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Qualified Small Business and Farm Property Deduction

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Eligibility and Overview

The deduction is for decedents that meet all of the following requirements:

  • Date of death is after June 30, 2011
  • Owned qualified small business or farm property
  • Qualified small business or farm property was passed to a qualified heir at death

The deduction cannot exceed $2.3 million for decedents whose dates of death are in 2019.

Qualified heirs must file and pay recapture tax if the ownership, participation, or maintenance requirements for the three-year holding period are not met.

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Informational Returns

Informational returns confirm that no recapture tax is due. Qualified heirs must file two informational returns electronically through e-Services. The first return is due 24 to 26 months after the decedent’s death. The second return is due 36 to 39 months after the decedent’s death.

How to Claim the Deduction

The executor and qualified heirs must complete and submit Schedule M706Q, Election to Claim the Qualified Small Business and Farm Property Deduction when filing the Minnesota estate tax return. Find Estate Tax forms and instructions

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