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Last Updated: 11/21/2018

What's new for Partnership Tax for 2017?

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Partnership Tax

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Federal adjustments for businesses

Minnesota defines net income for tax on partner’s share of partnership according to the Internal Revenue Code, as amended through December 16, 2016. Since that date, federal tax laws have been enacted that contain a number of provisions affecting business taxes for tax year 2017. Because Minnesota has not yet adopted these federal changes, adjustments must be made to correctly determine your Minnesota tax when filing your 2017 Form M3 Partnership Return. See Federal Adjustments for Businesses beginning on page 14 of the Partnership Tax instructions

Schedule KPI Instructions - Clarification

The instructions for Line 20 (formerly line 19) of Schedule KPI have changed for tax year 2017. This line calculates Minnesota-source gross income for a partner in a partnership, used to determine when part-year or nonresidents of Minnesota are required to file a state income tax return.

For tax year 2017, you no longer need to include Minnesota-source income amounts from Line 4 of your federal Form 1065. This change ensures that amounts reported from partnerships, estates, and trusts in tiered structures are only counted once in the calculation of Minnesota gross income. See page 10 of Form M3 Draft Instructions.

Due date

Effective May 31, 2017, the due date of Form M3, Minnesota Partnership Return, is the same as the federal return due date. The federal due date has changed from April 15 to March 15 for calendar year partnerships. 

Accelerated recognition of certain installment sale gains

Nonresidents and individuals who become nonresidents during the tax year must accelerate the gain on installment sale or elect to defer and pay when recognized federally.

Financial institutions

The definition of a financial institution is clarified and expanded to include entities other than corporations.

Credit for Increasing Research Expenditures

The second-tier credit, for qualified research expenses over $2,000,000, is raised from 2.5 percent to 4 percent.

Paper return filing fee

The fee of $5 per paper return assessed on preparers who expect to file more than 10 returns in a year is expanded to business returns including Forms M2, M3, M4 and M8.

Greater Minnesota Internship Credit

This credit is repealed for tax years beginning after 2017.
For more information see the Department of Revenue's Legislative Bulletin and the Session Law passed by the Legislature and signed by Governor Dayton. 


Minimum fee indexed for inflation

The Minimum fee brackets and amounts are indexed for inflation each year. The brackets and amounts for 2017 are:
​​If your total Minnesota property, payroll and sales is: ​Your minimum fee is:
​Less than $970,000 ​$0
​$970,000 to $1,959,999 ​$200
​$1,960,000 to $9,769,999 ​$590
​​$9,770,000 to $19,539,999 ​$1,960
​$19,540,000 to $39,079,999 ​$3,910
​​$39,080,000 or more ​$9,770

Interest rate adjusted

The rate of interest charged on taxes due and paid on refunds is 4 percent for 2017. See interest rates for more information.