MN HF2886

Modifies the deduction for royalties and fees from foreign operating corporations, reducing it from 80% to 62% for tax years 2012-2013, then to 39% for tax years beginning after December 31, 2012.

Creates a new dividend deduction category for deemed dividends paid from foreign operating corporations at the same reduced rates (62% for 2012-2013, then 39% thereafter).

Excludes foreign operating corporations' net income and apportionment factors from unitary business calculations, except for deemed dividends treated as dividends under the modified provisions.

Eliminates the subtraction for payments received from foreign corporations under the deduction rules when calculating adjusted net income of foreign operating corporations.

Effective for all changes beginning with taxable years after December 31, 2011.