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Minnesota Supreme Court affirms inclusion of foreign disregarded entities in combined report

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On Aug. 2, 2017, the Minnesota Supreme Court affirmed a Tax Court decision that the Department of Revenue had improperly adjusted a taxpayer’s combined Minnesota taxable income to exclude income and apportionment factors of a foreign subsidiary that had elected to be disregarded for federal income tax purposes. Specifically, the court determined that Minnesota’s income tax law could be reconciled with the taxpayer’s federal income tax election to disregard a foreign entity, resulting in the inclusion of the disregarded foreign entity in the taxpayer’s combined income tax report.