Opinion ID: 1905955
Heading Depth: 1
Heading Rank: 1

Heading: Interest on Arizona Real Estate Purchases:

Text: Under § 290.17(2), income from tangible property not employed in the taxpayer's business is assignable to Minnesota only if the property has a situs in this state. The situs of the Arizona real estate, which Ness purchased for investment, is clearly not in Minnesota. Ness owned the Arizona land personally; there is no evidence that the land was employed in any Minnesota business. Thus, gains and income from the land are not assignable to this state. Since income from the property would not be assignable to Minnesota, deductions permitted by § 290.09 that are connected to the property are not allowed against Minnesota gross income. In re Estate of Abbott, 213 Minn. 289, 6 N.W.2d 466 (1942), held that a taxpayer's expenses in securing rights to out-of-state land and exploring it for gold were not deductible from his Minnesota income. The court noted that profits from the sale or other use of the property     would have been received from tangible property outside the state and would have been properly taxable at the situs of the property. And expenses in connection with such property would be deductible in the tax returns to the state of the property's situs. The necessary conclusion is that profits could have been realized from tangible property outside of Minnesota, which profits would be taxable by such other state, and not by Minnesota; and that any expenses in connection with such property would be deductible in such other state, not in Minnesota. 213 Minn. 295, 6 N.W.2d 469.