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Minnesota Tax Court approves inclusion of foreign disregarded entities in combined report

The Minnesota Tax Court granted a taxpayer’s motion for summary judgment on June 6 and held that the Minnesota Department of Revenue improperly adjusted the taxpayer’s Minnesota income to disallow income and apportionment factors from a foreign subsidiary that had elected to be disregarded for federal income tax purposes. The court determined that Minnesota income tax law and the election to disregard a foreign entity for federal income tax purposes could be reconciled to function in harmony, and to allow the inclusion of the disregarded foreign entity during the tax years at issue.

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