HMN Financial, Inc. v. Commissioner of Revenue

OPINION

ANDERSON, PAUL H., Justice.

This appeal arises out of a tax-change notice issued by the Minnesota Commissioner of Revenue to relators HMN Financial, Inc. and its affiliates. In the notice, relating to tax years 2002 through 2004, the Commissioner concluded that relators’ business structure — a “captive REIT” 1 — lacked “economic sub stance” and “business purpose.” Based upon this conclusion, the Commissioner disregarded relators’ eaptive-REIT structure and attributed a substantial amount of additional income to them, raising their corporate franchise tax for 2002 through 2004 by…