By Charles Capouet and Charlie Kearns
On November 6, 2017, the Minnesota Department of Revenue issued a Revenue Notice advising taxpayers that it acquiesces to the Minnesota Tax Court’s decision in Sinclair Broadcast Group, Inc. v. Commissioner of Revenue. As a result, the Department now takes the position that Minnesota’s version of the I.R.C. § 382 net operating loss limitation is “calculated in the same manner as the federal section 382 limitation, and is not apportioned for franchise tax purposes.” For the years at issue in Sinclair, I.R.C. § 382 imposed an annual limitation on an acquiring corporation’s use of the net operating losses of an acquired corporation in the amount of approximately 5% of the acquired corporation’s stock value. The Minnesota Tax Court rejected the Commissioner’s position that Minnesota’s version of the limitation must be applied twice, both on a pre-apportioned and, subsequently, a post-apportioned, basis. Revenue Notice No. 17-09: Corporate Franchise Tax – Net Operating Loss Carryforwards – Sinclair Broad. Grp., Inc. v. Comm’r of Revenue, No. 8919-R, 2017 (Minn. Tax Ct. Aug. 11, 2017), Minn. Dep’t of Revenue (Nov. 6, 2017).