boxes.

Adjustments to federal adjusted gross income (AGI)

1 Bicyclecommungexpensesreimbursedbyyouremployer ....................... 1

2 Movingexpensededucon(enclose Schedule M1MOVE).......................... 2

3 Excessreimbursementsreceivedfromyouremployer

  reportedonline8ofScheduleM1UE.......................................... 3

4 Studentloanforgivenduetodeathorpermanentdisability......................... 4

5 EarningsfromaneducaonsavingsaccountusedforK-12educaon

  tuionexpensesorrolledovertoanABLEaccount ................................. 5

6 Casualtyorthegain(Enclose Schedule M1CAT).................................6

7 DistributedearningsfromanABLEaccountaributedtoexcesscontribuons ........7

8 Tuionandfeesdeduconfromline34offederalSchedule1...................... 8

9 Incomefromqualiedstockreceivedfromyouremployerthatis

  deferredforfederaltaxpurposes .............................................9

10 Thislineintenonallyleblank.............................................. 10

11 a. Thislineintenonallyleblank

Thislineintenonallyleblanks. ........................................ 11a

  b. Thislineintenonallyleblank ........................................ 11b

  c. Thislineintenonallyleblank ......................................... 11c

12 a. Thislineintenonallyleblanks.

   Thislineintenonallyleblank. ......................................... 12a

  b. Thislineintenonallyleblank ........................................ 12b

  c. Thislineintenonallyleblank ......................................... 12c

13 a. Thislineintenonallyleblank

Thislineintenonallyleblank ......................................... 13a

 b. Thislineintenonallyleblank

Thislineintenonallyleblank ........................................ 13b

14 Thislineintenonallyleblank.............................................. 14

15 a. ExcessbusinesslossandNOLdeduconadjustments (see instrucons) ........ 15a

  b. Thislineintenonallyleblank ........................................ 15b

16 Deduconforcertainbusinessexpensessuchasemployeefringebenets,mealsand

  entertainmentexpenses,certainselementpayments,andlobbying(see instrucons) 16

17 a. Thislineintenonallyleblank ......................................... 17a

b. Thislineintenonallyleblank ........................................ 17b

2018 Schedule M1NC, Federal Adjustments

MinnesotadoesrecognizethetaxeectofcertainfederallawchangesenactedsinceDecember31,2018thatarelistedintheinstrucons.

Addions Subtracons

YourFirstNameandInial LastName SocialSecurityNumber

9995

*181341*

Revised6/20

*181411*

2018 M1NC, page 2

18 Thislineintenonallyleblank.............................................. 18

19  Thislineintenonallyleblank.............................................. 19

20 AdjustmentfortaxtreatmentofAlaskaNaveSelementcorporaonsandtrusts ...20

21 AdjustmentforcapitalgainsinvestedinOpportunityZones ..................... 21

22  Thislineintenonallyleblank............................................. 22

23 a.AdjustmentforSecon965DeferredForeignIncome . . . . . . . . . . . . . . . . . . . . . . . 23a

 b.Incomeexcludedaspreviouslytaxedundersecon965or951A ..............23b

24 AdjustmentforGlobalIntangibleLowTaxedIncome ........................... 24

25  AdjustmentforForeignDerivedIntangibleIncome............................. 25

26 AdjustmentsrequiredundertheTaxpayerCertaintyandDisasterRelief(TCDTR)Act

  andCoronavirus,Aid,ReliefandEconomicSecurity(CARES)Act(see instrucons) ... 26

27  Adjustmentforrelatedpartyamountspaidinhybridtransacons................ 27

28 Thislineintenonallyleblank............................................. 28

29 AddionalAdjustments(see instrucons).................................... 29

30 Adjustmentscreatedbyfederalcreditsandtaxincenvesforbusinesses

(see instrucons)......................................................... 30

31 Thislineintenonallyleblank

  Thislineintenonallyleblank............................................. 31

32 IfyouhaveanadjustmenttoincomesubjecttoaruleinvolvingAGI

  (suchas2018IRAdeducons,SocialSecurityIncome,studentloaninterest

  deduconorrentalrealestatelosses),seeinstrucons ..........................32

33 IndividualadjustmentsrelatedtotheTCDTRAof2019(Seeinstrucons) ...........33

34 AddtheamountsintheAddionscolumn.....................................34

35 AddtheamountsintheSubtraconscolumn . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

36 If line 34 is more than line 35,subtractline35fromline34.

  Entertheresulthereandonline13ofScheduleM1M.

If line 35 is more than line 34,subtractline34fromline35.

  Entertheresulthereandonline40ofScheduleM1M. ................................................36

37 Entertheamountfromline1ofFormM1 ...........................................................37

38 Ifline34ismorethanline35,addline36toline37.

  Ifline35ismorethanline34,subtractline36fromline37.............................................38

YoumustincludethisschedulewhenyouleFormM1.

The maximum allowable exclusion for

an individual is $20 per qualied bicycle

commuting month. A qualied bicycle-

commuting month is any month you:

1. Regularly used the bicycle for a

substantial portion of the travel between

your place of residence and place of

employment, and

2. Did not receive transportation in a

commuter highway vehicle, any transit

pass, or qualied parking benets.

Line 2 —Moving expenses

If you completed Schedule M1MOVE,

enter the amount from line 6 of Form

M1MOVE in the Subtractions column as a

positive number. You must include Schedule

M1MOVE when you le Form M1.

Members of the armed forces do not use

Schedule M1MOVE if your move was the

result of a permanent change of station. Your

eligible expenses were deducted on federal

Form 1040.

Line 3 —Excess employee business

expense reimbursements

If you completed Schedule M1UE and

received reimbursements for more than

your actual expenses, enter the amount from

line 8 of Schedule M1UE in the Additions

column. Do not include amounts included as

wages in Box 1 of Form W-2 or included in

your federal adjusted gross income. Include

Schedule M1UE when you le Form M1.

Line 4 — Student loan forgiveness

due to death or disability

Student loan indebtedness discharged and

excluded from income due to death or

disability must be included in Minnesota

income. Enter the amount of forgiven or

discharged student loan debt that was not

included in your federal adjusted gross

income in the Additions column. These

amounts may be included in box 2 of Form

1099-C.

Line5—Non-qualieddistribuons

orrolloversfromeducaonsavings

accounts

If you used distributions from a higher

education savings account to pay tuition

expenses at an elementary or secondary

school, the distributed earnings must be

added to Minnesota income. The earnings

2018ScheduleM1NCInstrucons

ForTaxpayersAectedbyFederalTaxLawPassedAerDecember31,2018

Under current law, denitions used in determining Minnesota income are based on the Internal Revenue Code (IRC), as amended

through December 31, 2018. Since that date, Congress has enacted the Taxpayer Certainty and Disaster Tax Relief Act (TCDTR)

and Coronavirus, Aid, Relief, and Economic Security (CARES) Act, which contained law changes aecting tax year 2018. Because

Minnesota has not adopted these federal changes, adjustments are required to correctly determine your Minnesota taxable income. Use

lines 8, 15a, 26, 33, and the updated instructions to calculate any adjustments relating to these federal changes.

PurposeofThisSchedule

Rules used in determining Minnesota indi-

vidual income tax are based on the Internal

Revenue Code as amended through Decem-

ber 31, 2018. Since that date, federal tax law

was enacted containing provisions aecting

tax year 2018. Because Minnesota has not

adopted these federal changes, you may need

to adjust your Minnesota return.

If you are aected by any of the provisions

described below, you must use Schedule

M1NC, Federal Adjustments, and these in-

structions tocomplete your Minnesota return.

Save your entire 2018 Minnesota income tax

return and all worksheets you use.

WhomustleScheduleM1NC?

If you are aected by any of the provisions

included on this form, complete Schedule

M1NC to make the necessary adjustments

when you le Form M1. Refer to the line

instructions below for more information

about the adjustments and directions on how

to make the adjustment for your Minnesota

return. Do not enter amounts in gray boxes.

Enter all amounts as positive numbers.

Individuals who do not have ownership

interest in a business may need to complete

lines 1 through 9. Lines 10 through 30 are

used for certain business related adjustments

such as allowable expenses and depreciation.

LineInstrucons

Lines“Thislineintenonallyle

blank”

Do not enter amounts for the lines labelled

“This line intentionally left blank.” These

lines were required prior to Minnesota tax

law changes enacted May 31, 2019.

Line1—Bicyclecommungexpenses

reimbursed by your employer

If you received reimbursements from your

employer for bicycle commuting expenses,

you may exclude these reimbursements

from your income. Federal tax law changes

require reimbursements for these expenses

to be included in an individual’s income.

Enter the total reimbursements received from

your employer included in your FAGI. Enter

the amount in the Subtractions column as a

positive number.

portion may be included in Box 2 of federal

Form 1099-Q. Only enter the earnings from

box 2 if they were not included in your

federal adjusted gross income. Enter the

amount in the Additions column of line 5.

If you had a rollover from a higher education

savings account into an ABLE account,

include the earnings portion of the rollover in

the Additions column of this line.

If you claimed the Minnesota section 529

plan credit or subtraction on your 2017

Minnesota return, you may be required to

repay some of the benet you received.

Complete Schedule M1529, Education

Savings Account Contribution Credit or

Subtraction to calculate any recapture tax

you may be required to pay.

Line6—Casualtyorthegain

If you completed Schedule M1CAT,

Casualty and Theft, and had a net gain on

line 15 that was not included in your federal

adjusted gross income, include the amount

that was not in your federal adjusted gross

income in the Additions column of line 6.

Include Schedule M1CAT and this form

when you le Form M1.

Line7—Distributedearningsfrom

anABLEaccountaributedtoexcess

contribuons

The Minnesota contribution limit for ABLE

accounts is $15,000 for 2018. If your total

contributions exceeded the contribution

limit and a distribution is made in 2018,

the earnings portion of the distribution

attributable to the excess contribution must

be included in income. Enter the amount

of earnings attributed to these excess

contributions in the Additions column.

Line9—Incomefromqualiedstock

received from your employer that is

deferred for federal tax purposes

If you elect to defer the income from a quali-

ed equity grant from your employer, the

amount not included in your federal income

for 2018 must be included in your Minnesota

income. Enter the amount from Box 12 of

Form W-2 with code HH in the Additions

column.

Line 15a

Excess business loss and NOL deduc-

onadjustments

Minnesota does not currently recognize the

net operating loss (NOL) provisions under

the CARES Act. Your losses in 2018 may be

subject to the excess business loss limits and

carryover limits under the Internal Revenue

Code, as amended through December 31,

2018. You must add to income any amount

of a net operating loss exceeding the excess

business loss limitations in the Worksheet for

Excess Business Losses. You must also adjust

your 2018 NOL deduction if it includes a car-

ryover NOL originating from tax years after

December 31, 2017.

If you had a net operating loss carryover from

tax years beginning after December 31, 2017,

your net operating loss deduction is limited to

80% of taxable income for losses originating

in those years and only losses from a farming

activity may be carried back to the previous

two years. If you have a carryover of a net

operating loss, use the instructions under Net

Operating Loss Carryover below.

If you had net operating losses in 2018,

complete the Worksheet for Excess Business

Losses to determine your excess business loss

and your carryover losses to 2019.

NetOperangLossCarryovers

Carryforward from prior years

If you are carrying forward a net operating

loss from 2017, you must complete 2017

Schedule M1NC line 4 before determining

your allowable carryover NOL amount for

tax year 2018.

Your Minnesota net operating loss deduc-

tion for 2018 is the sum of any unused NOLs

from tax years beginning before 2017 plus

the lesser of:

• The NOL from a tax year beginning after

2017; which includes any part of an NOL

attributable to an excess business loss; or

• 80% of taxable income for the carryover

year determined before any NOL deduc-

tion.

On line 15a, include any NOL deduction

claimed on your federal return from tax years

beginning after 2017 that exceeds the 80%

limitation on taxable income. Include this

amount in the Additions column.

Netoperanglosscarrybackfrom2019

If you are carrying back a net operating

loss from 2019 (and it is not a farming loss

eligible to be carried back under the IRC as

amended through December 31, 2018), enter

the full amount of the carryback you claimed

from your federal return in the Additions

column of line 15a.

If you are carrying back a net operating loss

from 2019 that is a farming loss, your state

NOL deduction is limited to 80% of taxable

Worksheet for Excess Business Losses

1 Enter amount from Form 1040 or 1040-SR, line 1 ..................

2 Enter amount from Schedule 1 (Form 1040 or 1040-SR), line 12 ......

3 Enter amount from Schedule 1, (Form 1040 or 1040-SR) line 13 ......

4 Enter amount from Schedule 1 (Form 1040 or 1040-SR), line 14 ......

5 Enter amount from Schedule 1 (Form 1040 or 1040-SR), line 17 ......

6 Enter amount from Schedule 1 (Form 1040 or 1040-SR), line 18 ......

7 Enter amount from Schedule 1 (Form 1040 or 1040-SR), line 19 ......

8 Enter other income, gain, or losses from a trade or business

not reported on steps 1 through 7 ...............................

9 Combine steps 1 through 8 ....................................

10 Net amount of nonbusiness income and losses. Include amounts from

line 25 of Schedule KPINC, line 25 of Schedule KFNC, and line 25 of

Schedule KSNC. If the total is less than zero, enter as a negative number

11 If step 10 is a negative number, enter it here as a positive number.

If step 10 is a positive number, enter it here as a negative number......

12 Add steps 9 and 11...........................................

13 Enter $250,000 (or $500,000 if married ling jointly) ...............

14 Add steps 12 and 13. This is your excess business loss for 2018........

Include the amount from step 14 in the Additions column of line 15a.

Stepinstrucons

Step 1 — Enter any wages, salaries, and tips reported on line 1 of Form 1040 or line 8 of

Form 1040NR.

Step 2 — Enter any business income or loss reported on line 12 of federal Schedule 1 or line

13 of Form 1040NR.

Step 3 — Enter any capital gains or losses reported on line 13 of federal Schedule 1 or line

14 of Form 1040NR.

Step 4 — Enter any other gains or losses reported on line 14 of federal Schedule 1 or line 15

of Form 1040NR.

Step 5 — Enter any supplemental income or loss reported on a Schedule E, such as income

from rental real estate, royalties, partnerships, S corporations, estates, trusts, REMICs, etc.

This is reported on line 17 of federal Schedule 1 or line 18 of Form 1040NR.

Step 6 — Enter any farm income or loss reported on line 18 of federal Schedule 1 or line 19

of Form 1040NR.

Step 7 — Enter any unemployment compensation reported on line 19 of federal Schedule 1

or line 20 of Form 1040NR.

Step 8 — Enter any other trade or business income, gain, or loss not reported on steps 1

through 7 that you reported on your tax return.

Step 9 — Combine all entries from steps 1 through 8 on step 9. The resulting gure can be a

positive or negative number.

Step 10 — Combine the amount of income, gains, or losses on step 10 that were entered on

steps 1 through 8 and are not from a trade or business. Include the amounts reported on line

25 of Schedule KPINC, line 25 of Schedule KFNC, and line 25 of Schedule KSNC.

Step 11 — Enter the opposite of the amount from step 10 on step 11.

Step 14 — Add steps 12 and 13. If the result is negative, you have an excess business loss.

Include this amount in the Additions column of Schedule M1NC as a positive number. You

will need to keep a record of your excess business loss from each tax year since it is treated

as a net operating loss (NOL) carryover. Use this amount on step 3 of the net operating loss

carryover to tax year 2019 worksheet. If the result is positive, you do not have an excess

business loss.

Trade or Business

An activity qualies as a trade or business if your primary purpose for engaging in the

activity is for income or prot and you are involved in the activity with continuity and

regularity. The facts and circumstances of each case determine if an activity is a trade or

business. The regularity of activities and transactions and the production of income are

important elements. You do not need to actually make a prot to be in a trade or business as

long as you have a prot motive. However, you do need to make ongoing eorts to further

the interests of your business.

income. If you carried a farm loss back to

2017, you must use the 2017 Minnesota

instructions to determine your allowable

NOL that is carried over into 2018. Include

the amount of your net operating loss deduc-

tion from a farm activity that exceeds 80%

of taxable income on line 15a as a positive

amount.

Line 16 — Adjustment for certain

businessexpensededucons

The following deductions of certain busi-

ness expenses are limited or not allowed for

federal tax purposes:

• Allowable entertainment expenses

• Deduction for qualied transportation

fringe benets

• Deductions for settlements subjected to

nondisclosure agreements

• Deduction for local lobbying expenses

• Employer deduction for qualied equity

grants that have been deferred by the

employee

If you received a Schedule KFNC, KPINC

and KSNC, Include the amount from lines 9

and 10 in the Subtractions column of line 16

as a positive number.

Entertainment expenses

Federal tax changes denied all deductions

for entertainment expenses. For Minnesota

tax purposes, these business deductions are

allowed. If you had entertainment expenses

directly related to or associated with the

conduct of your trade or business, you may

deduct 50% of the allowable expense. In-

clude this amount in the Subtractions column

of line 16.

Deduconforqualiedtransportaon

fringebenets

For Minnesota purposes, a deduction is

allowed for qualied transportation fringe

benets provided to employees. These in-

clude transportation in a commuter highway

vehicle between the employee’s residence

and place of employment, transit passes,

qualied parking and qualied bicycle com-

muting reimbursements. If you provided

these benets to employees, include the

amount of the Minnesota allowable expenses

in the Subtractions column of line 16.

Employeroperatedeangfacilies

Under federal tax law changes, an employer

can no longer deduct the full cost of food

and beverages oered as a de minimis fringe

benet. The employer must apply a 50%

limit to the deduction of food or beverage

expenses.

For Minnesota tax purposes, employers can

deduct the full cost of food and beverages

that are excludable from the employee’s

income if they are provided for the conve-

nience of the employer at an employer-op-

erated eating facility as a de minimis fringe

benet.

For Minnesota purposes, expenses for these

facilities are not limited to 50% of the em-

ployer’s expense. Include the amount claimed

for this expense from your federal return in

the Subtractions column of line 16.

Deduconforpaymentsandselements

related to nondisclosure agreements

Federal tax law currently denies a deduction

for the following expenses:

• Any settlement or payment related to

sexual harassment or sexual abuse if such

settlement or payment is subject to a non-

disclosure agreement, and

• Attorney’s fees related to such a settle-

ment or payment.

If you incurred a business expense described

above that qualies as a deduction under

2016 I.R.C. section 162, include the expense

in the Subtractions column of line 16.

Deduconforlocallobbyingexpenses

Federal tax law changes do not allow a de-

duction for amounts paid or incurred in con-

nection with local lobbying expenses. These

expenses are allowed for Minnesota purposes

if they are paid or incurred:

• In direct connection with an appearance,

submission of statements or sending com-

munication to committees or individual

members of a committee in regards to leg-

islation of direct interest to your business.

• In direct connection with communication

of information between your business and

an organization of which your business is

a member regarding legislation of direct

interest of your business

• You may deduct the portion of dues paid

or incurred to an organization of which

your business is a member for the activi-

ties listed above.

If you incurred local lobbying expenses, you

may include those expenses in the Subtrac-

tion column of line 16.

Employee Achievement awards

Federal tax changes allow a deduction for the

cost of employee achievement awards with

certain limitations. The employee achieve-

ment award must be tangible personal prop-

erty given in recognition of an employee’s

length of service or safety and awarded as

part of a meaningful presentation under speci-

ed conditions and circumstances.

Federal tax laws changed the denition of

tangible personal property to exclude the

following:

• Cash, cash equivalents, gift cards, gift

coupons, or gift certicates

• Vacations, meals, lodging, tickets to

theater or sporting events, stocks, bonds,

other securities, and other similar items.

As a result, the above items are no longer

deductible federally as an employee achieve-

ment award.

If you granted employee achievement

awards consisting of tangible personal

property described above and qualify for the

deduction under 2016 I.R.C. section 274,

include the amount paid or incurred during

the taxable year in the Subtractions column

of line 16.

Line 20 — Adjustment for tax treat-

mentofAlaskaNaveCorporaons

andSelementTrusts

Include amounts from line 13 of Schedules

KFNC, KPINC, and KSNC. If you received

multiple schedules, combine those amounts

on this schedule. Include this adjustment in

the Subtractions column of line 20.

Federal tax law changes require an Alaska

Native Settlement Trust to report contribu-

tions from an Alaska Native Corporation

(ANC) as income if I.R.C. 247(e) applies.

These are not considered income for Min-

nesota purposes.

Line 21 — Adjustment for special

rules for capital gains invested in Op-

portunity Zones

Include amounts from line 14 of Schedules

KFNC, KPINC, and KSNC. If you received

multiple schedules, combine those amounts

on this schedule. Enter the amount in the

Additions column.

Federal law changes allow a deferral for in-

come received for two types of capital gains

or losses. If you were allowed a temporary

deferral for capital gains reinvestments in a

qualied opportunity fund and a permanent

exclusion of certain capital gains from the

sale or exchange of an investment in the

qualied opportunity fund, you will make an

adjustment on line 21. Include the deferred

or excluded amount from your federal return

in the Additions column.

Netoperanglosscarryovertotaxyear2019

1 Enter the current year NOL as a negative. Do not include amounts federally

carried back to 2018 from 2019 that are not losses from a farming

business that you added back to income on line 15a of this form .......

2 Enter the amount from step 1 that was federally carried back to 2016 or

2017 as a positive number .....................................

3 Enter the amount from step 14 of the worksheet for excess business losses.

Enter as a negative number ....................................

4 Combine steps 1 through 3. This is your NOL carryover to 2019.......

Line23a—Secon965repatriated

foreign income (14103)

Enter the amount of deferred foreign income

recognized on your federal return under

Internal Revenue Code section 965. This

amount is the section 965(a) inclusion

amount reduced by section 965(c). Enter the

amount as a positive number in the Subtrac-

tions column.

Include amounts from line 15a of Schedules

KFNC, KPINC and KSNC. If you received

multiple schedules, combine those amounts

on this schedule. Include the amount as a

positive number in the Subtractions column.

Line 23b —Income excluded as previ-

ouslytaxedundersecon965or

951A

If you recevied income excluded as previ-

ously taxed under IRC section 965 (deferred

foreign income)(TCJA Section 14103) or

951A (global-intangible low taxed income)

(TCJA Section 14201) in the current tax

year, include the amount in the Additions

column.

Include amounts from line 15b of Schedules

KFNC, KPINC and KSNC. If you received

multiple schedules, combine those amounts

in the Additions column of line 23b.

Line 24 —Inclusion of Global Intan-

gible Low-Taxed Income

Enter the amount of global intangible low-

taxed income included in gross income

under section 951A of the Internal Revenue

Code in the Subtractions column of line 24.

Line25—DeduconforForeign

DerivedIntangibleIncome

Federal tax law added a deduction for a

percentage of foreign derived intangible

income from a trade or business within the

United States. For Minnesota purposes, this

deduction is not allowed and must be added

back to Minnesota taxable income.

Include the amount from line 17 of

Schedules KFNC, KPINC and KSNC. If you

received multiple schedules, combine those

amounts on this schedule. Enter the amount

in the Additions column.

Line 26 — Adjustments required

undertheTCDTRandCARESAct

To report the dierences for Minnesota

tax purposes on line 26, you must attach to

your Schedule M1NC a list of the federal

provisions aecting your taxable income by

section numbers listed below and show how

you calculated each adjustment amount.

Subtotal all nonconformity adjustments

(positive and negative) calculated from the

provisions listed. If the net of all adjustments

result in an increase to income, enter as a

positive amount in the Additions column on

line 26. If the net of all adjustments result in

a decrease, enter the amount as a positive in

the Subtractions column on line 26.

Include the following amounts reported

on Schedules KFNC, KSNC, and KPINC.

If the amount is positive, include it in the

Additions column. If the amount is negative,

include it as a positive in the Subtractions

column.

• Line 26 of Schedule KFNC

• Line 26 of Schedule KSNC

• Line 26 of Schedule KPINC

ProvisionsthatMayRequireanIncome

AdjustmentfromtheTCDTRAct

The following provisions may require

an income adjustment for Minnesota

tax purposes. This list includes the most

common adjustments; you must make

adjustments as needed for all provisions

included in the TCDTR.

Secon111.IndianEmploymentCredit

If you were not allowed to deduct expenses

due to the Indian Employment Credit on

your federal return, include the amount

of the disallowed expenses as a negative

number.

Secon112.RailroadTrackMaintenance

Credit

If you were not allowed to deduct

expenditures due to the Railroad Track

Maintenance Credit on your federal return,

include the amount of the disallowed

expenditures as a negative number.

Secon113.MineRescueTeamTraining

Credit

If you were not allowed to deduct expenses

due to the Mine Rescue Team Training

Credit on your federal return, include the

amount of the disallowed expenses as a

negative number.

Secon114.ClassicaonofCertainRace

Horsesas3-yearProperty

If you own race horses and you claimed

a 3-year recovery period on your federal

return, calculate the dierence between the

3-year recovery period and the recovery

period you would have been allowed under

2018 IRC. If your recovery period reported

on your federal return is greater than the

recalculated amount, include the dierence

as a positive number. If your recovery

period reported on your federal return is less

than the recalculated amount, include the

dierence as a negative number.

Secon115.7-yearRecoveryPeriodfor

Motorsports Entertainment Complexes

If you have a motorsports entertainment

complex and you claimed a 7-year recovery

period on your federal return, calculate

the dierence between the 7-year recovery

period and the recovery period you would

have been allowed under 2018 IRC. If your

recovery period reported on your federal

return is greater than the recalculated

amount, include the dierence as a positive

number. If your recovery period reported

on your federal return is less than the

recalculated amount, include the dierence

as a negative number.

Secon116.AcceleratedDepreciaonfor

BusinessPropertyonIndianReservaons

If you have qualied Indian reservation

property and claimed accelerated

depreciation, calculate the depreciation

you would have been allowed under 2018

IRC. If your depreciation reported on your

federal return is greater than the recalculated

amount, include the dierence as a positive

number. If your depreciation reported

on your federal return is less than the

recalculated amount, include the dierence

as a negative number.

Secon117.ExpensingRulesforCertain

Producons

If you were allowed to deduct instead of

capitalize expenditures related to a qualied

lm, television, and theatrical productions

on your federal return, include the excess

expense deducted as a positive number.

Secon118.EmpowermentZoneTax

Incenves

If you had a tax change relating to an

empowerment zone that impacted your

FTI on your federal return, reverse the tax

impacts to your FTI.

Secon122.SecondGeneraonBiofuel

ProducerCredit

If you claimed the Second Generation

Biofuel Producer Credit on your federal

return that impacted your FTI, reverse the

tax impacts to your FTI.

Secon124.QualiedFuelCellMotor

Vehicles

If you claimed the credit for Qualied Fuel

Cell Motor Vehicles on your federal return

that impacted your FTI, reverse the tax

impacts to your FTI.

Secon125.AlternaveFuelRefueling

PropertyCredit

If you claimed the Alternative Fuel

Refueling Property Credit on your federal

return, adjust the property’s basis without

regard to the basis reduction required under

2019 IRC. Include any adjustments to FTI as

a result of this Minnesota change in basis.

Secon126.2-WheeledPlug-inElectric

Vehicle Credit

If you claimed the 2-Wheeled Plug-In

Electric Vehicle Credit on your federal

return, adjust the vehicle’s basis without

regard to the basis reduction required under

2019 IRC. Include any adjustments to FTI as

a result of this Minnesota change in basis.

Secon129.EnergyEcientHomesCredit

IfyouclaimedtheEnergyEcientHomes

Credit on your federal return, adjust the

property’s basis without regard to the basis

reduction required under 2019 IRC. Include

any adjustments to FTI as a result of this

Minnesota change in basis.

Secon130.SpecialAllowanceforSecond

GeneraonBiofuelPlantProperty

If you were allowed to deduct the additional

rst-year 50-percent bonus depreciation for

cellulosic biofuel facilities on your federal

return, include the additional depreciation as

a positive number.

Secon131.EnergyEcientCommercial

BuildingsDeducon

If you claimed an energy ecient com-

mercial buildings deduction on your federal

return that impacted your FTI, reverse the tax

impacts to your FTI.

Secon132.SpecialRuleforSalesorDispo-

sionstoImplementFERCorStateElectric

RestructuringPolicyforQualiedElectric

Ulies

If you elected to recognize gain from qualify-

ing electric transmission transactions ratably

over an eight-year period on your federal

return, include the amount of the deferred

gain as a positive number.

Secon203.EmployeeRetenonCreditfor

EmployersAectedbyQualiedDisasters.

If you were not allowed to deduct wages due

to the Employee Retention Credit on your

federal return, include the amount of the

disallowed wages as a negative number.

ProvisionthatMayRequireanIn-

comeAdjustmentundertheCARES

Act

The following provision may require an in-

come adjustment for Minnesota tax purposes.

Secon2307.QualiedImprovementProp-

erty Technical Fix

If you claimed federal bonus depreciation on

this type of property, determine the dier-

ence between the federal bonus depreciation

you claimed on this property, and the cost

recovery deduction or expensing method you

would have been able to claim prior to the

CARES Act. This may include a Minnesota

modication for section 179 expensing.

Include the result as a positive number.

If you led an amended federal return in-

creasing your federal bonus depreciation as a

result of this provision of the CARES Act, do

not adjust your Minnesota addition for bonus

depreciation on line 3 of Form M1M.

Line27—Relatedpartyamounts

paidinhybridtransacons

Federal tax changes disallowed a deduction

for disqualied related party amounts paid

or accrued in a hybrid transaction or by, or

to, a hybrid entity. For Minnesota purposes,

these deductions are not disallowed. If you

have disqualied related party amounts

disallowed on your federal return, include

the amount disallowed in the Subtractions

column of line 27 as a positive number.

Include the amount from line 18 of Schedule

KFNC, KPINC and KSNC. If you received

multiple schedules, combine those amounts

on this schedule. Enter the amount in the

Subtractions column.

Line29—Addionaladjustments

Include amounts from lines 12, 20, 21, 22

and 24 of Schedules KPINC, KFNC and

KSNC. Combine amounts if you received

multiple schedules. If the combined total of

these lines is a negative amount, enter as a

positive number in the Subtractions column.

Include a statement for the adjustment you

are making on this line.

Include amounts on this line for the

following changes to federal tax law:

• Treatment of certain capital contributions

from governmental entities

• Repeal of the rollover gains from publicly

traded securities into specialized small

business investment companies

• Treatment of the sale of patents,

inventions, models and secret formulas as

capital assets

• Allocation and apportionment of gains,

prots and income based on production

activities

• Gain or loss caused by a mandatory basis

adjustments upon transfer of partnership

interest

• Reporting income from life insurance due

to changes in the transfer-for-value rule

• Changes to the deductibility of FDIC

premiums

• Repeal of the exclusion from income

for interest on bonds to advance refund

another bond

• Repeal of the fair market value method to

allocate interest expenses

If you were a member of Congress and had

living expenses when away from home on

Congressional business, include the amount

of allowable expenses in the Subtractions

column of line 29.

Line 30 — Adjustments created by

federalcreditsandtaxincenves

Include the amount from line 23 of Sched-

ules KFNC, KPINC and KSNC. If you

received multiple schedules, combine those

amounts on this schedule. If the amount is

negative, include it as a positive number in

the Subtractions column. If the amount is

positive, include it in the Additions column.

If you received a federal credit or tax

incentive, you may need to adjust your

Minnesota income. These credits include:

• Credit for employers providing paid

family leave

• Orphan Drug Credit

If you claimed the federal credit for

providing paid family leave, the wages you

used to claim the credit are a disallowed

deduction on your federal return. Include the

amount of wages in the Subtraction column

of line 30, which were disallowed on your

federal return because you claimed this

federal credit.

If you claimed the federal Orphan Drug

credit, you will need to make an adjustment

for the deductible qualied clinical testing

expenses use to calculate the credit. Federal

tax law changes reduced the percentage

of these expenses used in determining the

credit. Include the amount of expenses that

you would have used in determining the

federal credit under the 2016 I.R.C. in the

Additions column of line 30.

Line 32 — Adjustments due to

limitaonsbasedonadjustedgross

income

The following items are limited based on

your Minnesota adjusted gross income.

If any of the following were reported on

your federal return, you may need to make

an adjustment on your Minnesota return.

Complete the appropriate worksheet listed

below and enter the adjustment on line 32 of

this schedule.

Rental Real Estate Losses. Complete the

Worksheet for line 32 – Rental Real Estate

Losses on page 14 if line 7 of your federal

Schedule 8582 was less than $150,000.

Social Security Income. Complete the

Worksheet for Line 32 – Social Security

Income on page 14 if less than 85% of your

Social Security benets were included in

your federal taxable income.

IRA Deduction. Complete the Worksheet

for Line 32– IRA Deduction on page 15

if you deducted contributions to an IRA on

you federal return. If you were required to

complete a worksheet in IRS publication

590-A, complete that worksheet using

Minnesota income amounts.

Student loan interest. Complete the Work-

sheet for Line 32 – Student Loan Interest

on page 16, if you deducted student loan

interest on your federal return.

Worksheet for Line 32 – Rental Real Estate Losses

Before you complete this worksheet, you will need to complete federal Form 8582. If you led a 2017 Schedule M1NC and completed

the Worksheet for Line 8 - Rental Real Estate Losses, you will need to complete a 2018 Form 8582 (Minnesota 8582) for Minnesota

purposes. Include the result of step 15 from the 2017 worksheet as a prior year loss when completing your Minnesota 8582. Use the Min-

nesota 8582 to complete this worksheet.

1 Enter the amount form line 6 of your federal Form 8582.................................................

2 Enter the amount from line 7 of your federal Form 8582.................................................

3 Enter the total from the Additions column for lines 1 - 30 of Schedule M1NC and line 33 ......................

4 Enter the total from the Subtractions column for lines 1-30 of Schedule M1NC...............................

5 Subtract step 4 from step 3. If the result is less than zero, enter as a negative.................................

6 Add step 2 and 5 ................................................................................

7 Subtract step 6 from step 1(if zero or less, enter 0 here and on step 15) .....................................

8 Multiply step 7 by 50% (0.5) Do not enter more than the amount on line 9 of your federal Form 8582.............

9 Enter the lesser of line 5 of your federal Form 8582 or step 8 of this worksheet. If line 2c of your federal Form 8582

is negative, go to step 10. Otherwise, go to step 14 .....................................................

10 Enter the amount from line 11 of your federal Form 8582................................................

11 Enter the amount from line 12 of your federal Form 8582................................................

12 Subtract step 9 from step 11 .......................................................................

13 Enter the smallest of line 2c (treated as a positive amount) from your federal Form 8582, step 10, or step 12 .......

14 Enter the amount from line 15 of your federal Form 8582................................................

15 Add steps 9, 13, and 14...........................................................................

16 Enter the amount from line 16 of your federal Form 8582................................................

17 Subtract step 15 from step 16. If the result is positive, include it in the Additions column of line 32 of Schedule M1NC.

If the result is negative, include it as a positive number in the Subtractions column of line 32 of Schedule M1NC ...

Worksheet for Line 32 – Social Security Income

1 Amount from line 7 of your federal Social Security Benets Worksheet ....................................

2 Enter the total from the Additions column for lines 1 - 30 of Schedule M1NC and line 33 ......................

3 Enter the total from the Subtractions column for lines 1-30 of Schedule M1NC...............................

4 Subtract step 3 from step 2. If the result is less than zero, enter as a negative.

Also include the amount from step 17 of the Worksheet for Line 32 - Rental Real Estate Losses .................

5 Add steps 1 and 4 ...............................................................................

6 If you are: .....................................................................................

• Married ling jointly, enter $32,000

• Single, head of household, qualifying widow(er), or married ling separately and you lived

apart from your spouse for all of 2018, enter $25,000

• Married ling separate and you lived with your spouse at any time in 2018 skip lines 6 through 13;

multiply line 5 by 85% (0.85) and enter the result on line 14. Then go to line 15

7 Subtract step 6 from step 5 (if zero or less enter zero on step 14) ..........................................

8 If you are: .....................................................................................

• Married ling jointly enter $12,000

• Single, head of household, qualifying widow(er), or married ling separately and you lived apart

from your spouse for all of 2018, enter $9,000

9 Subtract step 8 from 7. If zero or less enter 0 ..........................................................

10 Enter the smaller of step 7 or 8 .....................................................................

11 Multiply step 10 by 50% (0.50) ....................................................................

12 Enter the smaller of 50% of your total amount from box 5 of all your

Forms SSA-1099 and Forms RRB-1099 or step 11 .....................................................

13 Multiply step 9 by 85% (0.85). if step 9 is zero, enter 0..................................................

14 Add steps 12 and 13 .............................................................................

15 Enter the amount from step 17 of your Worksheet for federal Form 1040 line 5b..............................

16 Enter the smaller of step 14 or step 15 ...............................................................

17 Enter the amount from line 5b of federal Form 1040 ....................................................

18 Subtract step 17 from step 16. If the result is positive, include it in the Additions column of line 32.

If the result is negative, include it as a positive number in the Subtractions column of line 32....................

Worksheetforline32–MinnesotaIRAdeducon

Before you complete this worksheet, you must complete the worksheet for line 32 of federal Schedule 1. Also, complete the Worksheet

for Line 32 –Rental Real Estate Losses, and the Worksheet for Line 32 – Social Security Income, if you were required to do so.

Your IRA Spouse’s IRA

1 Enter the amount shown below that applies to you ................................1a 1b

• Single, head of household or married ling separately and you lived apart from your spouse

for all of 2018, enter $73,000

• Qualifying widow(er) enter $121,000

• Married ling jointly enter $121,000 in both columns. If one spouse was not covered by a retirement plan,

enter $199,000 for the spouse who was not covered

• Married ling separately and you lived with your spouse at any time in 2018, enter $10,000

2 Enter the sum of Schedule M1NC lines 1 through 30 and 33 in the Additions column .....................2

3 Enter the sum of Schedule M1NC lines 1 through 30 in the Subtractions column .........................3

4 Subtract step 3 from step 2. Include step 17 of the Worksheet for Line 32 –Rental Real Estate Losses,

step 18 of the Worksheet for Line 32 – Social Security Income, and the amounts on

line 6 of your federal Form 1040 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

5 Enter the total of the amounts from federal Schedule 1, lines 23 through 31a plus any write

in adjustments you entered on the dotted line next to line 36 .........................................5

6 Subtract step 5 from Step 4. If married ling jointly, enter the result in both columns .....6a 6b

7 Is the amount on step 6 less than the amount on step 1?

No: None of your IRA is deductible for Minnesota purposes. Include the amount you

entered on line 32 of federal Schedule 1 on line 32 of Schedule M1NC.

Yes: Subtract step 6 from step 1 ...............................................7a 7b

8 Using the amount on step 7, determine the amount to enter based on the instructions below: 8a 8b

• If single, head of household, or married ling separately, and the result is $10,000 or more, enter

$5,500 ($6,500 if age 50 or older but under 70 ½ at the end of 2018) for that column on steps 8 and 9.

If the result is less than $10,000, go to step 9.

• If married ling jointly or qualifying widow(er), and the result is $20,000 or more ($10,000 or more in the

column for the IRA of the person who was not covered by a retirement plan), enter $5,500 ($6,500 if age 50 or

older but under age 70 ½ at the end of 2018) for that column on steps 8 and 9. Otherwise, go to step 9.

9 Multiply step 7 by the percentage you used to determine step 7 of your federal

Worksheet for Schedule 1, line 32. Increase the result to the next increment of $10.......9a 9b

10 Enter the sum of the following amounts: ........................................................ 10

• Step 8 from your federal worksheet for Schedule 1, line 32, and

• The amount from step 9 of your federal worksheet for Schedule 1, line 32.

11 Enter the amount from step 11 of you federal Worksheet for Schedule 1, line 32 .........11a 11b

12 Enter the smallest of steps 9a, 10, or 11a on step 12a. Enter the smaller of steps 9b, 10, or

11b on step 12b. If you elected to deduct a smaller amount on your federal return,

reduce the amount for this line by the amount

you elected to treat as a nondeductible contribution on your federal return..............12a 12b

13 Add steps 12a and 12b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13

14 Enter the amount from your federal Schedule 1, line 32 .............................................14

15 Subtract step 13 from step 14. If the result is more than zero, enter the amount in the Additions column of line 32.

If the result is less than zero, enter as a positive in the Subtractions column of line 32 .....................15

Save this worksheet and your 2018 income tax return for your records until at least 3 ½ years after you le your Minnesota return for the

year during which your IRA balance became $0.

Worksheet for Line 32 – Student Loan Interest

If you are required to complete any of the other worksheets for line 32, you must complete those worksheets before completing this

worksheet.

1 Enter the total interest you paid in 2018 on qualied student loans

(see instructions for federal Schedule 1, line 33) Do not enter more than $2,500 .........................

2 Enter the amount from line 6 of federal Form 1040. Include any foreign earned income exclusion,

housing exclusion, foreign housing deduction, and any income from Puerto Rico

and American Samoa you are excluding. ........................................................

3 Enter the total from the Additions column for lines 1 through 30 of Schedule M1NC and line 33 ............

4 Enter the total from the Subtractions column for lines 1 through 30 of Schedule M1NC ...................

5 Subtract step 4 from step 3 ...................................................................

6 Enter the amount from step 17 of the worksheet for line 32 – Rental Real Estate Losses, step 18 of the

worksheet for line 32 – Social Security Income, and step 15 of the Worksheet for Line 32 – Minnesota IRA

Deduction. If your IRA deduction was disallowed in full on step 7 of the Worksheet for line 32 – Minnesota

IRA deduction, include the amount you entered on line 32 of federal Schedule 1 on this step.

If the result is negative, include as a negative amount. .............................................

7 Add steps 2, 5 and 6 ........................................................................

8 Enter the amount from your federal Schedule 1, lines 23 through 32 plus any write in adjustments on line 36 . .

9 Subtract step 8 from step 7 ...................................................................

10 If your ling status is single, head of household, or qualifying widow(er), enter $65,000.

If your ling status is married ling joint, enter $135,000 ...........................................

11 Subtract step 10 from step 9. If the result is zero or less, skip steps 12 and 13, and

enter the amount from step 1 on step 14 .........................................................

12 Divide step 11 by $15,000 ($30,000 if married ling jointly). Enter the result as a decimal

rounded to at least 3 places. If the result is 1.000 or more, enter 1.000 .................................

13 Multiply step 1 by step 12....................................................................

14 Subtract step 13 from step 1 ..................................................................

15 Enter the amount from line 33 of you federal Schedule 1 ...........................................

16 Subtract step 14 from step 15. If the result is positive, enter the result in the Additions column of line 32.

If the result is negative, enter the result as a positive amount in the Subtractions column of line 32 ..........

Line 33 — Individual adjustments

relatedtotheTCDTRAof2019

Mortgage debt forgiven in 2018 and

excluded from income. If you led federal

Form 982 and checked the box on line 1e,

enter the amount of discharged qualied

principal residence indebtedness included on

line 2 of Form 982 in the Additions column

of line 33 of Schedule M1NC.

IRA withdrawals not included in income

because of special disaster-related rules.

If your principal place of abode is in a quali-

ed disaster area and you withdrew funds

from a qualied retirement account that

are not included in your income, enter the

amount you would have included had your

principal residence not been in the qualied

disaster area. Include this amount in the Ad-

ditions column of line 33.

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M1nc 18 2018 M1NC, Federal Adjustments

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