Welcome back! Ask questions, get answers, and join our large community of tax professionals.
cancel
Showing results for 
Search instead for 
Did you mean: 

Minnesota Angel Investor Tax Credit

ztvv
Level 2

How do I generate a Minnesota form M1REF to take a Minnesota Angel Tax credit?

This discussion has been locked. No new contributions can be made. You may start a new discussion here

7 Comments 7
ztvv
Level 2

Never mind.  I found the input field.  

George4Tacks
Level 15

@ztvv Please share the solution so others don't have the panic you had. 


Here's wishing you many Happy Returns

 

 

@ztvv 

@George4Tacks 

My client's Minnesota-based attorney claims the 1099-Misc amount is not taxable. My client says the amount on the 1099 (which is 25% of his investment) is a return of a portion of his investment.

I have found no guidance other than this:

From BHB Advisors.com - Investors who receive the Angel Tax Credit will have additional tax considerations. The Minnesota Department of Revenue will issue investors a 1099-Misc that will be required to be reported on the investors federal and state tax returns as income for the year the credit was received.

0 Cheers

Is this the rationale for the idea that there is Federal taxable income from the MN Angel tax credit? Because the taxpayer received a state tax benefit, it is taxable Federal income.

0 Cheers

I think I have the answer:   It is taxable income for Federal.  It is a refundable credit, even for non-residents.

Taxpayer pays federal tax and gets her capital returned.  So that is not a good tax result.

BUT, MN Dept of Revenue says that is is MN taxable income. They wrote to me:  The IRS has determined that the credit is taxable income. The Minnesota Department of Revenue will issue you a 1099-MISC in the amount of the credit and it needs to be reported on your federal 1040 as income. It is also income for Minnesota state income tax purposes and is considered Minnesota-sourced income.

 

0 Cheers

Final answer, I swear.

It is taxable for Fed.

It is taxable for MN.

It is a refundable MN credit, unless...

The taxpayer has already received the money, like my client. And that means no MN return is required.

0 Cheers
George4Tacks
Level 15

Since you tagged me. All I can offer is that Minnesota is NOT on this IRS list of those they will let off the hook. 

https://www.irs.gov/newsroom/irs-issues-guidance-on-state-tax-payments-to-help-taxpayers

 


Here's wishing you many Happy Returns
0 Cheers